U.K. Companies With More Women on Executive Boards Outperform on Profits

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Large U.K. firms whose executive boards are one-third female are 10 times more profitable on average than all-male boards, and the gap in performance is growing, according to gender diversity consultancy The Pipeline.

Companies on the FTSE 350 index would generate 195 billion pounds ($250 billion) of additional pretax profit if their margins matched that of the firms with greater female representation, the group’s report on Monday said.

“There can be no good explanation for the massive underrepresentation of women at the top of British business -- so it must change,” former Prime Minister Theresa Maywrote in the foreword. Firms that don’t “will discover that they cannot recruit the talent they need to succeed.”

The report comes as progress on gender in the U.K. shows signs of faltering. There are now more men called Peter than there are female CEOs in the FTSE 100, after Alison Cooper stepped down at Imperial Brands Plc. The pay gap between men and women widened last year, and women are also doing more chores and child care during the pandemic, which could hurt their chance of career advancement.

The Pipeline also found that:

  • The difference in net income margin between companies that have diverse boards and those that do not rose to the highest in five years this year after declines at all-male board companies
  • There are just 13 female CEOs across the 350 largest publicly-traded companies in the U.K.
  • One in seven FTSE 350 businesses has no woman on their executive committee
  • While more women are making it onto boards, it’s often at companies which already have female executives at that level

All male CEOs need “to ask himself what he is doing to make his business one which his daughter or granddaughter can get on in,” May wrote.

©2020 Bloomberg L.P.

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