Companies With Women in Leadership Have Better Profit
Who is running the company you work for? Who is the CEO? If it has a woman in this position, that is good news! Your company will probably perform better than the benchmark. Well, at least this is what some recent studies say. Let’s see some of them.
Earlier this year, a huge research from the Peterson Institute for International Economics and EY came up saying that companies with more women leaders are more profitable. How did they figure this out? Here you have the numbers. They analyzed results from almost 22,000 global, publicly traded companies, in 91 countries. The study concluded that having at least 30% of women in leadership positions (CEO, COO, CPO, CMO, etc), adds 6% to the net profit margin.
"The impact of having more women in senior leadership on net margin, when a third of companies studies do not, begs the question of what the global economic impact would be if more women rose in the ranks," said Stephen R. Howe, Jr., EY's US Chairman and Americas Managing Partner when the study was released.
Another research launched few months earlier than PIIE and EY’s study had the same conclusion: more women leaders equal more profit. The report of MSCI ESG called “Women On Board” showed that companies with strong female leadership generated a Return on Equity of 10.1% per year versus 7.4% for those without. By “strong female leadership” it means that: The company has three or more women on the board, the percentage of women on the board is above its country’s average, or the company has a female CEO and at least one women on the board. The research included 4,218 public companies across the globe.
The report also shows that between 2012 and 2014, large companies, greater than US$ 10 billion in market cap, with at least one woman on the board outperformed other large companies by 5% on a sector-neutral basis.
Is this all? Nope, it’s not. Let me share one more relevant study. A project handled by the businesswoman Karen Rubin tried to figure out the correlation between female leadership and superior stock performance. She calculated the returns to investors in Fortune 1000 companies ran by women and compared that to the performance of S&P 500 companies. Corps managed by women had a 340% return vs. a 122% of S&P 500 benchmark.
Like Stephen R. Howe, Jr. said, imagine the impact in the global economy if we had more women in leadership positions. Just to give you an idea, it’s estimated that if women participated in the job market the same way as men, US$ 28 trillion could be added to the global GDP (Gross Domestic Product) in the next decade. Isn’t it time to empower women? Well, I personally need to confess that all these studies make me even happier with having a woman leading Kwema.