Gender diverse Executive Committees double profits

Alison Jarabo

A new report from The Pipeline has emphasised just how much companies stand to gain by appointing more women in senior level roles.

Profit margins are just under double in companies with at least 25% females on their Executive Committee compared to those with none.

The third annual Women Count report revealed that, despite this unequivocal evidence, in the last three years there has been no progress on gender diversity in senior roles in the FTSE 350 and representation remains at 16%.

The percentage of women on Executive Committees is said to be the best measure of gender equality in the FTSE 350, rather than representation on Boards, because executives have power in the running of a company.

Some of the key findings included:

  • FTSE 350 companies with no women on their executive committee only achieve an average 8.9 percent net profit margin. Where there are at least 25% women on executive committees, average net profit margins soar by 5 percent, to 13.9 percent.
  • Nearly a quarter of FTSE 350 companies have no women on their executive committees.
  • If all the FTSE 350 companies performed at the same level as those with at least 25% women on their Executive Committee, the impact could be £5bn gender dividend for Corporate UK

Not only this, but just 6% of Executive Committee members are women in profit and loss (P&L) roles and the number of companies with no women in executive P&L roles has risen from 2016.

As traditional route to CEO positions, the lack of women in these roles indicates a longer-term challenge for companies looking to benefit from the gender dividend.

The report found that far from ‘queen bee’ syndrome, companies with female CEOs have almost twice the number of women on their Executive Committee, over three times the number of female executives in P&L roles on their Executive Committee and more than twice as many female executives on their main plc board setting these companies inline for higher profits.

Commenting on the startling findings, the Rt Hon Nicky Morgan MP, Chair of the Treasury Select Committee said: “This lack of progress calls into serious question the possibility of achieving the UK’s target of 33% by 2020 which I set in response to the Davies Report, as Minister for Women and Equalities in 2015.

Businesses that don’t understand the need to appoint more senior executive women are failing to meet their full potential. I ask them to read this report and wake up to reality, in their own interests and the country’s interests.”