GENDER BENDER

The striking difference between companies with women on their boards and those without

Obsession
Lifestyle
Obsession
Lifestyle

In case you weren’t already sold on the payoff for companies that prioritize the hiring and promotion of women, a new report shows just how much large, listed companies are losing by not employing female executives on their boards.

Last year, publicly-traded companies with all-male boards lost out on a total of $655 billion in potential profits across India, the UK and the US, research by Chicago, Illinois-based accountancy firm Grant Thornton found.

The study, called “Women in Business: The Value of Diversity,” looked at 1,050 businesses—200 in India, 350 in the UK, and 500 in the US—and compared the companies with at least one female executive board member with those run entirely by men. It found that the diverse boards had a higher return on assets, on average, than the male-only boards. By comparing the rates at which each country’s diverse boards outperformed male boards with the country’s GDP, the firm estimated what it called the “opportunity cost,” or the increase in business profits the country might have earned if all businesses had at least one female executive directors.

The findings come on the heels of a report by the McKinsey Global Institute that showed $28 trillion could be added to global GDP by 2025 if men and women contributed equally to the workforce.

Up until now, researchers weren’t able to quantify the impact diverse boards had on businesses because there weren’t enough women sitting on boards of major companies, according to the firm.

Now, the tide is turning, and there are a notable number of female board members. But many are still employed in non-executive roles. Of the 990 companies in the three markets studied by Grant Thornton that had female board members, 127, or 13%, were employed as executives.

“Our research into the proportion of senior business roles held by women has revealed precious little movement over the past decade,” said Francesca Lagerberg, global leader, tax services and Europe, Grant Thornton, in a statement. “Perhaps businesses have simply not been aware of the value diversity brings.“

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