Gender Diverse Leadership Performs Better in a Crisis

gender diverse teamsA recent study done on gender diversity in management by the SKEMA Business School found that ‘feminised’ management teams performed better than their all-male counterparts during financial crisis. Michel Ferrary, professor of Human Resource Management at Skema, revealed that investing in companies with management teams which consist of at least 35% women considerably improved investment performance between 2007 and 2012. While we at Female Breadwinners wouldn’t consider a management team of 35% women to be a ‘feminised’ workforce we are delighted to see more evidence that gender diversity leads to better stability and bottom line results.

Professor Ferrary followed the stock performance of each company in the Parisian stock index, the CAC40, between 2007 and 2012. He then composed the Femina Index, a separate index of companies which had at least 35% women on boards.  Over the six years, the CAC40 lost 34.70% of its value, whereas companies in the Femina Index lost only 5.28%

An article in the Professional Manager on women in leadership commented on the research – “There can be no doubt that the presence of women on boards and in management will limit any natural tendency for all-male groups to exhibit overtly masculine, or risky, behaviour – a restraint that would almost certainly have been rewarded when the bad debts were called in during 2008. In addition, diversity of all kinds would enable multiple viewpoints to be taken on board – including some that would otherwise have been sidelined – and should facilitate better strategic decision-making.”

Similar findings were reported by the Credit Suisse Research Institute in 2012. In their report on the benefits of gender diversity, they found that shares of companies with women on boards outperformed comparable businesses by 26 percent worldwide. The net-debt-to-equity ratio at companies with at least one female director was 48 percent, compared with 50 percent at all-male boards.

The study also showed a faster reduction in debt at businesses with women on board during the global economic slowdown. Michelle Lamb, author of the study, said in a report, “Multiple academic studies have concluded that diverse corporate boards exercise more diligent oversight. They have better attendance records than homogeneous boards, and they invest more effort in auditing when the complexity of the business warrants heightened scrutiny.”

Hopefully, these statistics will push the UK Government and business groups to develop policies that will bring more women into boardrooms. The glass ceiling must be cracked if we want to remain competitive in the global economy.

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