Women at the top: (more) hard data on why it's more profitable

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Having three women on a company board is the 'tipping point' in terms of influence, says the Women on Boards Report 2016. This influence is then represented in the financial performance of these firms, with findings showing that companies with strong female leadership with returns of 10.1 per cent per annum, compared with those without such leadership seeing around 7.4 per cent annual returns. This does not prove causation, the authors point out, as the study pool was too small to get that deep. What it may show us is that having diversity in leadership gets better results. 

An analysis of American companies with at least three female board members at the beginning of a five-year period had a return on equity of 10 percentage points and earnings per share of 37 per cent. Those with no female directors experienced -1 percentage point in return on equity and -8 per cent in earnings per share over the study period. Adding women to the board over that time increased performance, sometimes by double, while dropping women from the board had the opposite effect. 

At September 2016, globally women held 15.8 per cent of all directorships, which is up 15 per cent on 2015. Norway, France and Sweden have the most women on boards. Mandatory quotas keep this number high in countries that use such a system. 

Why do boards with women perform better? Theories

The stark results could derive from the hypothesised better decision-making that a broader, more diverse group of people make, but it could also be linked with gender diversity at the top relating to gender diversity throughout the entire company ranks. According to research, greater diversity at the top leads to reduced staff turnover and higher employee engagement for both men and women at the company. Women represented at the top meant more women in the company's ranks, from new hires to executives. Companies with no female directors had far less women in senior positions, with even just one female chief executive officer making a big difference in company gender diversity at all levels. 

Theories include that more diverse groups make better decisions, and that gender-diverse companies more effectively utilise talent pools. The propensity to appoint women in the first place may account for a cultural x-factor that also improves performance. The authors thought that this factor would take some time to manifest, so, they studied it over five years. 

Alternatives managers and investors - survey into gender imbalance

KPMG has conducted its fifth annual survey of alternatives managers and investors across the globe, with some signs of improvement on the horizon amongst alternatives funds management professionals. The Women in Alternatives Investments Report offers insights into the industry, with the survey respondents - 790 in total, mostly women - seeing the action being taken, such as mandatory quotas, as an appropriate way to solve the problem over time. 

The numbers - female CEOs:

  • Fifteen per cent of hedge fund chief executives are women
  • Eleven per cent of private equity and venture capital
  • Fourteen per cent of real estate

The numbers - female CIOs:

  • Eighteen per cent of hedge fund chief investment officers are women
  • Nineteen per cent of private equity and venture capital
  • Twenty-six per cent of real estate

Key findings of the survey include:

  • Forty-two per cent of respondents support government-mandated quotas or guidelines for gender diversity on boards, with 36 per cent believing that this will improve gender diversity in alternatives
  • Just over a third believe that emerging-manager mandates will increase demand for female-owned managed funds, but 26 per cent believe they won't. The rest are unsure. 
  • Forty per cent of respondents think investors should seek out investments in women-owned managed funds
  • North America, then the UK, then Europe were ranked the best places for opportunities for women in alternatives
  • Over three-quarters of respondents think it is more difficult for female fund managers to succeed in their industry than it is for their male peers, and it's also harder for women-owned managed funds to attract capital.
  • North America is the least optimistic of all surveyed regions regarding the potential for women's advancement in alternatives

This report was founded by Camille Asaro and Kelly Rau.