Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Shared parental leave
    • Redundancy
    • Maternity & Paternity
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
    • OHW Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

Personnel Today

Register
Log in
Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Shared parental leave
    • Redundancy
    • Maternity & Paternity
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
    • OHW Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+

GenderLatest NewsPregnancy and maternity discriminationEquality, diversity and inclusionExecutive recruitment

Lack of women in top roles sees leading firms miss out on profits

by Adam McCulloch 27 Jul 2020
by Adam McCulloch 27 Jul 2020 Photo: Shutterstock (montage)
Photo: Shutterstock (montage)

FTSE 350 companies are not fulfilling their financial potential because of their failure to appoint more women to key executive roles.

In-depth research by diversity consultancy The Pipeline suggested a clear link between a lack of gender diversity in senior roles and net profit margins. Its authors, Lorna Fitzsimons and Margaret McDonagh, argued that Women Count 2020 provided compelling evidence as to why it was in companies’, government’s and society’s financial interest to improve gender diversity at executive committee level.

The analysis stated that the past year had not been a good one for those FTSE 350 companies still without a single woman on their executive committee. In 2019, the net profit margins achieved by these businesses stood at 6.1%, but in 2020 this has collapsed to just 1.5%.

The failure to look beyond outdated employment and promotion practices is resulting directly in poorer business performance” – Lorna Fitzsimons, Margaret McDonagh, The Pipeline

Figures scrutinised by researchers revealed that FTSE 350 companies which had executive committees with female membership of more than 33% had a net profit margin over 10 times greater than those companies with no women at this level.

Companies with no women on their executive committees had a net profit margin of 1.5%, whereas those with executive committees where comprised of more than 33% women achieved a 15.2% net profit margin. The authors argue that if the companies with no women on their executive committees this year had the same net profit margin as companies with more than 33% female membership on their executive committees they would collectively gained an extra £47bn in pre-tax profit.

The report stated that despite executive roles containing a profit and loss (P&L) responsibility being considered to be key for future CEOs, 90% of P&L roles on executive committees of FTSE 350 firms were held by men and only 10% by women. More than two-thirds (68%) of FTSE 350 companies did not have a single female executive committee member in a P&L role. This “staggering” fact, said the authors, raised “serious questions about the desire for positive change in so many businesses and the prospects for women seeking to make it to CEO”.

Companies with women in senior leadership roles are more profitable. They are better innovators. They are more respected in their fields” – Theresa May, former Prime Minister

Analysis of data found the gap between the net profit margin for companies without any women on their executive committees and those which did embrace a level of gender diversity in senior positions was the biggest The Pipeline had recorded in the five years of producing the research.

However, there had been a small (2.7%) increase of female membership on executive committees in the FTSE 350, which the study welcomed. Women now made up nearly a fifth (19.8%) of total executive committee roles. Most of this increase came from the FTSE 250 – the increase of female membership on FTSE 100 executive committees had slowed to 1.4%.

The rise of women in functional roles was welcomed by the authors with women in, for example, HR roles, beginning to break through in larger numbers to top jobs. The study added: “We also observe that those companies which are already good at promoting women are doing even better.”

Gender equality

Four in five senior applicants in financial services are men

UK slips down global gender equality rankings

Jordan Peterson: ‘Men and women are not the same and won’t be’

Gender pay inequality increases in financial services

Why fatherhood holds the key to solving the gender pay gap

Despite this, similar numbers of companies as last year remained all-male bastions, with 15% of FTSE 350 businesses “refusing” to have a single woman on their executive committee.

The authors concluded: “The failure to look beyond outdated employment and promotion practices is resulting directly in poorer business performance. This is another generation of female talent lost. At the current rate of growth, we will miss another generation of female talent before we have any hope of parity.

“The case for change here is unarguable, yet it seems many companies are ignorant, wilfully, or otherwise, of the opportunities on offer for improved company performance.”

Vanda Murray, chair of the board at FTSE 250 construction firm Marshalls, said profits were better where there was more diversity in terms of gender and ethnicity because leadership groups at such firms challenged more. She told the BBC: “They have more discussion and debate and that leads to better decision-making.”

In her foreword to the report, former Prime Minister Theresa May wrote: “Companies with women in senior leadership roles are more profitable. They are better innovators. They are more respected in their fields.Yet, as this report lays out, across the 350 biggest British PLCs, fewer than two in ten chief financial officers are women, only 4% of investment managers are women, and just 5% of firms are led by a female CEO. In the FTSE 100, there are more CEOs called Peter than there are women in the top job. Depressingly, that is one fewer female CEO than last year.”

HR business partner opportunities on Personnel Today

Browse more HR business partner jobs

Adam McCulloch
Adam McCulloch

Adam McCulloch is a freelance writer and production editor who has worked in sectors including travel (The Guardian), aviation (Flight International), agriculture (Farmers' Weekly), music (Jazzwise), theatre (The Stage) and social work (Community Care). He also works for a national newspaper and is the author of KentWalksNearLondon

previous post
Four in five senior applicants in financial services are men
next post
New Research – How Leading Organisations are Responding to Coronavirus and Creating Lasting Cultural Change

Leave a Comment Cancel Reply

Save my name, email, and website in this browser for the next time I comment.

You may also like

Entrepreneurs: men seen as less employable than women...

3 Mar 2022

Senior executives: towards a new world of work?

15 Feb 2022

Progress made on ethnic and gender balance on...

13 Dec 2021

Top executives aware of race bias in recruitment

24 Nov 2021

UK lagging behind major economies on CEO gender...

19 Nov 2021

HR leaders take biggest slice of C-suite hires...

28 Oct 2021

Female FTSE 100 directors earn 73% less than...

23 Aug 2021

FTSE 100: Proportion of white male leaders is...

11 Aug 2021

Boardroom diversity: Working class men losing out to...

21 Jul 2021

Manchester United & Morson – inside the business...

16 Jun 2021
  • What it really means to be mentally fit PROMOTED | What is mental fitness...Read more
  • How music can help to ease anxiety at work PROMOTED | A lot has happened since March 2020, hasn’t it?...Read more
  • Why now is the time to plug the unhealthy gap PROMOTED | We’ve all heard the term ‘health is wealth’...Read more

Personnel Today Jobs
 

Search Jobs

PERSONNEL TODAY

About us
Contact us
Browse all HR topics
Email newsletters
Content feeds
Cookies policy
Privacy policy
Terms and conditions

JOBS

Personnel Today Jobs
Post a job
Why advertise with us?

EVENTS & PRODUCTS

The Personnel Today Awards
The RAD Awards
Employee Benefits
Forum for Expatriate Management
OHW+
Whatmedia

ADVERTISING & PR

Advertising opportunities
Features list 2022

  • Facebook
  • Twitter
  • Instagram
  • Linkedin


© 2011 - 2022 DVV Media International Ltd

Personnel Today
  • Home
    • All PT content
    • Advertise
  • Email sign-up
  • Topics
    • HR Practice
    • Employee relations
    • Equality, diversity and inclusion
    • Learning & training
    • Pay & benefits
    • Wellbeing
    • Recruitment & retention
    • HR strategy
    • HR Tech
    • The HR profession
    • Global
    • All HR topics
  • Legal
    • Case law
    • Commentary
    • Flexible working
    • Legal timetable
    • Shared parental leave
    • Redundancy
    • Maternity & Paternity
    • TUPE
    • Disciplinary and grievances
    • Employer’s guides
  • AWARDS
    • Personnel Today Awards
    • The RAD Awards
    • OHW Awards
  • Jobs
    • Find a job
    • Jobs by email
    • Careers advice
    • Post a job
  • XpertHR
    • Learn more
    • Products
    • Pricing
    • Free trial
    • Subscribe
    • XpertHR USA
  • Webinars
  • OHW+