Companies with more women in senior roles have higher profit margins, an analysis of the FTSE 350 has found.
The Pipeline’s Women Count survey discovered that FTSE 350 companies with no women in their executive committees performed the worst of all the groups it analysed, while those with at least 25% females generated almost double the profit margin of those with none.
Gender equality resources
It estimates that if all FTSE 350 companies performed at the same level as those with higher female representation at executive level, there would be a £5 billion “gender dividend” for the UK economy.
However, the percentage of women on executive committees remains at 16%, and there are eight more companies without any women in these roles since last year’s survey.
The percentage of women in roles where they control profit and loss accounts (P&L roles) has also dropped from 38% to 35%. Most women (60%) who are on executive boards are in “functional” roles, such as HR, marketing, legal or compliance.
Out of 791 executive directors, only 65 of these were women, meaning women make up less than 10% of executive director roles on FTSE 350 boards.
Execpipeline.com found that companies with a female CEO tend to, on average, have more women in their executive leadership team.
Companies with a female CEO have an average of 2.6 women on their executive committee, compared to 1.4 on companies led by men.
The sector with the highest proportion of females on the executive committee is utilities – 45% of these companies had at least 25% female representation at this level. Retail also performed well, with almost one in two executive committee roles held by women.
The report calls for companies to promote more women into P&L roles, claiming these “offer the pathway to the most senior jobs”.
It says: “It has been argued that, because women are more likely to be in functional roles (such as HR, marketing, legal or finance), they may not get the opportunities to gain experience that senior leaders are expected to have, such as P&L accountability and running operations.”
Last November, a review led by Sir Philip Hampton and Dame Helen Alexander recommended that FTSE 100 companies should have at least 33% of their executive pipeline positions filled by women by 2020. It also found that around a quarter of members of FTSE 100 executive committees are women.
“With agendas dominated by Brexit, the focus on gender diversity at senior levels has been slipping,” Lorna Fitzsimons, co-founder of The Pipeline, told the Financial Times. “In this climate of low growth, companies cannot miss out on this profit margin advantage.”