Companies with greater gender diversity at the top achieved higher profits during the pandemic than those without female executives, confirmed a new report.
Firms with women making up at least 50% of the executive committee secured a profit margin of 21.2%, according to the Women Count report, released by The Pipeline. In contrast, FTSE 350 companies without women on their executive committees suffered a fall in profits of around 17.5%.
Additionally, without women in top jobs, UK businesses are missing out on £123 billion in pre-tax profit, noted the report. In short, gender parity in the FTSE 350 is crucial for the UK’s Covid-19 financial recovery. If companies continue to actively ignore the importance of gender diversity at the top, the UK will suffer financially and struggle to bounce back quickly from the pandemic”, warned The Pipeline.
GENDER PARITY REGRESSION
Gender parity in FTSE 350 companies has also been pushed back by another four years due to Covid-19. The predicted year for gender parity for women holding executive positions is now 2036. The pandemic provided an opportunity to push forward with meaningful change. “But instead we have gone backwards,” the report noted. The prospect for women seeking advancement to the senior echelons of FTSE 350 companies looks “as desolate as ever”.
The representation of women holding executive positions has hit the exceptionally low glass ceiling; with C-Suite positions “a near total male domain”. The report found that UK businesses are failing to make progress on gender diversity at the top of organisations; with women accounting for just 5% of CEO positions in FTSE 350 companies. That’s just a small rise from last year’s miserably low figure of 4%; and continuing a trend of slow incremental growth.
EXECUTIVE GENDER DIVERSITY DEFICIT
The failure to address the UK’s executive gender deficit is costing businesses and the wider economy substantial amounts of money. The research found that if all FTSE 350 companies with less than 33% of women on their executive committees were to achieve the same profit margin as those with 33% and greater, there would be an additional £123 billion in pre-tax profit for the UK economy. These are vital funds that could have been essential to a national recovery from the pandemic, according to The Pipeline.
Over the years, various incentives have been implemented to improve executive gender diversity, but no real change has happened. The business world however can take matters into their own hands; and take voluntary action before the government steps in to implement regulations. Boris Johnson has explicitly referred to the need to create a post-pandemic settlement in a more ‘gender neutral’ way in order for society to ‘build back better’. The Pipeline’s report highlights the steps that companies can take to improve executive gender diversity; unlock higher profit margins; and bounce back quicker from the pandemic.
WOMEN IN LEADERSHIP COUNT
“The last year has been dominated by Covid-19, which has disrupted so much. Times of crisis are moments that offer the possibility of major shifts away from established paradigms, but the extreme stresses involved can also drive a response that is regressive,” stated Lorna Fitzsimons, Co-founder of The Pipeline. “The data in Women Count 2021 reveals that FTSE 350 companies have not used the pandemic as a transformative moment for their businesses, instead there has been a reversion to type with companies continuing to fail women.”
“Women Count 2021 shows that without decisive action, the future is looking grim for both women who want to be the next boss and the wider economy,” added Margaret McDonagh, Co-founder of The Pipeline. “Evidence of this lies in the incredibly low-level of women who are in executive committee roles with profit and loss responsibility, which are critical pre-CEO positions; a situation that remains largely unchanged in the last 12 months.”
Since 2016, The Pipeline has conducted research annually into the FTSE 350 to analyse the state of gender diversity at executive and board level. The Women Count series is the only study which reviews the role, value and number of women executives in the FTSE 350.
According to the World Economic Forum’s Global Gender Gap Report 2021, the global gender gap has increased by a generation from 99.5 years to 135.6 years. Click here to read more. Check out the best companies for women in leadership here.
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