According to a new report by Thomson Reuters, increasing the percentage of women in the workplace can also drive up a company’s share prices.
Researchers at the company used its ASSET4 database on environmental, social and corporate governance matters to measure the impact of the glass ceiling on corporate performance. They found that the glass ceiling does indeed continue to exist, and, according to their report on the topic, “Companies that are ahead of their peers when breaking through the glass ceiling tend to have share prices that outperform, particularly in tough market conditions.”
Written by André Chanavat, Manager of Commercial Support for environmental, social and corporate governance (ESG) at Thomson Reuters, the study, “Women in the Workplace” shows that making a concerted effort to improve gender diversity within a company does pay off – not just for women already within the company’s workforce, but for the company’s long term growth.
Use of Metrics
Based on analysis of almost 2000 companies between 2005 and 2010, Thomson Reuters says it has seen a significant change in the way companies are measuring gender diversity – that is, they are measuring it, and reporting on it. The report says companies are “doing more to track and quantify the number of women they employ, including those hired at managerial levels.”
The percentage of companies providing workforce gender data to investors has rose by 13% in the time span, and the percentage of companies providing managerial gender data rose by 10%. Unfortunately, this hasn’t led to a correspondingly large increase in the percentage of women at the top levels of companies, with women only making up about a fifth of management.
In fact, while European companies did a better job of reporting on workforce gender diversity, American companies seem to be doing better when it comes to hiring women at management levels.
Thomson Reuters noted that the financial service sector has outperformed most when it comes to increasing the number of women in management over the five year period: “several companies which can boast nearly 60% of women in the workforce and 40% or more participation rate by women in managerial positions.”
The report also notes that the lack of data for some industries makes it hard to measure the percentage of women at the top. For example, in technology, the report says, “this lack of transparency has made providing a meaningful analysis almost impossible.”
Improved Stock Performance
According to Thomson Reuters, those companies that have made the biggest gains in increasing the percentage of women in management tend to outperform in volatile or falling market conditions. The study explains:
“In other words, the early data provided by our study on the glass-ceiling phenomenon appears to signal that these companies may serve as a “hedge” against broader stock market weakness. (The same holds true of companies that have more women on their boards of directors.)”
And the results hold true in the long term as well.
“Even so, throughout all but a few days at the very beginning of this period, the performance of STOXX 600 companies able to demonstrate a better track record of opening positions as managers to women were also those that did better at delivering investment returns to their shareholders.”
This study, like others by Catalyst and Newton Investment Management, is another analytical, quantifiable study that shows that gender diversity pays off. Those companies that continue to ignore the strategic and shareholder value of diversity are putting their own futures at risk and ignoring the wellbeing of their workforce – for no discernible benefit. Gender diversity has been proven as a real, tangible boon for companies – and those that ignore its importance will be surpassed by their more savvy competitors.