A combination of a narrowing of the gender wage gap and improvements in women’s...read more
Firms with gender diversity on their boards generated six times more profits than those without, according to a survey by PA Consulting Group.
It found that firms with gender diversity at board level generation up to 600 per cent total shareholder return [TSR], while those without generated less than 100 per cent TSR. The group says companies are still slow to pick up on the business benefits of diversity despite the evidence and that organisational culture plays a critical role in solving this problem.
PA analysed the public reports of 50 US and UK companies over a six-year period to show how those with female leaders generated higher total shareholder return (TSR). The report established a relationship between success and organisational culture by analysing employees’ responses to detailed interviews around engagement, behaviour and values.
The research shows that having a high performance culture is key – and that culture, gender diversity and performance are inherently linked. According to the report, organisations with both the strongest financial results and the highest performing culture – those with ‘performance magic’ – had the greatest proportion of women (50 per cent) on their executive leadership team. The two organisations without women on their leadership team sat in the bottom five positions of both the financial and cultural measures.
It defines a high performance culture as one in which:
– there is a clear mission and vision, which derives directly from the organisation’s strategy
– the organisation is highly adaptable and responds rapidly to the influences of the external market place and customer needs
– people are aligned and engaged and there is a ‘team’ orientation
– values, systems and processes are in place and aligned to support performance.
The report suggests that this culture can be attained by reviewing the organisation’s operating model, reward system and its mission and purpose; building talent from within and challenging roles; and looking to the future through a clear articulation of its mission.
Lesley Uren, PA talent management expert, says: “Despite decades of well-meaning interventions, and in the face of incredible pressure from society, many companies have had limited success in accelerating women up the management ladder.
“We started our research with the conviction that something vital was missing from the debate. What we found suggests that organisational culture – something frequently overlooked by other studies – is the key. As our findings show, it is absolutely in companies’ best interests to raise their game when it comes to promoting gender diversity. And the way to start is by getting the right culture in place.”