Hire Women Executives, Reap more Profits

women executive

According to a study conducted by the researchers at the Peterson Institute of International Economics, Washington DC, companies with 30% female executives rake in as much as six percentage points in profits. The findings are a result of survey done across 91 countries and their 22000 publicly trading companies.

“If you’re a firm and you’re discriminating against potential female leaders, that mean you’re essentially doing a bad job of picking the best leader for your firm,” said Tyler Moran, one of the study’s three co-authors, in an interview.

Though the results indicate the presence of women in corporate leadership positions can boost a firm’s performance, the study has found while having women in executive ranks resulted in better profitability, female CEOs or board members did not have a statistically-significant impact on the bottom line.

The study also underlines that all firms are created equal when it comes to fostering women leadership potential, with some more likely to encourage female managers depending on characteristics ranging from size to national policies such as family-leave. Larger firms are often likely to appoint more women on boards and in upper executive ranks.

Karyn Twaronite, a spokeswoman for professional services company EY, which helped fund the study, said the results would likely prompt discussion over the need for different kinds of workplace arrangements.

“This research sheds light on the importance of establishing modern workplace benefits, providing equitable sponsorship opportunities, and creating inclusive work environments, so that both men and women can have equal access to leadership positions,” she said.

Still, despite the bottom line incentives of drawing in more female managers, much needs to be done, the research found. Currently, about three in 10 companies worldwide have no women either in executive positions or on their board, the researchers found.