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August 22, 2012

Study: Companies with Women in Key Leadership Slots Prosper

by Jim Randle

A study by a major investment bank shows companies around the world with at least some women in key leadership positions significantly outperformed companies with all-male boards of directors during the past several years.  

Companies that have women on their boards of directors have stock prices that on average are 26 percent higher than firms with all-male boards.  Experts at Credit Suisse drew that conclusion after studying 2,000 companies around the world for the past six years.

A company’s board of directors usually is made up of experienced business executives, mostly from outside the company, whose job is to ensure the company's business strategy makes sense and that the chief executive officer is running things well.

Kimberly Gladman was not involved in the Credit Suisse study, but she tracks thousands of companies at GMI Ratings, a global corporate governance ratings agency.  She says that adding women to traditionally all-male boards sparks more debate, which makes for better decisions.  

"Diverse groups are better at complex decision-making," Gladman said.  "That isn’t just about women.  It is about any group that is diverse in terms of the identity of the people."

Gladman says diversity also prompts board members to prepare better and work at a higher standard because they do not want to look foolish in front of “strangers.”

The Credit Suisse study shows the difference in performance between diverse and all-male boards was strongest when the economy was weakest.

"When there is a recession, and you are running into trouble, that underlying good quality of the management and the firm and of the board comes to the fore and pays off," said Gladman.

Gladman says her studies show that globally, women make up only about one-tenth of the membership of boards of directors.  Companies in Nordic countries have the highest percentage of female directors, while Asian nations tend to have the lowest percentage.

One woman who serves on several boards is Joan Amble, who honed her business skills during a long career at American Express.  She now helps guide Booz Allen Hamilton, SiriusXM Radio and other firms.  In her experience, female board members are more inquisitive than their male counterparts.

“Sometimes more detailed questions about things in some cases, probably more dialogue than I’ve seen in some situations, so I think we do approach things differently,” Amble said.

Amble says women have “a long way to go” to overcome bias in the business world.
 
"We will know as a nation that we have really moved forward when all we are talking about is diversity of thinking and ideas, and not trying to attribute it to gender or anything else," she said. "But sometimes I think you have to walk before you start running."

Amble is trying to make that day come sooner by leading a foundation that helps talented women gain the skills and contacts they need to take top positions in business.