Smart Companies Have Female Directors
Increasing Company Profits

Increasing Company Profits

Female board members increase profitStudies around the world are finding that companies with a higher representation of women on the boards are more financially successful.

It's a case of strength through diversity for companies and boards that look beyond the staid small pool of standard board directors.

Catalyst, a US nonprofit organisation focused on women in the workplace, published a report that found large companies that had the greatest number of female board directors usually have a considerably better financial performance than companies with few or no women board members.

Catalyst President Ilene Lang said "diversity, well managed, produces better results" for companies.

"Bringing women on their boards to represent the stakeholders really gives them a better company and better performance," Lang said. The correlation was found throughout a variety of industries, she said.

The Catalyst study found the companies with the highest percentages of female board directors outperformed their competition by at least 53% for return on equity, by 42% on average for return on sales and by 66% for return on invested capital.

With research showing that it makes smart business to have women in the workforce, including the senior executive roles, work place equality and fairness is taking on a new meaning.

Yet to keep women interested in the executive and directorship roles businesses and agencies are learning the value of work-life balance is beneficial to men as well.

One of the theories about why companies with more women on the board and in senior executive positions are so markedly surpassing their competition is they are more likely to be forward-thinking, adaptable, smart businesses that have cultures allowing vigorous discussions that result in intelligent decisions and creating excellence through diversity.

Daniel Ferreira, of the London School of Economics, believes that women are more risk adverse than men and that "women on boards would have been more vigilant and more worried about what the executives were doing. I suspect that it would have attenuated the crisis we are living now."

In October 2009, a group of male executives who participate in a British mentoring program published a letter to the editor in The Telegraph: "We are convinced it is essential to accelerate the progress of women into senior positions, given the UK's need to deploy the best talent available. This need is greater than ever in the current economic climate."

While countries like Norway have a law requiring that women constitute 40 percent of board members it is still a case of quality over quantity, fortunately there's an abundance of ideal female director candidates available for any company in any industry who wants to seize the growth advantage.

The challenge for many companies is to give the exceptional women languishing in middle management the opportunity to thrive in their organisation. Rather than letting these talented women leave in frustration to take up roles elsewhere or start their own businesses, smart companies have realised if they create a flexible workplace that is a true meritocracy they can promote skillful women in-house.

Need to find female candidates for your Australian board? Visit the Women on Boards site as they have network of ideal candidates.

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