Why Women Make Boardrooms Better
New research suggests that companies feeling the pain of the economic downturn might need a woman’s touch.
Large companies with at least one women on the board do better than those with all male boards, a report by Credit Suisse found.
Credit Suisse analyzed more than 2,500 companies and found that companies with more than one woman on the board have outperformed those with no women on the board by 26 percent since 2005.
“Introducing women to a group of men changes their behavior and makes them focus more. Companies with more women on the board tend to be closer to the consumer and have a better sense as to what is going on in their product markets,” Michael O'Sullivan, UK research and global portfolio analysis managing director at Credit Suisse Private Bank, told CNBC.
O'Sullivan said: “We’re used to governments telling companies they need to have a certain quota of women on the board. That debate is now moving on to performance and how decisions are made within companies.”
Companies with at least one woman on the board over the past six years show better average growth, with an average of 14 percent over the past six years compared to 10 percent for those with no female board representation. They also have a 4 percent higher return on equity, according to the research.
“Most of that performance comes from the post-credit crisis period: introducing women to the board gives better decision making and better vigilance in terms of what’s going on the in company," O’Sullivan said.
A mixed-gender board allows for a better mix of leadership skills and access to a wider pool of talent. It improves corporate governance, and tends to be more risk-adverse than companies with male-only boards, the report showed.
According to the research, people, including investors, also believe companies with women are better businesses and people work harder when there is gender diversity in the workplace.