The tech company Slack recently made headlines when its CEO sent four African American women to accept an award on his behalf. This was a radical move in the tech sector, which is as a whole decidedly male. While other industries’ lack of gender diversity may be less glaring, it’s an issue economy-wide. “Diversity” has become such a ubiquitous concern in hiring that the writer Anna Holmes wondered whether the term has lost its meaning.
New research shows that there’s one reason why companies might want to hire a lot more women, especially at the higher ranks: It’s good for the bottom line. That’s the finding of a massive study by the Peterson Institute for International Economics and the accounting firm EY. The study looked at nearly 22,000 publicly traded companies in 91 countries, and found a correlation between the number of women in executive positions and a company’s profitability.
“The research demonstrates that while increasing the number of women directors and CEOs is important, growing the percentage of female leaders in the C-suite would likely benefit the bottom line even more,” said Stephen Howe, EY’s U.S. Chairman, in a press release.
Overall, the study found a dearth of women in corporate leadership positions. In the sample, 60 percent of companies had no female board members, and 50 percent had no female top executives. A female CEO was even harder to find: Less than 5 percent of the 22,000 companies had one. While the study saw no increase in profitability for companies led by female CEOs, it concluded that having women on corporate boards and C-level ranks was associated with better performance.