May 13, 2016
This analysis is by Bloomberg Intelligence analyst Gregory Elders. It first appeared on the Bloomberg Terminal.
It’s a fact: when there is diversity of skill, experience and thought around the table – and on the board – businesses perform better. Companies with strong female leadership generated a return on equity of 10.1% per year versus 7.4% for those without, according to a recent study.
Bloomberg has brought a new level of clarity and awareness to social and governance information, launching Bloomberg Financial Services Gender-Equality Index, and has built a team of reporters dedicated to covering diversity, especially in executive leadership. The new series, “Walk the Talk,” focuses on gender equality and the importance of women in executive leadership.
This Bloomberg Intelligence analysis looks at the state of women in global leadership.
Gender leadership gap sees slow progress, pay gap gains scrutiny
Companies under pressure from governments, investors and their own employees are slowly addressing the lack of female leaders in their boardrooms and executive ranks.
The Girls’ Lounge founder and CEO Shelley Zalis, who helped introduce “Walk the Talk” at Bloomberg’s IAB NewFront. pushes for gender equality in the workplace. Photo: Bloomberg Media
With women making up about 25% of U.S. and European boards on average, and C-suite levels even lower, much work needs to be done to promote and retain female leaders.
The gender pay gap is gaining scrutiny as U.S. and U.K. regulators consider new rules on disclosure. Some companies are proactively seeking to demonstrate leadership.
Women powering up Europe boardrooms as U.S. progress lags behind
Government quotas and threats are driving European companies to quickly narrow the gender gap in their boardrooms. European Stoxx 600 companies have doubled the proportion of female directors to a median 25% since 2011.
In contrast, U.S. S&P 500 companies, at a median 20%, have made about as much progress in the period as Europe did in the last year. Government imposed diversity is not palatable in the U.S. This means investors concerned with good governance and management are left to prod laggards.
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In contrast, U.S. S&P 500 companies, at a median 20%, have made about as much progress in the period as Europe did in the last year. Government imposed diversity is not palatable in the U.S. This means investors concerned with good governance and management are left to prod laggards.
Melinda Gates: “You can be a man or a woman and be pro-female policies.” Photo: Chris Goodney/Bloomberg
Easier to get women into boardroom than into executive suite
Appointing women to corporate boards has proven relatively easy compared with changing the culture and creating opportunity to promote women to executive leadership. More than three-quarters of S&P 500 and Stoxx 600 company boards have two or more female members.
In contrast, fewer than half of companies in the S&P have two or more women as executive officers, and one quarter have none. The Stoxx 600 fares worse, with only 20% of members having at least two female executives. More than half have none.
Europe puts faith in mandated gender diversity on Norway success
Norway leads other countries in the proportion of female directors and in the reported proportion of female executive officers and managers. This may support the trickle-down diversity idea that Norway and others maintain comes with having quotas for the number of women on boards.
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Yet a University of Chicago study found the benefits of Norway’s quotas were limited to just the few women at the very top of organizations. The study, from 2014, noted more time may be needed for benefits to spread throughout companies.
Women in finance find top pay easier to crack than glass ceiling
Finance companies generally do a poor job promoting women to their senior ranks, but they do better in rewarding them with top pay.
Women account for about 30% of the top-pay decile at many of the largest financial services companies among members of the Bloomberg Financial Services Gender-Equality Index. This contrasts with women holding only about 15% of top executive roles. Closing the gender pay gap will help retain top talent, but more needs to be done to boost the proportion of women in leadership ranks.
– compiled by Shannon Doubleday, May 13