Women in leadership make companies attractive for investors

Companies with a high proportion of women are economically more successful. This is shown in a recent study by the International Labour Organisation (ILO). A result that coincides with the analyses of the FKi, which has already identified a connection between various teams and the willingness of companies to change and innovate in earlier studies. Women in leadership are therefore becoming increasingly important from an investor’s perspective.

Mixed leadership increases profits

More than 12,000 companies from 70 countries were surveyed by the International Labour Organisation ILO for the study. Although a positive correlation between gender diversity and business success had been assumed before, the results of the current study had clearly exceeded expectations, according to Deborah France-Massin, Director of the ILO’s Bureau for Employers’ Affairs: “Almost two thirds of the companies that rely on a gender mix in company management were able to increase their profits. The majority achieved increases of between 10 and 15 percent.”

Capital market factor woman

A high proportion of women in management is becoming an indicator of economic success. Findings such as those of the ILO study mean that investment companies are increasingly taking gender into account when making decisions on the staffing of management positions and making their selection according to where heterogeneous teams are in charge. What’s more, investment houses want to know from companies what credible efforts are being made to secure diverse teams in the long term. After all, they want to invest in an economically lucrative way with a view to the future.

Diversity inside and outside? The FKi provides important insights

It is often difficult to judge how credibly the goal of greater heterogeneity is actually being pursued in the company. Although many companies advertise to the outside world with the buzzword “diversity” – also as a means in the fight for qualified talent – real insights are rare. It is extremely difficult to make reliable statements about how women’s careers actually develop, at which levels they drop out disproportionately, whether staffing processes are transparent and what efforts are made. This is precisely where the FKi comes in, not only quantifying the current state of women in the company, but also revealing the management’s commitment, deriving concrete measures, presenting overarching relationships and uncovering obstacles and weaknesses. And all this on a structural and cultural level.

Success today means: to open up as a company

The analyses of more than 200 companies have shown that there is a connection between the successful development of women’s careers and the willingness of companies to innovate and change. After all, those who rely on women open themselves up structurally and culturally in order to achieve the necessary flexibility, especially in times of digitalisation, and to be able to shape future change processes. This is also shown by the ILO study: More than every second company improved in the areas of creativity, innovation and entrepreneurial openness. More than half also stated that it was easier to attract and retain skilled workers. It is therefore obvious which priorities successful companies are focusing on today.

Germany has some catching up to do

Companies with foreign headquarters often score disproportionately well in the FKi analyses, because the cultural prerequisites and framework conditions are already in place there. Germany lags behind in terms of women in leadership. This has already been shown in earlier studies: Germany ranks 24th out of 34 in a European comparison when it comes to women in management positions (Eurostat 2016) and holds 24th place out of 32 when it comes to board members in financial organisations (Oliver Wyman 2016). And the fact that even today, too little is changing in top management can be shown by current figures from the AllBright Foundation:

The average member of the Management Board is therefore 92 percent male, 76 percent German and born in 1965. Between September 1, 2017 and September 1, 2018, the following recruitment took place: 88 percent male, 64 percent German and born in 1968 – to name just a few key comparative figures. These figures illustrate the phenomenon of cloning that occurs in German boards of directors; i.e. those manager types are promoted as successors who are closest to the boards’ own nature.

Source: AllBright Stiftung

Why is that?

Because promoting women’s careers challenges the status quo. It brings uncertainty. The companies that invest in women’s careers with the help of the FKi have developed far above average between 2013 and 2018. This can be seen, for example, in the area of transparency with an increase of 31 percent. In everyday corporate life, this means that information must be available to everyone at all times. This in turn requires knowledge to be shared – which is a counter-concept to the current corporate reality. And the demand for flexibility, openness and acceptance by women also collides with the previous monotonous structures that provide consistency, protection and presence (control). These structures and teams are well-rehearsed and they work – still! But they are not the future.

Please read the blog article: Management monotony – why homogeneous organisations are still popular but not sustainable