As we face the greatest economic crisis of our lifetime, for the 5th year running the ‘Women Count 2020’ has today revealed that gender diversity at the top levels of British business needs urgent attention, with data proving that companies in the FTSE 350 with diverse leaderships perform considerably better and have higher profit margins.
According to the insights, only 24% of executive committee members in the British retail sector are women. Down from 17% in 2019, with just 12% of female executives on main plc boards. Worse still, only 12% of P&L roles on executive committees are held by women, with zero female CEOs or board chairs.
The report, funded by The Pipeline, the UK’s largest gender diversity business, identifies that if companies [listed on the stock exchange] with no women on their executive committees had performed with the same net profit margin as those with more than 33% at this level, a further £47 billion could have been made in pre-tax profit – enough money to keep the NHS running for a full 5 months.
This poor performance in gender diversity is reflected in the net profit margin, with insights revealing the average profit margin of FTSE 350 retail companies with 1-24% women on their executive committee is 5%, increasing as the proportion of women on the executive committee rises; 8% average profit margin for those companies with 25-49% women and 11% average profit margin for those companies with 50+% women.
Britain’s economy shrank by a record 20.4% in April as a result of the lockdown. With full recovery looking unlikely until 2023, the country is on course for the worst recession in more than three centuries. Companies need to act now and address their gender diversity issues in order to increase their profit margins to survive.
Former Prime Minister and Government Minister, Theresa May has been exceptional at introducing measures to reduce discrimination at work, including the legal requirement for all firms with more than 250 employees to report their gender pay gaps. Rt Hon Theresa May MP, comments, “Whenever data reveals a disparity of outcome between groups, the challenge to those in power should be – explain it or change it. There can be no good explanation for the massive underrepresentation of women at the top of British business – so it must change. Every single male CEO who looks around his boardroom table to see nine out of ten male faces staring back at him needs to ask himself what he is doing to make his business one which his daughter or granddaughter can get on in. Act now to change your businesses, to make the most of every talent, and to play your part in making our economy one which works for everyone.”
Lorna Fitzsimons, co-founder of The Pipeline, explained: “Women Count 2020’ report shows the stark difference in net profit margins of companies that have diverse gender leaderships compared to those who do not. During the most unprecedented economic challenge of our lifetime, the economy can’t afford for businesses to continually miss the opportunity to be more productive. Businesses and governments need to actively address this as an economic imperative if we want to come out of the inevitable recession any time soon. We will then emerge from this crisis together, stronger, and more united than ever in a post Covid-19 world.”