Companies with More Women in Decision-Making Positions Generate Higher Returns--But Are More Women Moving into Executive Suite? It's a Slow Train

There is a strong rationale for promoting women's participation in economic decision-making. The impact of women on economic growth of companies is substantial. More women board directors translates into higher returns.

According to Organization for Economic Development (OECD) 2008 study, Fortune 500 companies with more women board directors had 53% higher returns on equity, 42% higher on sales, and 67% higher on invested capital.

Numerous studies and theories have emerged trying to explain female economic success on both sides of the gender aisle pointing to advantages or disadvantages of having women in positions of power. Some have called for additional studies.

Despite all the evidence supporting inclusion of women into decision-making, women are still under-represented on the boards of major companies in public and private sectors. Norway and Sweden have the highest percentage of women's directors, and Italy, Portugal and Japan the lowest.

The UN 2009 World Survey on the Role of Women in Development states that 13% of board members of Fortune 500 companies in the United States are women, with only 2% holding chief executive officers positions in comparison with OECD countries where 7% of women are directors. Women are also under-represented in other management positions of public and private sector. The participation of women in management is the highest in the United States, the United Kingdom and Ireland, where 8% to 12% of women hold management positions compared with 12% to 18% of men.

In the top 50 United States commercial banks, only 12.6% are women in the executive positions even though 75% of employees in the financial services are women, and according to Ewing Marion Kauffman Foundation, only 8.6% of venture capitalist decision-makers are women.

ILO reports that even though women hold 30% to 60% of professional jobs, they are in minority in positions of power.

Situation is better on small business front. Women own 38% of small businesses in the United States, one third in China, nearly half in Kenya and one third in Asia Pacific region.

In medicine, law and engineering, women are very well represented.

Economic success has so far not translated into the equal opportunities. The individual or institutional discrimination in the workplace persists despite the evidence of considerable monetary losses related to inequality and discrimination.

The correlation between women in decision-making positions and the financial performance has been confirmed. Companies with more women in top positions do better. No matter how many more studies will pop up on the horizon, no matter which theory on the drivers of women's financial successes prevails at the end, the clock can not be turned back. And if the economic factor is enough for inclusion of more women into decision-making process remains to be seen.

The Third Millennium Development Goal to promote gender equality, empower women and eliminate all forms of discrimination will not be achieved by 2015 as global leaders have envisioned. The representation of women in the positions of power lags heavily behind the pledges of governments, at approximately 17% worldwide. At this rate, it is questionable if the Goal can be reached even by 2030.

Source: OECD, UN 2009 World Survey on the Role of Women in Development, UN, ILO,
Ewing Marion Kauffman Foundation, Kansas City, Missouri