Tuesday, 27 August 2019


Press for progress: Women and performance

Barack Obama once said that "Empowering women wasn't the right thing to do – it’s the smart thing to do".

He had a point – woman make up almost half our global population. If this many people are being even partially held back today, imagine the increase in productivity we could achieve if we could eradicate gender discrimination altogether. Thought provoking right?

Two weeks ago we celebrated International Women’s Day, a worldwide celebrated day which has marked the plight and achievements of women for over a century. This year's theme was 'Press For Progress' and aimed to highlight that recent studies have estimated that gender parity is still 200 years away.

Looking to our own experiences, we may assume that we are much closer than this. But when you look closer, you soon realise we have a long way to go.

Finance industry

Whilst recognising the differences across the globe, for this post I want to focus on our own industry.

The Government's gender pay gap registry released this year shows that the finance industry has the highest gender pay gap in the UK, with a median difference between male and female remuneration of over 30%*.

There are various reasons why the gap is so large in our industry, but one of the reasons is the lack of leadership positions held by females. Just recently, three representatives from a well-known investment manager came to present to one of my clients. Shortly after the pitch, one of the Trustees commented on how all those in attendance (from the manager) were male and the irony of this given they call themselves 'diversified'.

What may seem like a mere observation to some is actually a leading example to the issues we are facing today. Unfortunately, this example is not unusual and it is not limited to investment managers, but also applies to the companies in which our clients invest.

There is an increasing volume of research highlighting the differences between men and women's psychology and how this may influence leadership styles. Importantly, studies have shown that men and women think differently about risk. This poses the question; could diversity at leadership levels positively impact financial performance?

Researching the impact of diversity

For International Women’s Day, a number of investment managers released their own research, including MSCI who tested two categories of companies within certain sectors (including our own) from 2014 to 2016:

  1. 3+ WOB': firms that had three or more women on the board (WOB) for all three years; and
  2. 1- WOB': firms with one or zero women on the board for all three years.

It found that over the three year period:

  • There was a positive correlation between the number of women on the board and “best practice” talent management.
  • There was evidence of higher productivity and better financial performance amongst the firms with 3+ WOB.

Based on these results MSCI believe that if 3+ WOB and “best practice” talent management are executed effectively, there is a possibility of value creation within a firm. I am not advocating taking these results as gospel, but what I am advocating is greater awareness and more thought around diversity within the industry itself.

Providing more evidence of women’s’ leadership influences on company performance is not straightforward, especially as long term data of women in leadership positions is simply not available. In addition, seeking evidence might be misconstrued that women must prove themselves before they are considered ‘worthy’ of leadership roles.

If the above results have the possibility to make an impact, why are so many firms not following this in practice? Perhaps this question is rhetorical but maybe today you'll take away this thought – though the destination for gender equality may be a way off, the journey towards achieving this objective is most certainly happening.

And this was evident in New York this year as State Street installed a statue called the Fearless Girl right at the heart of the financial district to mark International Women’s Day.

To end, I will say that companies who fail to employ women at all levels, not just leadership, restrict their talent pool.

Diversity brings fresh ideas. Diversity brings opinions. Diversity brings talent.

by Kinna Patel - Investment Analyst at Hymans Robertson

View original blog here

* Source: Financial Times.


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