Why Women Should Be In More Executive Roles

By Lucy Page

---

As a woman in finance, I found a report by The Pipeline – the UK’s largest gender diversity business – particularly interesting as it shows that FTSE 350 firms with diverse leadership had higher profit margins.

There was a positive correlation between women in leadership roles and profit margins. However, on 17 April 2020 it was revealed there was only 13 women in executive roles (5% of firm leaders) at CEO level in FTSE 350 companies, in fact, there are more CEO’s named Peter (6%) than there were women. 68% of FTSE 350 companies do not have a single female executive committee in executive roles containing a profit or loss (P&L). But why? When firms with no women on the executive committees had a net profit margin of 1.5%, whereas those with more than 33% of women at this level reached a net profit margin of 15.2%.

The research has suggested that companies need to address their underrepresentation of women and their lack of gender diversity to improve their profit margins. As the UK’s economy shrank 20.4% during the lockdown period and potentially the worst recession for more than three decades, it is more important than ever to improve pre-tax profits as £47bn could keep the NHS running for five full months.

As recently as April 2019 to April 2020, female membership on executive committees in the FTSE 350 is increasing 2.7% year-on-year and is currently sat at 19.8%. As good as this may look for females wanting to gain membership on an executive committee, the research has revealed that the increase in female leadership in companies has occurred through other women in functional roles like HR, accounting or marketing.

Looking at this information, I decided to do some research of my own. Why is there massive underrepresentation of women at the top of British business, when it has been shown female leadership drives larger profits? After much research, this distinct underrepresentation is rooted from the social stereotype of a woman’s role. Still in 2020, there is a perception that a woman’s role should be to have children and be the main child carer whilst a man should work to financially support this. This allows a man to further his career whilst a woman takes maternity leave and may work part time for some income, from my reading, this helps to create a pay gap where men can advance in their career and gain more managerial and executive roles. Now, whilst Britain is facing its worst recession and may not recover until 2023, companies should consider hiring more females in executive roles to not only improve profits, but to improve the economy. Personally, I deem it to be a trade-off, should companies save their profits; or should they maintain a male dominated executive committee forcing the economy to miss out on £47 billion.

---

Key Takeaways

· Women in leadership roles could improve UK economy by £47 billion

· Companies with women in executive roles have higher net profit margin

· Less women due to perceived stereotype of women as ‘home-builders’