Frequently Asked Questions

Research shows that metrics such as Return on Invested (ROI) capital and Return on Equity (ROE) are correlated with having more women on your board. By increasing your board gender diversity, you are enabling your business to perform better in a number of metrics, including financial.

• Improvement in female employees' performance (they see role models in female board directors)
• The presence of at least 3 women on a board is required to change boardroom dynamics
• Diverse boards are more likely to mirror customer and client bases, making them more effective in making decisions in developing products
• When you lack diversity on your board, you run the risk of not hearing potentially useful ideas for your organisation, as well as not examining potential downsides of ideas. Harvard Business Review, for example, cites research that shows companies with women directors deal more effectively with risk and focus more strongly on long-term priorities.

What research supports this claim?

Catalyst

• MSCI found that companies with “strong female leadership” (primarily measured by women on boards) were correlated with higher Return on Equity (ROE) than companies without (10.1% vs. 7.4%), as well as a superior price-to-book ratio (1.76 vs. 1.56).
• MSCI also found that companies with fewer women on boards had more governance-related controversies than average.

Catalyst – Why Diversity Matters

• In a study of more than 150 German firms over five years, researchers confirmed that boards need a critical mass of about 30 percent women to outperform (as measured by return on equity) all-male boards. This translates into a “magic number” of about three women, based on average board size.
• Catalyst's 2004 research found that companies with the highest representation of women in senior leadership had better financial performance than companies with the lowest representation of women; the companies with the highest representation of women had 35 percent higher return on equity and 34 percent higher total return to shareholders.

Mckinsey – Women Matter Africa (2016)

• In Africa, companies in the top quartile with regards to women's representation on executive committees outperformed industry EBIT margins by 14 percent on average.
• Women on boards bring openness to new perspectives, collaboration and inclusiveness, and strength in ethics and fairness.
• The results of our African research published in this report show that the earnings before interest and tax (EBIT) margin of companies in the top quartile in terms of the share of women on their boards was on average a fifth higher than the industry average.

McKinsey – Why Diversity Matters (2015)

• Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.
• In the United Kingdom, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent.

AfDB – Where are the Women (2015)

• Women hold 12.7% of board directorships (364 out of 2,865) in 307 listed companies based in 12 African countries. This is 4.6% lower than the 17.3% women's representation on the boards of the 200 largest companies globally.
• The majority of African companies have at least 1 woman board director. However, about one-third (32.9%) have 0 women on board, and another one-third only have one female director (33.6%), so the majority of African companies have minimal women's presence on boards.

Why Boards Need More Women – Harvard Business Review (2012)

• Women directors are likely to be more in tune with women's needs than men, which helps develop successful products and services. After all, women drive 70% of purchase decisions by consumers in the European Union and 80% of them in the United States.
• Studies show that the presence of at least three women is necessary to change boardroom dynamics. In fact, an analysis of FTSE-listed boards found that operational performance and share prices were both higher in the case of companies where women made up over 20% of board members than those with lower female representation.

(Grant Thornton) Women in Business: The Value of Diversity

• $USD655 billion global opportunity cost of not having diverse boards

Credit Suisse – the CS Gender 3000: The Reward for Change

• Found that companies with at least one female director had generated a compound excess return per annum of 3.3% for investors over the previous decade.
• Companies where women made up at least 15% of senior managers had more than 50% higher profitability than those where female representation was less than 10%.

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