Finance and Investments

Women in developed economies have made substantial gains in the workplace during recent decades. Nevertheless, it’s still true that the higher up in a company you look, the lower the percentage of women.

Research in Europe and the United States suggests, for example, that companies with several senior-level women tend to perform better financially. Hiring and retaining women at all levels also enlarges a company’s pool of talent at a time when shortages are appearing throughout industries.

Many countries and regions face talent shortages at all levels, and those gaps will worsen. By 2040, Europe will have a shortfall of 24 million workers aged 15 to 65; raising the proportion of women in the workplace to that of men would cut the gap to 3 million. In the United States, the upcoming retirement of the baby boomers will probably mean that companies are going to lose large numbers of senior-level employees in a short period of time; nearly one-fifth of the working-age population (16 and older) of the United States will be at least 65 by 2016.

In recent years, McKinsey has done extensive work on the relationship between organisational and financial performance and on the number of women who are managers at the companies they have studied. The research has shown, first, that the companies around the world with the highest scores on nine important dimensions of organisation—from leadership and direction to accountability and motivation—are likely to have higher operating margins than their lower-ranked counterparts do. Secondly, among the companies for which information on the gender of senior managers was available, those with three or more women on their senior-management teams scored higher on all nine organisational criteria than did companies with no senior-level women.

Work by professors at the business schools of Columbia University and the University of Maryland lends support to this point. demonstrate the “strong positive association between Tobin’s Q, return on assets, and return on equity on the one hand and the [female top-management] participation rate on the other.”

It’s exasperating to see these studies and be aware of the pool of talented women who are not being advanced in their careers either as senior management or directors.