Women in business: How diverse perspectives deliver greater profitability

To those who may be unsure about what a gender-balanced workforce is, the clue is in the word ‘balanced’. This is because the qualities of a strong leader are not gender-specific – people are not homogenous in their thinking.

Men are not better leaders than women or vice versa. What matters is a diversity of thought, attitudes, and experiences. A balanced board room underpins good corporate strategy – and catalyses bigger profits and long-term value creation.

And while there may be critics, the profit argument is no longer up for debate. Multiple studies over economic cycles prove that gender-balanced boardrooms and management teams outperform their more male-centric peers.

In 2021, the Bank of England and Financial Conduct Authority in the UK conducted a peer-reviewed study to understand why gender balance makes such a difference in corporate performance. It cites evidence that the presence of women on corporate boards in the financial sector ‘has a positive and significant effect on firm profitability measured by a return on assets.’

The analysis also shows correlations between diversity and inclusion and positive outcomes in risk management, good conduct, healthy working cultures, and innovation. The report also – quite rightly – suggests that the environment, social and governance (ESG) agenda will likely serve to keep diversity and inclusion at the forefront of the minds of boards, executives and staff.

With so much evidence that gender-balanced workforces improve profitability, we must also look for nuance within the statistics: which sectors benefit the most and which industries are lagging? The financial domain is an example of an industry that continues to struggle. Well-known to be male-dominated, most notably within its leadership ranks, a woman’s contribution is harder to quantify, simply because there are fewer women in senior roles – and therefore less data.

A 2019 report by the UK Financial Conduct Authority analysed gender diversity at senior levels in UK financial services that looked specifically at role, firm, and sector. It found that gender diversity is low at the industry level overall, with women making up just around 17 per cent of FCA-approved individuals.

If the number of women in financial organisations is low in developed economies, it is even lower in the emerging markets – but the issue isn’t lost on policymakers. The UAE federal government introduced new legislation in 2021 to require at least one female director on the boards of all listed companies. The current ratio is low: The five biggest companies listed on the Dubai Financial Market and the Abu Dhabi Securities Exchange have 84 board members, of which only three are women.

The current state of play is starkly examined by a social enterprise called Aurora50, which helps leaders, companies and boards to support the United Nation’s Sustainable Development Goal 5 of Gender Equality. It points out that while women are present on the boards of 28 out of 110 listed companies in the UAE, they make up only 3.5 per cent of all board positions.

The good news is that companies in MENA are catching up and doing so quickly. World Economic Forum (WEF) data shows that in 2020 alone, the number of all-male boards in Saudi Arabia fell by 8 per cent, from 94 per cent to 86 per cent.

The WEF also provides evidence that since 2017, emerging market companies have exhibited higher percentages of CFOs than companies in developed markets, and the difference is widening.

So, as we celebrate international women’s day on March 8, let’s celebrate not just the unique and varied qualities that women bring to all aspects of life. Let us celebrate the fact that when women and men come together in the boardroom, their diverse perspectives deliver greater profitability and a more sustainable and equitable business. It doesn’t take a feminist to want to build a gender-balanced workforce – just ambition.

Josette Rizk is the head of sovereign clients, Middle East at Invesco