Gender Diversity is the Key to Business Success

There has been a lot of research lately into the effects of gender diversity on a company and the results are impressive. The research found that it pays off in multiple ways to have more women, who are treated equally, at a company. The advantages to companies include higher returns, less volatility in returns, higher performing stock, lower probability of a major drawdown, superior decision making, lower accruals, and attracting the top talent. Businesses are not only driven to diversify by the profit motive but also by the workforce itself.

The effects of gender diversity on a company’s bottom line is astonishing. Specifically the fact that women CEO’s in the Fortune 1,000 produce three times the returns of companies primarily run by men. If this statistic alone is not enough to motivate more companies globally to diversify there is a mass amount of other findings that should. A gender diverse company’s stock outperforms companies that have yet to diverse, with higher returns, less volatility, and a lower probability of a corporate downturn.

Some of the benefits that aren’t directly linked to a company’s profit include the diversity of clients, businesses, and communities. If a company diversifies its employee base it is bound to diversify in other areas gaining a larger, more diverse, market. There is also the advantage that a more diverse work environment allows for better decision making and problem solving, with different viewpoints, market insights, and ideas. Greater diversity is also correlated to a company attracting and retaining the top talent in their industry. Organizations that respect and strive for diversity are more likely to attract, build, and retain a stronger, more talented workforce.

The concept of gender diversity has been a struggle to measure in the past, but Morgan Stanley has been successful recently by measuring gender diversity around five factors: representation of women at various levels; the amount of sway those women actually held within the company; pay equality; the company's diversity policies; and programs to promote work-life balance. Companies around the world should take note and strive to diversify, it pays in the end.