It may come as a surprise to some, but gender diversity at work and the promotion and encouragement of equality for women can, in fact, enhance investment performance.
At Yang, Odell and Kostner this is something we have been keen to promote in the areas where we have influence, not only inside our company but also with those we come into contact with, such as brokers, insurance companies and the legal profession to name a few.
Over the last few years, we have seen an emergence of women speaking up for themselves about inequality and injustice and through their courageous deeds, facilitating social change.
As a company, we spend a considerable amount of time discussing how we can aide this change and increase equality for women. We welcome the real traction being gained surrounding gender diversity and inclusiveness across all business sectors, not just as a company – but as mothers and fathers, sons and daughters, husbands and wives.
To us, gender diversity means an evenness of representation across all genders, in both discussions and deeds.
Inclusion and diversity can open the path to new perspectives and lead to improved decision-making. It transpires that gender diversity practices can also positively affect your portfolio’s performance.
Gender diversity is not merely about promoting capable women into C-level positions and higher, although inclusion in the top echelons is hugely significant. It is also about coming up with new products and services that help advance the lives of women and children.
Change has already arrived as investors seek ever more transparency and increasing gender inclusivity.
Some countries already have passed laws that legislate company boardrooms must include a certain number of women. Mostly though, the journey towards gender equity is not being driven by national governments or public-sector pressure, everyday citizens are the ones demanding change from the companies that provide our goods and services. The reasons to continue striving for gender equality are twofold. Firstly to create a better world and secondly create better-performing, more innovative companies.
On Average, Gender-Diverse Businesses Outperform
According to recent research, the more female balance that a workforce incorporates has a direct relation to superior average financial performance. Based on this industry research, the top third of companies with the highest number of women on their workforce and other metrics of gender diversity showed more than a 2% higher average relative return than similar competitors. Over a more extended period of several years, businesses with higher levels of gender diversity produced a one-year return on equity that was slightly over 1% better than companies with low to no female employees.
Why Gender Diversity Could Lead to Better Performance
Diversity in general, and gender diversity, in particular, have been linked with better performance and higher levels of employee engagement. Remarkably, there appears to be a statistically more significant correlation between diversity practices and employee engagement, for all employees, irrespective of gender. Happy employees work harder, longer and build better products. As it is considerably more expensive to hire, train, and bring on new workers than to keep the ones you already have, by keeping your workforce motivated, happy, and engaged can reduce one of the central business expenses, thereby increasing bottom line performance.
The right work-life balance, a flexible working environment, and available parental leave are factors in delivering outperformance for several reasons, including assisting businesses to attract the best talent in competitive markets. This advantage gives businesses an edge in attracting the employees they need—particularly in countries that have an aging or declining workforce to source from.
A more diverse business outlook can enrich decision making and increase innovative abilities to create new products and services. If everyone involved in the discussion has comparable experiences and viewpoints, you could have inadvertent blind spots in your decision-making process.
Servicing a broader client base:
If men are attempting to design products for women and girls, they may well not be as tuned in to that market or as successful as a group of people who more closely understand and relate to that client base. Tapping into markets that have previously been overlooked can add additional new revenue to a bottom line.
When companies are going through controversies surrounding issues such as gender pay gaps, employee disenchantment, sexual harassment lawsuits, equal opportunity litigation, and the like, everyone in the world seems to notice. While these concerns can arise at diverse businesses, many investors prefer to see that companies have a solid track record for supporting diversity.
Impact investing enables us to use our financial might to promote change and help alter environmental and social practices. Gender diversity is one change for the better that we can influence to some degree by how we invest.