23 April, 2024

Research Data – Why Hiring More Women To Fill Top Level Roles Could Help UK’s Largest Companies Make Billions More In Profits

The UK’s largest companies that were listed on the FTSE 100 and FTSE 250 indexes with no women on their senior executive committees potentially missed out on some £47billion last year,

This was according to the gender diversity consultancy, The Pipeline, whose calculations used a recognised measure called net profit margin that estimates how much each pound of top line revenue translates into bottom line net profit.

Companies in the UK with no women on their highest senior committees had a net profit margin of 1.5 per cent. Yet those companies that had women in 33% to 50% of the most senior roles had a net profit margin of 15.2 per cent. That’s ten times greater.

And because The Pipeline’s research found that 15 per cent of major companies had no women in any of their top roles it means that if all UK companies had the same higher level net profit margins in the year to April 2020, they would all have made an extra £47billion in net profit.

The former prime minister, Theresa May, during her time in office, introduced a statutory requirement for all UK companies that had more than 250 employees to report their gender pay gaps.

This is based on research that found that in UK companies where women were in the most powerful roles they also tended to have more women at the top table.

UK FTSE 350 companies that had a female boss had an average of one in three women on their senior executive committees.

Whilst gender diversity has been a hot business topic in the City in recent years, The Pipeline’s analysis suggests that many firms will miss targets set by the  Hampton-Alexander Review. The Government-backed review is pushing for women to make up a minimum of a third of UK FTSE 350 company boards, executive committees and those reporting to the committee by the end of 2020.

There is still a way to go to meet these targets as the percentage of women on top teams was still only 19.8%. However at least it was 2.7% higher than last year.

So, the question remains. If money talks in business, why has this line of profitability not been followed by large UK companies?

Business Talk

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