Diverse Boardrooms Lead to Higher Profit


A recent study by international advisory firm Grant Thornton, titled “Women in Business: the Value of Diversity,” reveals that companies with women in executive roles outperform those with all-male boardrooms. The study included companies from the U.S., U.K. and India focusing on day-to-day business operations, and discovered that companies lacking diversity at the executive level lost out on billions of dollars in 2014.

The report found that while the high majority of companies studied have women on their boards, only a miniscule amount have women in executive roles. Furthermore, companies with at least one woman board executive outperformed those with male-only boardrooms in all three of the evaluated countries.

In the U.S., S&P 500 companies with female executives bested their all-male counterparts by 1.91 percent. In total, the cost of business for companies without female executives in these three countries was $655 billion in 2014, with the U.S. accounting for 567 of those billions.

Grant Thornton encourages companies to go further than simple implementing diversity in non-executive positions, stating, “Diversity in decision-making boosts performance so if your board is male-only it could be underperforming.” To investors, the firm suggests pressuring companies to diversify their boardrooms at the executive level, and urges them to not wait for legislation to begin forging progress.

When we consider that this study focused on large companies, it sheds light on the importance of discovering the diversity statistics, and their impacts, within mid-sized and small companies. As the report reveals, diversity leads to better business and higher profits; so, not only is the presence of women in executive roles warranted from a diversity and inclusion standpoint, it is also exceedingly pragmatic.

To learn more about the benefits of diverse boardrooms and read Grant Thornton’s study in full, please click here.

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