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Want better profits at less risk? Just hire more women

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The International Women’s Day was globally celebrated on March 8, commemorating struggles and accomplishments of women, while seeking untapped potential and opportunities that await future generations. It is clear in Kenya and other countries that women are a strong power of change.

“The woman is a powerhouse of creativity, development and peace. Conflict between men and women is, therefore, unnecessary because a woman brings an equal and powerful complementarity to the common human condition,” wrote the late award-winning author, medical doctor, and world-renowned pro-life advocate, Dr Margaret Ogola.

 

Yet when it comes to leadership in business, women are still trying to find space at the high table in Kenya, making a tiny percentage in management and boards even for listed companies. Recent research will however compel companies to hire more women since, as it notes, they bring in more money than their male counterparts.

Workplaces that are evenly split along gender lines are more productive and help the company’s financial performance, compared to offices that lack gender diversity, according to the study co-authored by a Michigan Institute of Techology (MIT) researcher. And all-male or all-female workplaces that shifted to a more balanced gender ratio increased revenue by roughly 41 percent.

These findings are based on analysis of eight years’ worth of revenue and employee survey data. Sure, the findings may be specific to one firm in one industry, but they’re a clear indication that “companies really need to start considering whether introducing more diversity and benefit their bottom line in ways they may not be able to predict or understand,” said Sara Ellison, the study’s co-author and an MIT economics senior lecturer.

Another research from Peterson Institute backs this emerging trend. Researchers there find that having more women in the senior management ranks of a company (please note, not so much in the C-Suite) increases the profitability of a firm.

Companies with 30% female executives rake in as much as six percentage points more in profits, according to a study, feeding into a global debate over the scarcity of women in decision-making business roles.

The conclusion stems from a study of about 22,000 publicly-traded companies in 91 countries ranging from Mexico to Norway and Italy conducted by researchers at The Peterson Institute for International Economics, a Washington, DC-based think tank.

Gender diversity

An interesting and useful finding is that:  “If you’re a firm and you’re discriminating against potential female leaders, that means you’re essentially doing a bad job of picking the best leader for your firm,” said Tyler Moran, one of the study’s three co-authors, in an interview. The results indicate the presence of women in corporate leadership positions can boost a firm’s performance, suggesting a reward for policies that facilitate women rising through corporate ranks.

That all seems remarkably logical and as the authors themselves say:

“We believe that there are at least two channels through which more female senior leaders could contribute to superior firm performance: increased skill diversity within top management, which increases effectiveness in monitoring staff performance, and less gender discrimination throughout the management ranks, which helps to recruit, promote, and retain talent. Because gender-biased firms do not reward employees with responsibilities commensurate with their talent, they lose out to rivals that do not discriminate. Their lack of gender diversity affects the bottom line.”

Even leading businessman Chris Kirubi knows that. “Africa needs to give their women equal rights, equal opportunities because many women have leadership quality and those who have not practiced their leadership quality should be allowed to show it and use it; I think Africa will only be one of the most developed nations if we allow our women folk to be equal to the men,” Mr Kirubi said recently at an international forum.