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Morally and ethically, pushing for parity between women and men in senior business positions is clearly the right thing to do. What also makes the benefits of gender parity compelling is the impact it can have on the commercial performance of businesses — diversity and inclusion can make companies more profitable, innovative and respected.[i]
With a clear moral and commercial advantage to involving more women at a senior level in business, the question remains: why don’t more firms embrace it? Following this year's Women in Business research, we explored the relationship between the levels of women in senior positions and how this impacts commercial performance, including profit expectations, among mid-market businesses.
Diversity in a company has often been linked to performance; a variety of voices at a senior level is thought to lead to better decision making and therefore higher performance.[ii] This year, the global percentage of women in senior management reached 33.5%. We found that among mid-market businesses who are expecting profits to increase over the next 12 months, there is a higher level of women in senior management (35%).
As Dan Holland, Audit partner and Head of ED&I at Grant Thornton Ireland, says: “Having more female senior leaders within an organisation, and a better balance, leads to a greater diversity of thought and a better discourse. This is going to lead to the development of a stronger overall commercial strategy.”
Not only do mid-market firms with higher levels of women in senior positions say they expect to increase profits, they are also poised to invest more. Of the firms that expect to increase investment in staff skills, technology, research and development (R&D) and employment, 35% of senior management positions in those firms are held by women. This is above the global average. Leadership teams with high levels of female involvement are clearly optimistic about the future. Their ambitious approach to investment shows that they are working to expand and improve their organisation to get ahead of competitors in their markets.
Greater diversity brings different perspectives to the boardroom. Ensuring a more diverse range of voices are involved enables companies to better connect with consumer needs and understand the divergences and nuances.[iii] This can be advantageous for international business – something which we know is already a key priority for the mid-market.
Michelle Alphonso, Partner, National transaction advisory services and Private equity leader at Grant Thornton Canada, highlights: “Having people at the table with unique experiences and different perspectives enriches decision making. In the long run, this cultivates an environment for more genuine and varied forms of leadership to flourish.”
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In looking at the impact of women’s leadership on performance, it is crucial to understand the positions they hold (or don’t hold). Despite increased levels of women in leadership at mid-market firms, there have been drop-offs in roles which are instrumental in setting the direction of the company and will have the most significant impact on overall business performance.
In particular, the percentage of businesses where women hold the CEO position dropped from 28% in 2023 to 19% in 2024. There was also a fall in the percentage of businesses with a female COO, from 25% to 23%. The situation, however is nuanced, with some industries having above average numbers of women in some of these key positions but falling short in others.
In financial services, there is a big emphasis on measuring and quantifying performance. Consistent performance measurement helps women rise to leadership positions; however, if interrupted due to a career break for child rearing, caregiving or other reasons, it may make it difficult to demonstrate success, and subsequently secure promotion.[iv]
Added to this, when women in the most senior positions decide to leave their role, there is often not a female replacement lined up. In an index of global financial services firms, despite a turnover of CEOs of 4%, just 8% of new CEO appointments went to women.[v] This goes someway to explaining the reduction of female CEOs in asset management firms, down from 31% in 2023 to 20% in 2024 and in banking, where it fell from 44% in 2023 to 35% in 2024.
Despite the drop in women holding CEO positions, participation in the roles of CFO and COO in banking and asset management has increased. For banking, women holding the position of COO has increased by 8 percentage points since 2023, and in asset management women holding the position of CFO has increased by seven percentage points. This suggests there have been significant recruitment decisions taken to increase the number of women holding these positions over the last twelve months, bringing a critical female voice to future decision making.
In mid-market financial services companies, a third of senior management roles are held by women. This is in line with the global average, though with significant strides being made to promote women in the workplace,[vi] the outlook for women is improving in the sector.
The financial services sector is set to invest heavily over 2024, and above the global average. Among all mid-market business in this sector, 62% say they will invest in R&D (compared to an average of 52%), and almost three quarters (73% compared to 61% globally) expect to put more investment into technology, undoubtedly with many wanting to harness the emerging power of AI.[vii] When it comes to investing in staff skills, 62% of financial services companies say they want to boost the capabilities of their workers.
Firms in financial services might do well to invest in their female workers and look to increase the number of female voices around the table when it comes to investment decisions. A study by Goldman Sachs found that a significant volume of female-managed hedge funds outperformed their male-led counterparts.[viii] And in the turbulent markets of 2022, when Covid impacted businesses, equity funds led or co-led by women suffered narrower losses than purely male-led teams.[ix]
Further reasoning for this includes more senior leadership diversity leading to greater innovation and therefore likelihood of higher profits, as well as creating an environment of inclusion and diverse decision making which can enhance performance and profitability.[x]
Pallavi Joshi Bakhru, Partner and India-UK corridor leader at Grant Thornton Bharat, comments: “More diversity helps better decision making and when you are making better decisions, you're more intuitive of how the market outside looks. You have better sight of what lies ahead and are more optimistic. You end up doing the right things and I think that this in some way would correlate to profitability.”
Our International Business Report research shows that businesses that are more optimistic about their expectations for profit are the ones which have more women in senior leadership positions. These firms, where men and women work together to make decisions, are also those that will more likely invest in the future growth of their companies, planting the seeds for greater profits in the future.
The results of the recent Women in Business research from Grant Thornton show that two thirds of senior management positions are held by men. Globally, that leaves businesses significantly short of parity, and therefore missing out on a lot of potential growth and profits. In the case of financial services, harnessing the capabilities of balanced senior teams has the potential to impact the bottom line and also the performance of the financial products people rely on.
To find out three ways in which your business can be part of the push towards parity read our full Women in Business report.
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i. weforum.org - How gender diversity at the top can boost the bottom line - and improve the world - 29.04.19
ii. forbes.com - One More Time: Why Diversity Leads To Better Team Performance - 24.01.24
iii. weforum.org - Why diversity within your organization matters - 12.12.22
iv. ft.com - Female leaders face built-in career blocks from the start - 11.06.24
v. russellreynolds.com - Global CEO Turnover Index
vi. forbes.com - Global Financial Services Firms Are Gender Balancing. At Last - 29.06.21
vii. statista.com - AI adoption by industry/function in global organizations 2022
viii. ft.com - Female-managed US funds outperform all-male rivals - 06.09.20
ix. invmetrics.com - Women Portfolio Managers Outpace Men’s Performance in Down Market - 02.11.22
x. cnbc.com - Why companies with female managers make more money - 02.03.18
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