Why more women in top finance jobs will benefit everyone
After a long career in investment banking and asset management, I find it difficult to ensure that gender parity in general management is still far away, even unattainable, and therefore crippling for companies.
As an investor, I have participated in hundreds of meetings with management teams. I was eager to ask a specific question about culture, a simple question that often surprises them and can say a lot about their businesses: How do you treat your employees?
I generally found that men gave a one-dimensional response that highlighted rigid appraisal processes, being lean, or keeping salary expenses low. They would neglect to talk about the non-financial aspects that generate long-term value, such as what it takes to attract and retain top talent.
Female managers – who were few in number – were more likely to answer the same question with holistic answers on security, flexibility, diversity and inclusion, competitive compensation and corporate social responsibility in the community within the meaning large. Areas that are all growing in importance in attracting the best people who will ultimately create future returns for shareholders.
As management thinker Peter Drucker put it, “culture eats strategy for breakfast”. This doesn’t mean that strategy is trivial, but that a culture of empowerment is paramount for success.
When I ask the management of our holding companies, they normally expect questions about the hard things that determine shareholder value – sales, profit margins, capital expenses, costs and tax rates. . However, behind these tangible elements are people. People who make decisions at the strategic and tactical levels. Without the best people, you may not be successful.
My anecdotal evidence is largely supported by research, which shows that involving men and women in decision-making broadens perspectives, increases creativity and innovation, diversifies talent and skill pools and reduces conflict. It improves both the process and the results for the benefit of shareholders and other stakeholders.
Women are better able to manage difficult personal relationships, are more attentive to the needs of people, are inclined to prevent and resolve conflicts, share their views more easily with others and strive to achieve a deal. They also monitor and give feedback more often.
Shareholder value can be measured relatively easily, but creating it is very complex. Behind the result is a web of multidisciplinary forces such as science, psychology, finance and even luck and chance. These require diversity of thinking and should make it obvious to include both women and men in leadership positions.
It’s no secret that investors are looking for companies to create and maintain value. If you think about the role of the CFO in this regard, and the speed with which he has moved from communicating annual accounts to now also covering the impact of the company on the health of our planet, I see it both fascinating and particularly well suited to women. Whereas previously a company only needed profitability for a license to operate, today it also has to act sustainably. This means, for example, not using up natural resources faster than they can be replenished.
The idea that women are a good fit for a CFO position is also supported by facts.
A 2019 study by S&P Global Market Intelligence of 6,000 companies in the Russell 3000 Index over 17 years found that within 24 months of the appointment of a female CFO, company profits increased on average. . 6 percent, and stock returns improved 8% over their male predecessors.
In the face of this evidence, it is surprising why more women are not CFOs. Although we hit an all-time high this year with 90 female CFOs in the S&P 500 – 18% of companies – I think this proportion should be reversed. Investor pressure for greater gender parity must persist.
Peer pressure will also benefit women, as top companies like Microsoft, Nvidia, Cisco, Staples, GE, Diageo, Estee Lauder, GM and Coca-Cola lead the way with female CFOs – and others will follow.
A 2017 report by Harvard Law School found that about one-third of the CFOs of 289 large-cap U.S. companies surveyed held positions outside of the board. Therefore, not only are women well suited for the job, but the role of CFO is a good stepping stone for women who want to rise to the top of the business.
It is therefore all the more important that the relatively low representation of women as CFOs, despite their skills and good performance, becomes a thing of the past.
The writer is Director of Investments at Skagen Funds