What it found: better performance for companies that have women on the board (just as it found last time). But the bank also looked at women not on the board, and saw a link between companies with more female executives and higher returns on equity, higher valuations, better stock performance and higher payouts of dividends. "There's a very strong outperformance of companies that have women in management, particularly in operational roles," said Stefano Natella, Credit Suisse's global head of equity research.
For instance, when the bank compared companies where women make up less than five percent of the top operational jobs to those where more than 10 percent of these key positions are held by women, it found a 27 percent higher return on equity and a 42 percent higher ratio of dividend payouts for those with greater gender diversity. It also found that female CEOs make fewer acquisitions and more divestitures than their male peers do.
Studies linking company performance and female executives, rather than board directors, are not as common for several reasons. Board data is easier to access and cleaner to define, for one — since where to draw the line on who's a member of the senior team can be different from one company to the next.
Moreover, the influence of different board positions is relatively equal, whereas the power held by different senior management jobs can range widely. That makes the process of linking financial performance to the diversity of executives a little murkier. A woman who is a company's CEO, chief operating officer or head of a major business unit, for instance, exerts far more influence on the outcome of that company's results than its personnel chief or its head of public relations does.
To address this, Credit Suisse first examined how many women are in each type of role. Across all 3,000 global companies, it found that just 3.9 percent of CEOs are women. And only 8.5 percent of jobs leading major business units, and just 17.5 percent of top financial and strategic jobs, are held by women. Meanwhile, women hold 18.9 percent of "shared services" jobs such as those leading legal, human resources and marketing departments — career paths that less frequently offer a stepping stone to the very top.
Making these distinctions allowed Credit Suisse to see how a company's numbers fare when there are more women in the really big-gun jobs. For instance, the bank looked at stock returns and found that the more women whom companies had in the top three categories above (the jobs it calls the "front office"), the better the results.
In fact, the results were so surprisingly clear — see the chart below — that Natella initially questioned their accuracy. "It's almost as if there's a symmetry to it," he says. Companies where at least half of the key "front office" jobs were held by women had average annual returns of 28.7 percent, compared with returns of 19.1 percent for all companies, 22.8 percent for those where a quarter of the top jobs were held by women, and 25.6 percent where at least a third were filled with female execs.
Natella is careful to note that the study does not try to prove that more women at the top are necessarily the cause of better performance. Still, the correlation is striking, and further evidence that diversity may indeed have a very real payoff.
"You can argue whether companies are performing better because they have more women in management or because better companies employ more women," Natella says. But the effect, he notes, is the same, and the answer is probably that both are statements are true. "There's a point where you can put too much into trying to prove causality."