Gender diversity = Good business

By Loretta McCarthy, Managing Partner, Golden Seeds

October 29, 2019

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Founders just starting a new company, or even those looking to keep more established companies successful, have a lot to consider: improving their products, hiring and keeping the best management team, how they’ll take their products to market, and hundreds of other concerns. At Golden Seeds, we believe very strongly that one of the things on the list — high on the list, in fact — has to be gender diversity. It’s certainly high on ours.

More than that, gender diversity is baked into our investment thesis; we believe it’s absolutely crucial for any company to have success. And it’s never too early to start thinking about it. After all, if you start putting a gender diversity plan into action during the earliest stages of your company, it’ll be easier to make it part of your corporate culture: You can make it an integral part of what you are building, and whom you hope to attract.

Research has proven, again and again, that gender-diverse management teams and boards of directors link directly to more success. But how? In this blog we’ll investigate a few areas where gender diversity can help your company thrive, and give you the data to back it up.

Diversity = better talent

When Gender Diversity Makes Firms More Productive, a research article by Harvard Business Review shows it clearly: diverse workplaces attract top talent.

Glassdoor study cited in the report shows that 61% of female job candidates — and a full two-thirds of overall candidates — consider the gender diversity of an organization’s leadership team when making a job decision.

The takeaway? The best of the best prefer a diverse workplace. It follows, then, that if you want the most talented candidates to consider your company, make sure you’re actively creating a gender-diverse workplace.

Diversity = innovation

If gender diversity can help you attract and retain the best people, it only makes sense that those companies that value and curate diversity will become more innovative and create better products.

Gallup’s The Business Benefits of Gender Diversity report follows the logic to get us there. To start, it’s pretty obvious that simply ignoring half of your potential workforce across the globe is bad business (to say the least). As more and more companies recognize this, they tend to consider and hire more women at all levels, leading diversity to build on itself.

As this diversity builds, along with a greater number of leaders with diverse backgrounds and different experiences, it will lead to work environments where new and creative ideas are given true consideration, from a wider range of people.

As the report says, “Men and women have different viewpoints, ideas and market insights, which enables better problem solving, ultimately leading to superior performance at the business unit level.”

Diversity = investor value

So, gender diversity helps you hire and keep the best people, those employees who will innovate and create better products. It follows that better, more innovative products, will be good for your investors.

It seems that investors have caught onto this idea. According to HBR, they are more likely to value diverse companies highly, and the numbers back it up. Research shows that a 10% increase in gender diversity — measured by Blau’s gender diversity index, which measures the ratio of men and women at a firm — delivers about a 7% increase in a company’s market value.

The bottom line

All this is great news for those who hire gender-diverse workforces and management teams. But, high on the list of what we all really care about is the bottom line: How our company performs financially. It has to be, or else we have no business. This is where gender diversity shows its value. Simply stated, according to McKinsey’s delivering through diversity research study, companies with diverse leadership — including gender, cultural, and ethnic criteria — do better financially. They are more profitable. They are more likely to outperform their margins.

The McKinsey study’s numbers are striking. Worldwide, companies in the top quartile based on executive-level gender diversity were:

● 21% more likely to out-perform their fourth-quartile industry peers based on EBIT margin

● 27% more likely to outperform those fourth-quartile peers in longer-term value creation

We’ve recognized the value of and practiced gender diversity at Golden Seeds since Day 1 in 2005, and research continues to support this belief. As the McKinsey study says, “We found that having gender diversity on executive teams, specifically, to be consistently, positively correlated with higher profitability across geographies in our dataset.”

We couldn’t have said it better ourselves.