Companies with more women in leadership positions are likely to experience better financial performance, according to the CEO of non-profit organization Women Who Code.
Speaking to CNBC’s “Capital Connection” on Friday, International Women’s Day, Alaina Percival said companies have a “fiscal responsibility” to seek a gender balance in their top ranks.
“Companies experience a higher (return on investment) when they have women represented at the board, at the executive level, and on teams in general. So really, companies have a fiscal responsibility to have balance because it’s better,” Percival said.
Her sentiment is echoed by research from New York-based index company MSCI. According to a 2015 study from the firm, companies with “strong female leadership” generated a return on equity of 10.1 percent every year, compared to 7.4 percent for companies without.
For that research, “strong” representation was defined as a company’s board having three or more women, or the board’s percentage of women exceeding the country average.
The challenge of tech
Gender balance is especially important for the tech sector, Percival said. Companies need to take “aggressive measures to adopt best practices,” she added, saying that could include equipping women with skills and knowledge required to enter the technology workforce.
“What we’re going to be seeing is every industry becomes a technology industry. Looking forward, 10, 15, 20 years from now, having a technical background and an understanding of technical knowledge will be a basic foundation that executives need to have to lead the company,” she said.
Yet even as companies are starting to see the increasing importance of equal gender representation, Percival said the message is “getting through slowly.”
“Companies understand that they need to be making change — but most companies don’t understand how to accomplish that yet,” she said. Organizations have not built up the necessary budget to really see a big change, she added.
However, Percival acknowledged that it would take time for the results to show, and for women to be well-represented in the technology sector.
“Change also takes time, because it’s not just the number of people you hire, or the way that you’re paying,” she said. “It’s also the culture inside the company and inside of society.”