Is Market Performance a Women's Issue?

In an article NOTE - This link will open in a new tab. recently published by the International Monetary Fund, president Christine Lagarde advocates for greater participation of women in the labor force. "It's good for growth", she writes, "IMF studies NOTE - This link will open in a new tab. have shown significant macroeconomic gains when women are able to participate more fully in the labor market", adds the French diplomat.

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As the adjacent table shows, women's participation rate is far from consistent in OECD countries and globally. However, we can see that the Scandinavian countries, which are known to offer women more space in the labor market, have a better economic performance. For example, GDP per person in Norway was $103,000 in 2013, about twice that of Canada.

What is all the more fascinating is the microeconomic impact that women have on business performance. A recent study NOTE - This link will open in a new tab. by McKinsey & Company in collaboration with, concludes that companies with a more diverse workforce perform better financially. However, independent investors rarely take this factor into account.

Today, women comprise 46% of the workforce in the United States. However, the glass ceiling is very real: the higher the hierarchy, the lower the proportion of women, attaining a meager 19% at the executive level. This is precisely where the problem lies.

The McKinsey study reveals that at the global level, companies that rank in the top quartile in terms of diversity generate a return on equity that is 53% higher than that of companies in the bottom quartile. For US companies alone, this difference is 95%.

Paradoxically, some of the best known companies - and the best performers - offer counterexamples. Among the 11 members of Apple's senior management, only one woman, Angela Ahrendts, holds a decision-making position. At Tesla Motors, there is only one woman among the seven top executives, and at Bell Canada there are two of them. Even at Facebook, a company whose operations director, Sheryl Sandberg, founded the Lean In movement, there are only five women in the top leadership of 22.

As the data shows, however, these companies would likely gain by diversifying their management team. Who knows? Perhaps they would generate higher returns than they have in recent years?

The management of a company is not just a matter of ethnic origin or gender: it must take advantage of the talent of people who have a role to play at specific times in the evolution of the business.

One needs no more than to step back and observe how listed companies perform to see that there are fundamental trends, particularly with regard to the positive impact diversity can have. This is one more factor to consider when selecting securities for your portfolio.

The author

Francis Gosselin

Francis Gosselin

President, FG8 Conseils