Reading a report on the performance of S&P 500 companies, a specific graph caught my eye. It showed that when it came to 10-year returns, companies with women CEOs at the helm outperformed those with men in similar roles. Interesting!

Harvard Business Review also reported a study with the conclusion that “Going from having no women in corporate leadership (the CEO, the board, and other C-suite positions) to a 30% female share is associated with a one-percentage-point increase in the net margin—which translates to a 15% increase in profitability for a typical firm.”

But what comes as an anticlimax is the fact that in the same graph, we find that women hold only 41 of the CEO positions at the S&P 500 companies. The surprise does not end with this. I found that back in 2018, the year had ended with 31 female CEOs in S&P 500 companies. Which means that in the last five years, we have seen an addition of only 2% to the number of female CEOs in S&P 500 companies!

We need to find out why the score got worse and understand the rationale behind the gender-based pay gap in the industry.

Gender inequality has always been an issue since women started to work in corporates that are perceived to be modern in their mindset. While diversity norms have kept the numbers at a decent level, most women have been given roles involving lesser grade administration. It has been only recently that we have started to see women getting represented at the board level. But unfortunately, data shows that CXO positions still seem distant.

It will be difficult to find out why female CEOs have performed better, but even without getting into the analysis, I feel that diversity can only bring in a positive change.

I have read several articles that suggest women may bring a longer-term vision to the business when they join the leadership. To cite examples, PwC’s 2022 Board Member Survey found 66% of female directors prioritize climate action, even at the cost of near-term financial gains. Two academic studies (Al-Najja & Salama, November 2022 and Altunbas et al, 2022) have mentioned that having more women in senior leadership roles helps better corporate environmental performance.

Approaches like these might translate to greater value to the business in the eyes of its investors and other stakeholders, because, as I have been writing in my other blogs, all of them give more importance to long-term sustainability than short-term profits.

So, I strongly feel that the day is not far when we start seeing investors using their power to ensure a better gender ratio at the CXO levels.