In light of recent national attention regarding women in the workplace, companies that refuse to diversify not only face public and private backlash—research shows they also make poorer decisions and fewer profits.

Betsy Feigin Befus
Betsy Feigin Befus

“Many studies correlate diversity with better business results,” says NMHC general counsel Betsy Feigin Befus, who is a member of the association’s Diversity & Inclusion Committee. “I firmly believe in that, but it’s very difficult to quantify.”

Consulting firm McKinsey reports a “statistically significant correlation between a more diverse leadership team and financial outperformance,” and investment data and analytics firm MSCI found that companies with strong female leadership (primarily measured by women on boards) have higher return on equity and fewer governance-related controversies. Credit Suisse found that firms where women make up half or more of senior management show average earnings per share growth of 11% over five years versus 4% for others.

In its analysis of 165 equity REITs from 2006 to 2017, Wells Fargo found that companies with more than the average percentage of women on their boards achieved higher average price and total returns and outperformed those with no female representation by 1.93 to 2.33 percentage points.

A Conference Board of Canada study of corporations with two or more women on the board found that these firms pay more attention to audit and risk oversight and more carefully monitor implementation of corporate strategy as well as ethical codes of conduct. Enriching the leadership palette with different perspectives, the group says, “enables constructive dissent that leads to board unity.”

“This is the right thing for business—there’s no other way to think about it,” Patricia Lenkov, president of Agility Executive Search, says. “The running joke is that if Lehman Brothers had been Lehman Sisters, it wouldn’t have gone the way of the dinosaurs.”