This article was first published as the Foreword to the Guardian Women in Business supplement in March 2009. The argument for gender-balanced leadership remains as relevant as ever, but the statistics and economic context below have been updated to reflect the UK in 2024.
As the UK navigates a cost-of-living crisis, sluggish growth and the lingering effects of the pandemic, it is time for the business world to review, learn and get smarter. Women in business are a critical part of the solution.
The evidence is now overwhelming that having more women at the top improves performance. Report after report confirms that boards and senior leadership teams with at least 30 per cent female members perform better across strategy, innovation and governance. McKinsey’s long-running research shows companies in the top quartile for gender diversity on executive teams are more likely to achieve above-average profitability, while the Chartered Management Institute estimates that the UK economy loses billions every year when skilled women are overlooked for promotion or leave the workforce entirely. The latest FTSE Women Leaders Review shows women now hold more than 42 per cent of board seats in the FTSE 350, yet they still occupy fewer than one in three executive committee roles. Progress at the very top has been welcome, but the pipeline to the chief executive’s chair remains narrow.
Darwin found that species-rich communities are more productive. That is true of business too. Diverse groups bring a wider range of experience, challenge groupthink and make better decisions under pressure. Research continues to show that gender-diverse leadership teams are associated with stronger financial returns, better risk management and higher employee engagement. In short, it is time to dilute and diversify the male monoculture still running too many of our companies.
Despite this, chasmic gender leadership and pay gaps remain across the business spectrum. The median hourly gender pay gap for all employees stood at 14.3 per cent in 2023, and women are still under-represented in senior executive, board chair and chief executive positions. More and more talented women are therefore opting out of traditional corporate hierarchies and building their own businesses on their own terms. There are now around 1.6 million women-led SMEs in the UK, contributing an estimated £85 billion to the economy each year. The Alison Rose Review of Female Entrepreneurship suggests that closing the entrepreneurship gender gap could add as much as £250 billion to the economy.
Those entrepreneurial women comprise a quiet revolution, changing the face of business from the bottom up. In common with women throughout the world, they invest higher levels of their wealth and time to support their community and family. They are also generally more values-led and at the forefront of ethical and environmental businesses. While women still own a minority of all SMEs, they lead an estimated 41 per cent of social enterprises.
In the Darwinian sense again, those women-led businesses are ‘fit’ and should be better able to survive economic turbulence. They tend to have lower levels of debt, are more likely to have business plans and processes in place, and to take up business support and training opportunities. Yet female-dominated sectors such as retail, hospitality, health and social care, and professional services have been battered by the pandemic, rising energy costs and labour shortages. During COVID-19, women were more likely to be furloughed and to take on unpaid care, and the subsequent cost-of-living squeeze has hit part-time workers and single-parent households hardest. Government support and procurement spending have not always reflected where women actually work and lead. With women more likely than men to work part-time, to shoulder caring responsibilities and to face a persistent pension gap, there are real worries that hard-won progress towards equality at work could still be jeopardised.
There is now no question that gender-balanced business leadership is important for business and social wellbeing. But it will not be achieved without smart actions that protect equality and get behind talented women.
What might those actions look like in 2024? Transparent pay gap reporting must be matched by clear plans to close gaps, not just publish them. Investors and boards should use the Investing in Women Code and the Women-Led High Growth Enterprise Taskforce recommendations to channel funding and mentorship towards female founders. Boards should also set clear targets for executive succession, not only non-executive appointments, and chairs should insist on diverse shortlists for every senior hire. Affordable childcare, flexible working by default and menopause-friendly workplace policies are no longer nice-to-have perks; they are economic infrastructure. And procurement teams should actively seek out women-led suppliers, not least because diverse supply chains are more resilient.
The original foreword was written at the depths of the 2008-09 financial crisis. Fifteen years on, the UK faces different shocks but the same underlying truth: economies and businesses thrive when they use the talents of all their people. Balance is not a quota or a public relations exercise. It is the soundest strategy we have.
First published as the Foreword to the Guardian Women in Business supplement, March 2009. Updated for Prowess in 2024.
