There’s a sweet spot for gender diversity in the workplace, finds BlackRock – get it right and you’ll outperform your peers

Having a diverse workforce is good for a company’s bottom line, a new report suggests.

In its paper, Lifting Global Growth by Investing in Women, asset management firm BlackRock finds that greater gender diversity can boost company performance and economic output.

The paper uses data on women in the workplace to set out its evidence, as this is the most available data on workforce diversity.

Employing a high percentage of women isn’t what boosts your business performance.

In fact, BlackRock’s report shows that it’s companies in the middle – those who neither have the highest or lowest percentage of women – who perform best.

This ‘sweet spot’ shows that it’s diversity that counts, rather than the prevalence of women or men, the firm says.

Companies with the most diverse workforces outperformed those with the least diverse workforces by an average of 29% a year between 2013 and 2022, the research finds.

Diverse workforces can boost economic output by tapping into different perspectives, experiences and underused talents, BlackRock says.

Women globally are almost level with men in terms of their participation in the workforce, BlackRock finds.

At least 40% of women in most countries go to work.

But regions and countries show “significant disparities”. Women are a very low proportion of the workforce in some large emerging markets, especially the Middle East, North Africa, South Asia and Latin America. Women make up only 23% of the total labour force in India, for example.

Employing women and diverse workers at all levels of an organization is key to improving financial performance, BlackRock’s data shows.

Typically more women work in clerical roles and fewer work in senior and managerial roles.

But firms with workforce diversity at all levels outperformed less diverse companies by an average of 1.2% between 2011 and 2022.

European and North American organizations outperform most in this measure, by 2.1% and 1.5% respectively.

Asian markets show the smallest degrees of outperformance, including 0.2% in Japan.

Women lead only 6% of the world’s biggest corporations in the role of chief executive officer (CEO).

Yet companies with women CEOs have “almost consistently” outperformed companies run by men over the past decade, BlackRock says.

Women CEOs are more prevalent in some countries than others. Finland, Norway, Sweden and Singapore have the highest percentage of women CEOs, while Spain, Italy and Israel have none. In the US, 7% of companies had women CEOs in 2022.

When millions of women and girls lose out on economic access and opportunity, it has “wide-ranging consequences” for the global economy, the World Economic Forum says in its Global Gender Gap Report 2023.

Improving access to affordable childcare, better parental leave policies and supporting the care economy are the kinds of government policies that can help women get into work, it says.

To improve workforce diversity, some governments are also taking more gender equal approach in areas including pay equity, health and safety standards and preventing harassment and sexual violence at work.

A strong gender strategy is increasingly seen as “essential to attracting the best talent and ensuring long-run economic performance, resilience and survival,” the Forum says.