Assessing diversity: A three step approach to finding an inclusive workplace.

An inclusive and diverse workplace is understandably desirable, but finding companies that actually offer one can be tricky.

Wanting to work for a company with an inclusive and diverse culture seems an obvious decision to make. But arguably finding such an environment may not be as straightforward.

However, research has shown that stronger gender diversity in the workplace translates into higher and more sustainable performance. Over recent years it has been well-documented that companies with a better gender balance in senior roles, are more successful – and on a number of levels.

Generally, such firms enjoy higher returns on equity, are less likely to take on excessive risk, display greater innovation and have a better client focus.

For example, a new study from McKinsey & Co. found that corporations in the top quartile for gender diversity on their executive teams were 21% more likely to experience above-average profitability than companies in the bottom quartile.¹

A separate analysis from the Petersen Institute for International Economics concluded that a move from having no female leaders to 30% representation is associated with a significant 15% increase in net revenues.²

When it comes to making investment decisions, we have a number of filters which potential holdings need to pass through. Our criteria are actively measured against our investment universe – the MSCI All Country World Index – and this includes the percentage of women on boards and of female senior executives. Our intention is to raise standards in terms of gender diversity and to continue asking questions about how companies are tracking improvements in this field.

But if you are a graduate entering the working world for the very first time or indeed, if you are looking to make a career move and want to work for a company where diversity is a key priority, it may seem difficult to assess the culture of the company beforehand. Below we outline three factors to look out for and consider.

What’s the big picture?

Taking a look at female representation on a firm’s board and executive committee is a great starting point. I like to see at least 20% female representation at board and executive levels – and have a minimum 10% threshold for emerging markets. For my part, when it comes to assessing a company, it’s not just about examining diversity levels but looking at what positions a firm’s female employees hold.  What are the roles the most senior women in the organization occupy? It’s usually a strong sign to see women in the C-Suite or women heading-up divisions, which are traditionally dominated by men – for example, technology and/or finance departments.

Studies show that corporations with at least one woman on their board outperformed the Credit Suisse Gender 3000 universe by 40% or 3.5% per annum between 2006 and 2016. In addition, those with more than 33% women in senior management positions outperformed by 3.8% a year between 2009 and 2016.³

Notably the MSCI All Country World Index, more than half of the companies, or 1,404 out of 2,492, have less than 10% women at board and senior executive levels.⁴

Look beyond face-value

Take a look at a company’s core policies too. For example, check whether there is a real framework within a firm to push for greater gender diversity, and if so what sort of targets do they have? In addition, are such strategies endorsed and driven by company leaders or is the topic left to human resources to be deal with? Many companies publish corporate and social responsibility reports, which can provide you with a decent enough picture but research look at the media too, to see what else they do.

What about advocacy?

When you see companies becoming more transparent, on a voluntary basis, it is very encouraging – as transparency is a key motor for change. We are starting to see more and more companies going above and beyond the minimum requirements, to promote and sponsor extra initiatives. For example, we ask if a firm is a member of an organisation like The 30% Club, which launched as a campaign in the UK in 2010. It started with the aim to encourage a minimum of 30% women on FTSE 100 boards – and it has been very successful in doing so. Indeed, currently the figure stands at 27.9% up from 12.5%. It is now pushing up to the next level, with targets stretching to the FTSE350 and to the executive committee team.⁵

There is also EDGE Certification, which was created to help businesses, not only build a better workplace for women and men but also benefit from it.

While it’s essential that we can see diversity at the top level of firms, such a scenario is not always going to present itself. But the situation is improving and we believe the direction of travel is only heading one way.

More so than ever, thanks to government actions on increasing transparency, thought-leading organisations paving the way ahead and passionate individuals wanting to make a difference, today’s young graduates have greater visibility into the culture and practices of corporations they are looking to join. So make sure you do your homework and hopefully you will be greatly rewarded!