How Companies Might Boost Their Returns -- But Don't

Are you an investor out to find compelling stocks and score big returns in the stock market? If so, you should want to invest in companies that identify ways to outperform their competition.

Yet there's one way that some companies have boosted their financial performance that many others aren't capitalizing on: bringing more women onto their boards of directors. Following up on past research, the folks at Catalyst did a study two years ago showing that the 25% of companies with the most female board representation far outpaced the 25% with the least in several key performance measures, including the following:

Data: Catalyst.

Sadly, too many companies still aren't acting on this data. According to Catalyst's latest research, while women make up about 50% of the American workforce and influence more than 70% of household spending, they're not very well-represented on corporate boards:

• Women held just 15% of board seats, and this level hasn't changed much in five years.
• While nearly 90% of companies had at least one female director, less than 20% had three or more.
• Only 2% of board committees are chaired by women.

What to do
Here's a quick look at some well-known names and their female board representation:

Data: Company reports.

The results of just this small sample are interesting. You might think that a hip, forward-looking company such as Apple would feature more women than Berkshire Hathaway, an older company focused on such areas as insurance, railroads, and furniture. You might also expect that a company such as Avon, which caters to women, wouldn't have a board that's less than half female. You might argue that many of these companies are strong performers, regardless of their boards' makeup -- but I'd counter that perhaps they might do even better with more female representation.

(There's proposed legislation in France to mandate a 50/50 gender split on the boards of publicly traded companies. Is that the way to go?)

As you study and invest, look for companies that are leading the charge toward including more women among top decision makers. They may well be the best performers in the future.