New Australian research shows direct proof for the first time that companies do better when they appoint more women to leadership positions.
The study, based on six years of Australian companies’ gender reporting to the federal Workplace Gender Equality Agency, has established that companies who appointed a female CEO increased their market value by 5 per cent — worth nearly $80 million to an average ASX200 company.
Increasing the number of women in other key leadership positions by 10 per cent or more, meanwhile, increases a company’s market value by 6.6 per cent or an average $105 million.
The study, led by researchers Rebecca Cassells and Alan Duncan from the Bankwest Curtin Economics Centre at the Curtin Business School, is a world first because of the causal role it identifies between greater gender diversity and business success.
While other studies have concluded that such a connection is likely, the data provided by the WGEA allowed real case studies and leadership appointments to be tracked over a number of years to establish direct proof of the link.
“The strength of this research, the strength of this information that we launch today, shows that if you improve your diversity you get better results,” said WGEA director Libby Lyons.
Ms Lyons said while the headline data concerned gender, the principle demonstrated was about diversity, and leadership in organisations reflecting the community.
“If you’re a member of a board or a CEO or executive and you don’t take notice of what this report is telling you, then you are not meeting your obligation to your shareholders or your owners.”
Of the 11,000 organisations from which the WGEA annually collects gender data, around one third currently have not a single woman on their boards.
Of the ASX200 — Australia’s biggest companies — 34 currently have only one female board member, and four have no female board members at all, according to the latest data from the Australian Institute of Company Directors.
Those four are the New Hope Corporation Ltd, Pro Medicus Limited, Silver Lake Resources Limited and TPG Telecom Limited.
The study finds that increasing the number of female board members by 10 per cent or more produces 4.9 per cent boost to a company’s market value.
“If I were a shareholder and there were no women and no diversity, I would be agitating big-time right now,” said Ms Lyons. “Because it’s irresponsible. Really, it’s irresponsible to shareholders to ignore a report such as this.”
Ms Lyons said the report also had lessons for other bodies including the Parliament and executive decision-making bodies.
Federal Cabinet’s key “razor gang”, for instance, the Expenditure Review Committee, which makes final decisions about Commonwealth expenditure, has since a restructure late last year consisted of five men and no women.
The study demonstrated that companies who reduced their numbers of women in key leadership roles suffered a loss in value as a result, of around 3 per cent.
“What our research shows clearly is that broadening the talent pool drives better company performance and one of the most obvious ways to do this is by having more women at the decision-making table,” said Ms Cassells.
“Balance is the key and like good public policy, good business must start with gender equality in the leadership ranks. If women aren’t included, then we’re missing half the population, half the ideas and half the talent.”
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