Women on boards give companies a boost
A study published in 2020 by the Bankwest Curtin Economics Center and the Workplace Gender Equality Agency showed that having more women at the top meant better business performance, higher productivity and higher profitability.
It found that an increase of 10 percentage points or more in female representation on the boards of ASX-listed companies led to a 4.9% increase in the company’s market value. The appointment of a female chief executive has also been good for business, leading to a 5% increase in the market value of ASX-listed companies, averaging $80 million.
Dr Meraiah Foley, deputy director of the women, work and leadership research group at the University of Sydney’s business school, says it’s increasingly clear that diversity is good for people. businesses.
“Organizations that are open and led by people from diverse backgrounds are more innovative, resilient and profitable,” says Foley. “They benefit from the productive friction that arises when multiple perspectives and experiences are brought into play on difficult issues and are less susceptible to groupthink.”
Purpose Bureau research suggests that the benefits of board diversity apply to small and medium-sized businesses, not just large corporations.
Rhonda Brighton-Hall, co-founder of small tech and consulting firm, Mwah.live, says her company since its inception five years ago has sought to embrace diversity. It has four female and four male directors and seeks to recruit staff from a variety of cultural backgrounds.
“We deliberately recruit to be diverse,” says Brighton-Hall.
Having people with different life experiences makes the team better and fosters innovation, she says. “You lose blind spots if you are [not] everyone thinks the same,” says Brighton-Hall.
Emma Lo Russo, co-founder of Sydney software company Digivizer, tells a similar story. She believes that having a diverse management team is key to effective dialogue with staff and customers.
“If you don’t reflect your employees and customers, how can you make decisions? ” she says.
“There will be a bias that will always be there, no matter how empathetic you think you are, that voice won’t be there.”
Having “different perspectives” on the leadership team benefits the whole company, says Lo Russo.
But joint councils are the exception rather than the rule.
The Purpose Bureau study identified the gender of every director in nearly 900,000 Australian businesses across all industry sectors. It revealed that 68% of Australian companies had all-male directors, while 17% were all-female and only 15% were mixed.
The sectors with the largest share of joint boards were agriculture, forestry and fishing (22%) and financial services (20%). Male-only advice was most common in mining (81%) and construction (80%), while the highest proportion of female-only advice was in education and training (15%) and healthcare health and social assistance (15%). ).
Overall, the profile of Australian business leaders remains very gloomy. Kamper explains that this is partly due to the large number of small businesses and individual entrepreneurs in sectors dominated by male employment, while in sectors dominated by female employment there are a relatively small number of businesses.
“Male-dominated industries like construction account for the largest number of businesses in Australia, 11 times more than education and training which has the highest female representation,” he says.
“It does appear that the subcontractor economy is predominantly male.”
However, the gender balance at the board tables of Australia’s largest corporations has shifted over the decade.
In 2009, women held just 8.3% of the seats on the boards of the 200 largest companies listed on the Australian Stock Exchange (ASX 200). But that share had risen to 34.2% by November 2021, according to data collected by the Australian Institute of Company Directors. All companies on the ASX 200 now have at least one female board member.
Research by the University of Queensland School of Business found that Australia was one of the first countries in the world to achieve a target of at least 30% women on top corporate boards. listed, and this was achieved without mandatory quotas. Australia now has a higher proportion of women in large publicly listed companies than the average for wealthy member countries of the Organization for Economic Co-operation and Development.
Louise Petschler, chief advocacy officer at the Australian Institute of Corporate Directors, says the growing recognition of the benefits of board diversity by Australian companies is demonstrated by “how far we’ve come” in recent times. years.
“Diversity on boards is important because it leads to better business outcomes,” she says.
“Different perspectives around the board table improve the quality of decision-making by introducing new perspectives and lived experiences. Diversity in the meeting room also fosters an environment that encourages healthy debate and discussion, which again can lead to more thoughtful decision-making. »
There are still eight with all-male boards among Australia’s 300 largest listed companies (ASX 300), while across all listed companies there are 67 boards without women.
But there is pressure from the public and investors to appoint more female directors.
An ASX 300 company with an all-male board is Melbourne-based voice recording software provider Dubber Corporation. When this masthead questioned Dubber’s directors asking if there were any benefits to having an all-male board, a company spokesperson said he changed course. Dubber recently “began an international search” to find a suitable independent female director to join the company’s board.
When that happens, Dubber will join all 54 boards of Australia’s 300 largest listed companies with only one female board member.
Dr. Foley cautions that simply appointing a female director does not guarantee the superior performance associated with greater diversity.
“It’s about embracing everything that diversity entails,” she says. “It means recruiting for a diversity of opinions and allowing for that productive tension that can happen when you bring a range of perspectives and experiences to solve difficult problems. It cannot be done symbolically.
Research by Canadian academics Camélia Radu and Nadia Smaili underscores this point. They found that companies with at least three female board members were more likely to have adequate cybersecurity risk measures in place and to report significant cybersecurity breaches. But anything less than this “critical mass” of three female board members was not enough to reach the high level.
“A symbolic woman is insufficient to trigger greater cybersecurity disclosure,” the study published in the Business Ethics Journal. “Although visible, it has no impact on the decisions of the ‘old school club’.”
The benefits of diversity are not limited to improving the gender balance in directorships. Dr. Foley says companies with more racial and ethnic diversity in their management teams also outperform their less diverse competitors in terms of profitability.
Australia’s largest companies lag behind on this measure. A 2021 study of board diversity found that nine out of 10 ASX 300 board members were of Anglo-Celtic descent and only one out of 20 was under the age of 50. .
On current trends, it will take almost 20 years for the boardrooms of the country’s largest companies to reflect Australia’s cultural diversity, according to the report by Watermark Search International and the Governance Institute of Australia.
The Purpose Bureau study is just the latest to draw attention to how greater diversity in corporate leadership translates to superior performance. But many Australian companies – large and small – still have a long way to go on this front.
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