Female CEOs bring millions
New research shows Australian companies do better when they have more women in leadership.
Six years of data reported by Australian companies to the federal Workplace Gender Equality Agency (WGEA) shows companies with a female CEO increase their market value by 5 per cent – or an average of $80 million for an ASX200 company.
Having 10 per cent more women in other key leadership roles increases a company's market value by 6.6 per cent, or an average $105 million.
The study is one of the first to establish a causal role between greater gender diversity and business success.
Other studies have suggested such a connection, but the data provided by the WGEA allows for real case studies and leadership appointments to be tracked over a number of years.
“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.
“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.”
Increasing the number of women in leadership positions also increases the likelihood of companies outperforming in their sector on three or more key profitability and performance metrics. These include return on equity, earnings before interest and tax, sales per worker, return on assets, dividend yield and Tobin’s Q.
“More gender-balanced leadership will improve the bottom line and financial performance of any organisation,” Ms Lyons said.
“Workplace gender equality is not just about fairness, it also has a compelling commercial imperative. This research provides hard evidence that more women in top-tier management levels will deliver improved profitability for business.”
The analysis was undertaken in part by Bankwest Curtin Economics Centre (BCEC) Professor Alan Duncan, who says the findings show that Australian companies still have some way to go to achieve a better gender balance in key decision-making roles.
“Women are far less likely than men to be the Chair of the Board. While there has been progress towards a 30 per cent target for the share of women on company Boards, three in 10 companies in the WGEA dataset still have no female Board representation at all,” Professor Duncan said.
“Greater female representation on Boards and in senior leadership positions is better for business. Increasing the talent pool and taking into account the experiences and views of a broader group will ultimately lead to better decisions. This is particularly important as we look to rebuild our economy and broaden business and employment opportunities.
“We found that an increase of 10 percentage points or more in female representation on Boards led to a 6.0 per cent increase in the likelihood of that company outperforming its sector on three or more performance and profitability metrics,” he said.