[ad_1]
Australian researchers have finally conclusively demonstrated the link between the presence of women in leadership and strong economic performance. Businesses that have appointed female CEOs in the past six years have increased their market value by five percent.
The study is based on data collected by the Australian Workplace Gender Equality Agency (WGEA), which was established under former Australian Prime Minister Julia Gillard back in 2012 and has been collecting comprehensive data on gender diversity in the workplace since 2014.
The agency surveys companies that have more than 100 employees, which is 11,000 companies in Australia including the ASX200. The aim is to “understand the depth of gender inequality in the workforce and take responsibility for improving equality through reported data,” Gillard says.
The latest report is based on an analysis of six years of data by researchers Rebecca Cassels and Alan Duncan of the Bankwest Curtin Economics Center at the Curtin Business School. According to Duncan, the goal of the study was to prove once and for all that women in leadership positions increase performance.
“We actually threw everything but the kitchen sink in this research to see if what we found was causal and statistically significant,” he said.
To this end, advanced econometric techniques were used to study the progress of executive appointments over an extended period of time, allowing researchers to move beyond likely correlation and establish causation.
The study is among the most conclusive in the world on the far-reaching benefits of female leadership. Duncan, Cassells and their team report that a female CEO could increase market value by 5%, which equates to around $80 million for the average ASX200 firm. Not only that, but companies that expand female leadership by 10% or more have market value returns of nearly 7%, averaging over $100 million. On the other hand, the researchers found that companies that reduced the representation of women in the top ranks experienced a 3% decrease in value on average.
A female edge?
There were undoubtedly exceptions to this trend, but Duncan emphasized that these were outliers compared to the thousands of firms surveyed. After observing this broad connection, researchers have sought to understand the reasons for better performance under female leadership, and observations have largely focused on a departure from traditional—and perhaps outdated—structures and mechanisms.
“The history has been that meetings have been repeated in the same picture. The consequence is that there can be laziness or an orthodox approach that can lead to poor results. There is an untapped talent pool of women in business when it comes to fighting to break that barrier,” explained Duncan.
“There is something different about the performance and driving style of women. They tend to be more democratic, tend to cooperate more and have a greater sense of corporate social responsibility. They are also less likely to engage in fraudulent behaviour,” Cassells added.
As they publish these findings, we hope that businesses will finally have a solid and quantifiable reason to improve their diversity, not just in terms of gender, but as an overall push towards a more open business environment. In fact, WGEA director Libby Lyons suggested that companies that do not act on the latest findings will be acting irresponsibly.
“The strength of this research shows that if you improve your diversity, you will get better results. If you’re a board member or a CEO or an executive and you don’t see what this report is telling you, then you’re not fulfilling your duty to your shareholders or owners,” she said.
A recent study in the United States showed a similar correlation between greater diversity and company performance, suggesting a step forward for equity in the international business environment. By global standards, gender equality in Australia is consistently promising, although researchers point out that there is considerable room for improvement.
One promising trend is that compliance with minimum diversity standards has increased to nearly 100% since the WGEA began producing a data scorecard for companies across Australia each year, according to Lyons, laying the groundwork for a more diverse future.
In a broader study on gender parity, a recent study by KPMG revealed that the economic value of a more balanced workforce in Australia could deliver an annual economic benefit to GDP of up to $60 billion.
[ad_2]