A new research on gender equity has revealed that an increase in the number of women in senior leadership positions has resulted in greater productivity and profitability, providing a crucial insight on how Australian businesses should move forward post-pandemic.
Research released by Curtin University Business School’s Bankwest Curtin Economics Centre (BCEC) and the Workplace Gender Equality Agency (WGEA) found that a rise in the proportion of female “top-tier” managers by 10 percentage points or more led to 6.6% increase in the market value of ASX-listed companies, equivalent to $104.7m.
The report titled “Gender Equity Insights 2020: Delivering on Business Outcomes” showed a strong correlation between the increase of women in key decision-making roles and subsequent improvements in company performance.
Associate Professor Rebecca Cassells, BCEC Principal Research Fellow and report author, stressed the importance of leadership in dealing with the economic impact of coronavirus crisis.
“When businesses are looking to a post COVID-19 world, our research shows that having a female CEO has the potential to help companies navigate through the crisis,” she said.
According to the report, ASX-listed companies with female chief executive officers posted a 5% rise in market value, worth the equivalent of $79.6m on average.
The study also found that increasing the number of women in leadership positions raised the likelihood of businesses “outperforming in their sector” on three or more “key profitability and performance metrics.”
These metrics include return on equity, earnings before interest and tax, sales per worker, return on assets, dividend yield, and Tobin’s Q.
Libby Lyons, WGEA Director, said the research was “a significant contribution to the international business case for gender equality.”
“As we ‘snap forward’ to a post-COVID-19 economy, this report demonstrates that CEOs and senior executives must include gender equality as they develop recovery plans,” she said.
“This report provides tangible proof to support the established business case for gender equality. More gender-balanced leadership will improve the bottom line and financial performance of any organisation.”
Associate Professor Cassells said the report was an important step towards “delivering more gender equitable workplaces” and understanding how gender equity can lead to better performance among Australian businesses.
Better gender balance needed
However, Professor Alan Duncan, BCEC Director and report co-author, noted that Australian companies still have some way to go to achieve better gender balance in key decision-making positions.
“Women are far less likely than men to be the Chair of the Board,” he said. “While there has been progress towards a 30% 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.”
According to the report, only 17.1% of CEOs in Australian companies were women. In addition, 8% of businesses have no female representation on their Boards and a similar proportion have no women in key management teams.
Professor Duncan explained greater female representation on Boards and senior leadership positions was 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,” he said.
“This is particularly important as we look to rebuild our economy and broaden business and employment opportunities.”