If you want your company to make more money, put a woman in charge

A new study into Australian companies found profitability, performance and productivity increase under female leadership
Female top-tier managers add 6.6% to market value of ASX companies
Increasing female representation on ASX-listed company boards by 10% or more added $78.5 million in market value
A female CEO led to a 12.9% increase in the likelihood of outperforming the sector on three or more metrics
Just 14.1% of board chairs are women
Women make up only 17.1% of CEOs

Putting more women in senior management adds more than $100 million to the market value on Australian ASX-listed companies, a new report into gender equity has found.

The report, Gender Equity Insights 2020: Delivering on Business Outcomes, found a strong and convincing causal relationship between an increase in the number of women in key decision-making positions and subsequent improvements in company performance.

Increasing the share of female ‘top-tier’ managers by 10% or more led to a 6.6% increase in the market value of Australian, which worth $104.7 million. It also delivered 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.

Report author Associate Professor Rebecca Cassells said the research showed having a female CEO has the potential to help companies navigate through the covid-19 crisis.

“We found the appointment of a female CEO led to a 5% increase in the market value of Australian ASX-listed companies. These companies also had a 12.9% increase in the likelihood of outperforming the sector on three or more performance and profitability metrics,” she said.

That figure means a female CEO is worth the equivalent of AUD$79.6 million on average.

The report by the Bankwest Curtin Economics Centre (BCEC) and Workplace Gender Equality Agency (WGEA) analysed nearly 5000 reports submitted to WGEA between April 2018 and March 2019, covering 4.3 million workers, around 40% of Australian employees.

WGEA director Libby Lyons said the report demonstrates that CEOs and senior executives must include gender equality in the Covid-19 recovery plans.

“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,” she said.

Report co-author Professor Alan Duncan said it’s clear 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% 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,” he 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% increase in the likelihood of that company outperforming its sector on three or more performance and profitability metrics.”

The key findings of the report are:

An increase of 10 percentage points or more in female representation on the Boards of Australian ASX-listed led to a 4/9 per cent increase in the company market value, worth the equivalent of AUD$78.5 million for the average company
An increase of 10 percentage points or more in female representation on Boards led to a 6% increase in the likelihood of outperforming their peers on three or more metrics
The appointment of a female CEO led to a 12.9% increase in the likelihood of outperforming the sector on three or more metrics
An increase of 10 percentage points or more in the share of female key management personnel led to a 5.8% increase in the likelihood of outperforming their sector on three or more metrics
Women are least likely to be the Chair of the Board, with only 14.1% of women being Board Chairs
Women make up only 17.1% of company CEOs
29.8% of companies have no female representation on their Board and a similar proportion of companies have no women in their key management teams
Two-thirds of firms in the construction sector have zero female representation on their Boards.

You can download the BCEC WGEA Gender Equity Insights 2020 here.