New report reveals link between leadership diversity and financial performance
Gender balance in leadership teams could significantly increase company value, according to a new report, that links diversity and financial gains.
WGEA's 10th report in the Gender Equity Insights Series with the Bankwest Curtin Economic Centre (BCEC) showed how gender-balanced leadership can be a sound financial buisness strategy.
"Gender equity and business performance go hand-in-hand," said Alan Duncan (pictured above), BCEC Director and the report's author, in a statement.
"Australia cannot afford complacency. Employers who take deliberate action will not only retain women and strengthen leadership pipelines, they will also secure long-term value, innovation, and competitiveness."
The report said the impact of gender balance varies by market capitalisation based on reearch modelling.
According to the report, companies valued at $500 million would have an uplift in shareholder value of around $47.5 million if they move towards gender balance in leadership.
For companies valued at $1 billion, the increase would be by nearly $93 million.
"Organisations that achieve balanced leadership are more likely to outperform their peers in company value, profitability and resilience," the report, based on de-identified data from the Workplace Gender Equality Agency's annual Employer Census, said.
"Gender balance delivers better decision making, stronger innovation, and enhanced capacity to navigate shocks."
The report said the clear implication was that gender balance in leadership was not just an equity issue but a driver of business value and boards and executives should treat diversity as a central element of governance, strategy, and market performance.
WGEA CEO Mary Wooldridge (pictured above) said the findings clearly show gender-balanced leadership teams deliver stronger results for organisations.
"This research points to the benefits that flow to those employers that choose to embed gender equality into their business strategies," she said in a statement.
"By digging into the data and developing an approach that's tailored to their specific workforce needs, employers can build a strong pipeline of talented leaders and help safeguard the long-term sustainability of their organisation."
Progress on workforce gender balance
A gender-balanced workforce refers to a team where at least 40% are women, 40% are men, and up to 20% of any gender, according to the report.
Only 27.3% of companies are meeting this benchmark. However, some industries are shifting strongly towards balance, with more than 75% of accommodation and food service firms reporting balanced workforces, as well as more than 66% of financial firms.
Gender balance in leadership, however, remains slow, according to the report.
While nearly 40% of board positions are held by women, female representation among CEOs and senior executives has plateaued at around 25%.
"This 'board-executive divide' may well be reflective of systemic barriers in leadership pathways," the report [read]. "Boards have benefited from stronger accountability, ASX governance requirements, and public reporting. But similar levers are not yet being applied to executive leadership."
Addressing gender balance in leadership
Various factors are in play when trying to balance gender in leadership, including appointments, promotions, and resignations.
While appointment rates for women have increased in key industries, resignation rates are also persistent and are holding back gender balance.
"Without tackling the drivers of female attrition, such as inflexible work practices, career cliffs for part-time roles and weak mentoring, progress cannot be sustained," the report read.
Uneven promotions also impact gender balance, which the report said leave behind a fragile leadership pipeline that can be disrupted by the loss of talent.
"The key lesson is that balance cannot be achieved through recruitment alone," the report stated. "Sustainable equity requires integrated action: fair appointments, supportive promotion practices, and cultures that retain female leaders."
