It’s official: gender diversity drives better business outcomes

The evidence is in and it’s irrefutable: having more gender balanced leadership in an organisation improves the business bottom line.

The Bankwest Curtin Economics Centre and the Workplace Gender Equality Agency (WEGA) have today released a ground-breaking report: Gender Equity Insights 2020: Delivering the Business Outcomes. Using WGEA’s longitudinal data covering 4 million workers and 11,000 employers in Australia over 7 years, the report shows that there is an undeniable causal link between increases in the numbers of women in leadership roles and better business performance. Businesses with more women in key management positions were more likely to outperform their peers and do better across a comprehensive range of business performance measures modelled by the researchers. For example, the report shows that an increase of 10 percent or more in female representation on Boards leads to a 4.9% increase in company market value – this equates to about AUD $78.5 million.

One of the Report’s most important findings is the causal nature of the relationship between greater numbers of women in key leadership roles and better business performance, through this modelling, rather than a simple association between the two.

So why is it that improving the numbers of women leaders in an organisation so clearly leads to better business performance?

The researchers identified a number of potential factors:

  • Greater gender (and other types of) diversity in leadership leads to better decision-making through a diversity of opinions and greater knowledge stocks.

  • Women can bring different leadership styles and techniques (for example through more collaborative and democratic approaches).

  • Women may have greater stakeholder orientation which can indicate a greater tendency towards corporate social responsibility and better performance in a crisis.

The Report is essential reading for all business leaders and decision-makers.

While we know better gender diversity is ethically and morally the right thing to do, we also now know that it is excellent business strategy. In the words of Libby Lyons, the Director of WGEA, good leaders will use this report to invigorate their enthusiasm for improving gender diversity in their organisations and in so doing will derive better financial outcomes and benefits for the companies they lead.

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