Women bosses bring in profits: Company value soars by $ 80 million under female CEOs, first global study finds

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As businesses contemplate a post COVID-19 recovery, they cannot ignore the findings of a landmark new report that has established a compelling link between female leadership and profitability, performance and productivity.

The new research, released today, essentially gives a figure on the added value a company can generate by appointing more women to key decision-making positions – finding that there is a strong and compelling causal relationship between performance. of the company and women holding a growing share. management positions in organizations listed on ASX.

The study, based on six years of reporting on the gender of Australian companies to the Federal Agency for Gender Equality in the Workplace (WGEA), found that companies that appointed a female CEO increased their market value of 5%, or $ 79.6 million for an average ASX200 company.

And that number is worth more than enough millions to justify investing in everything we know how to support and elevate women to leadership roles – like inclusive recruitment processes, real flexible working conditions, paid parental leave and the leadership.

These findings should highlight the opportunity offered by female leadership to help businesses recover and thrive in the post-COVID-19 economy.

The research, which analyzed data from 2014 to 2019, found a massive 4.9% increase in the market value of ASX-listed companies achieving a 10 percentage point or more increase in the share of women. in their boards of directors.

It’s worth an average of $ 78.5 million.

Companies that increase their share of female executive positions (KMPs) see their market value increase by 6.6% – an increase of $ 104.7 million – according to a study by the Bankwest Curtin Economics Center (BCEC) and of the WGEA.

The same holds true for companies: Researchers found that companies that reduced the share of women as key managers by 10 percentage points or more faced market value. reduction 2.9%, or an average of $ 46 million.

While previous studies have indicated a link between gender diversity and profitability, this research is a world first as it looked at actual leadership appointments that could be followed over several years to establish direct evidence of the link. .

Despite these results, achieving even 30% female representation on the boards of ASX 200 entities has required serious work, and the proportion of women represented is significantly lower across ASX.

Three in 10 companies in the available WGEA dataset (the 4,841 entities that reported to the agency in 2018/19) still have no women represented. And 27.5% of companies have no women on their key management teams.

As WGEA Director Libby Lyons said in the report’s introduction: “The results mean that, if you are a business leader, you have no excuse to avoid taking action.

“This groundbreaking study provided important new evidence of the critical need to improve gender diversity in business leadership. As we “move” towards a post-COVID-19 economy, this report demonstrates that CEOs and senior executives need to include gender equality when developing stimulus packages. “

Gender equality in the workplace has strayed far from the “right thing” to do. It is now the key thing to do for your employees and shareholders.

During an economic downturn in which women’s participation in the labor market is likely to decline even further, these findings show that one of the best things companies can do is get more women into leadership positions. leadership and support those who move up through the ranks.

Estimated impact on business performance of increasing or decreasing female leadership:

Notes: Projections are presented at the average market value of the company and the average value of common shares of Australian companies listed on ASX. Estimates are reported as statistically significant (Sig.) At 1% (***), 5% (**) and 10%
.

Source: Bankwest Curtin Economics Center | Authors’ estimates based on WGEA gender equality data from 2014 to 2019.

The main results of the data

  • According to the report’s authors, key findings from the data include:
  • An increase of 10 percentage points or more in the representation of women on the boards of directors of Australian companies listed on ASX results in a 4.9% increase in the market value of the company or the equivalent of $ 78.5 million on average
  • An increase of 10 percentage points or more in the share of female executives leads to a 6.6% increase in the market value of Australian companies listed on ASX, equivalent to $ 104.7 million in mean
  • Having a female CEO results in a 5% increase in the market value of Australian companies listed on ASX, equivalent to an average of $ 79.6 million
  • An increase of 10 percentage points or more in the representation of women on boards of directors results in a 6% increase in the probability of outperforming their sector on three or more parameters;
  • An increase of 10 percentage points or more in the share of women in key management personnel results in a 5.8% increase in the likelihood of outperforming their sector on three or more metrics

Having a female CEO results in a 12.9% increase in the likelihood of outperforming their industry on three or more metrics.

* The six key metrics used are return on equity, earnings before interest and taxes (EBIT), sales per worker, return on assets, dividend yield, and Tobin’s Q. This is an edited version of an article which was first published by

Women’s agenda.

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