In this article Women on Boards director Claire Braund illustrates how gender diverse boards are integral to better financial performance and improved governance, align with Australia’s economic imperatives and satisfy community and shareholder expectations.The research was overwhelming

In 2004 the US-based non-profit research organisation Catalyst created the link between female board directors and corporate performance in its report “The Bottom Line: Corporate Performance and Women’s Representation of Boards”. The report found higher financial performance for companies with higher representation of women board directors in three important measures:

  • Return on Equity: On average, companies with the highest percentages of women board directors outperformed those with the least by 53 percent.
  • Return on Sales: On average, companies with the highest percentages of women board directors outperformed those with the least by 42 percent.
  • Return on Invested Capital: On average, companies with the highest percentages of women board directors outperformed those with the least by 66 percent.

Fast forward to Australia in October 2011 and the non-profit research organisation, Reibey Institute, finds that over three and five year periods, ASX500 companies with women directors delivered significantly higher return on equity (ROE) than those companies without any women on their boards.

  • 6.7 per cent higher over a three year period.
  • 8.7 per cent higher over a five year period.

In between 2004 and 2011 there were a number of significant studies and reports successfully prosecuting ‘the business case’ for recruiting and retaining women into senior leadership roles and onto boards. In particular the global consultancy firm, McKinsey & Co, made a strong case for diversity in its Women Matter series as follows:

  • 2007: Demonstrated a link between a company’s performance and the proportion of women serving in its governing body.
  • 2008: Identified the reasons for this performance effect by examining the leadership styles that women leaders typically adopt.
  • 2009: Surveyed 800 business leaders worldwide which confirmed that certain leadership behaviours typically adopted by women are critical to perform well in the post-crisis world.
  • 2010: Provided a focused analysis on how to achieve gender diversity at top management level.

In Australia, Tim Toohey, the Chief Economist at then Goldman Sachs JBWere, wrote a report in late 2009 which stated that closing the gap between male and female employment rates would boost the level of Australian GDP by 11 per cent. The report, Australia’s Hidden Resource: The Economic Case For Increasing Female Participation, outlined the steady decline in Australia’s labour productivity growth and advocated that “… an alternative source of highly educated labour is already at Australia’s disposal and with the right set of policy options this pool of labour can be unlocked.”

In 2011 leading gender equity advocate and author Avivah Wittenberg-Cox took a group of Australian company executives through the hard data on the global business imperative to increase the participation of women in the workforce. There were several key points:

  • Economic growth is being driven by the world’s women, who will collectively earn $18 trillion by 2014 and are a dominant force in the rapidly rising middle class in emerging economies.
  • Trends in birth rates show that women who work are the ones having more children, challenging old style government and business policies enabling women to more easily opt out of the workforce.
  • Following the GFC, greater percentages of women have taken jobs in the high growth services area as male dominated manufacturing and other manual work have declined.

The clear message was, if governments and business want productivity and growth then they should be throwing social infrastructure at the parents (of both sexes) to keep them in work.

Did anything much happen?

Despite this overwhelming body of evidence that having women on boards, in leadership teams and just in the workforce in general is good for business, Australia was slow to act. It took the inclusion of diversity measures in the ASX Corporate Governance Council Principles and Guidelines in 2009 to see any real movement from listed companies in terms of women in the boardroom. Following adoption of the new Principles & Guidelines, 59 ASX200 director positions were filled by women in 2010, compared with just 10 the previous year.

In a survey (below) of 1,080 Women on Boards members in September 2011, more than 70 per cent believed that changes to Principle 3 of the ASX CGC Guidelines had driven an increase in the number of women on boards.

Factors driving increase in the number of women on ASX200 boards

  • Business benefits of diversity (Increased awareness) – 43 %
  • Changes to ASX Guidelines (public reporting)  – 73 %
  • Advocacy (Women on Boards and others)  – 56 %
  • Other  – 9 %

At the recent NSW CPA Congress, Priscilla Bryans, a corporate partner at Freehills, said that Principle 3 is having a greater impact than of the other guidelines, including the hotly debated one on the independence of directors Guideline.

However, little statistical progress has been made beyond the ASX200 or in the numbers of senior executive women moving ‘up the pipeline’. The Women on Boards 2011 Boardroom Diversity Index reports the percentage of women on boards in the following sectors:

  • ASX300 – < 5%
  • Superannuation bodies – 20.4%
  • Credit unions – 18.4%
  • National Sporting Organisations – 22.7 %
  • Government boards & committees – 38%

At management level a number of companies, principally the banks, big retailers and global consultancy firms, have made serious interventions to stem the female talent haemorrhage with a range of innovate and flexible work options and mandated targets for executives tied to remuneration outcomes. For example, at CBA, the CEO announced targets to increase the number of women in Executive Management roles to 35 per cent by 2014 requiring a hiring ratio of 60:40 women versus men for the next two to three years.

Do we need a quota?

The debate about the number of women on boards has been active since 2002 when the first Census of Women in Leadership was released by the EOWA, but for a long time corporate Australia tip-toed around the quota and target conversation. This included many leading female directors and executives who were concerned about
being labelled a ‘token.’ Happily we seem to have moved past this and are now at the stage where we can have a conversation about the merits or otherwise of mandated quotas for boards.

In the survey of 1080 Women on Boards members mentioned earlier:

  • 50 per cent agreed gender targets should be legislated for public listed (ASX) boards as against 53 per cent in 2009
  • 57 per cent agreed gender targets should be legislated for government boards/committees as against 62 per cent in 2009

Globally the numbers are interesting as this survey Heidrick and Struggles of 721male and female board members in 26 countries in 2011 shows:

  • 41 per cent women versus 13 per cent men support quotas (compared with 25
  • percent and 1 per cent in 2010)
  • 53 per cent women versus 18 per cent men think quotas are effective for
  • increasing diversity
  • 55 per cent women versus 16 per cent men agree three or more women on any
  • board makes it more effective

The last point leads into a discussion on what is the optimal number of women on a board. In 2006 an important study, “Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance” defined this as three or more as the dynamic shifts significantly and benefits are more widely felt when better balance is achieved. Boards that have never had a female director invariably appoint a lone female which often leads to isolation for that director and a sense of being a token.

How do women make a difference?

The research tells us about the dynamics of the discussion in the boardroom and the quality of decision making when women are present. It tells us the range of issues canvassed increases and includes usefully different perspectives from female board members. Boards with women also are more likely to be best practice in terms of
board evaluations, codes of conduct, conflict of interest guidelines and looking more closely at executive remuneration arrangements.

In 2010 Insync Surveys: Gender Agenda: Unlocking the power of diversity in the boardroom, found that board members on gender diverse boards believe that they:

  • add more organisation value through the quality of their decision making;
  • have Chairs that are more effective in several ways;
  • have directors who act with greater integrity;
  • are more vigilant about the connection between management’s remuneration packages and performance; and
  • require better documentation of roles and responsibilities.

Svein Rennemo, the Chair of global giant Statoil, told Claire Braund on her recent Churchill Fellowship study trip that people tend to over-play the challenge of a quota system and under estimate the benefits of change that doing something different can bring, which in his experience are:

  • More educated directors
  • Improved board governance
  • Younger board members
  • Directors with different experiences
  • Closer connections with company executors

Action not rhetoric

The global business case for more women on boards and in leadership roles is overwhelming. It no longer needs to be proven and debated, but believed and acted upon. This will require a significant shift in corporate culture and in the attitudes and behaviours of many who occupy positions of power. Change is occurring, but it is
slow and the many talented, qualified and experienced women seeking to serve on boards might not be prepared to be patient for much longer.


1. The Bottom Line: Corporate Performance and Women’s Representation of Boards, Nancy M. Carter, Ph.D., and Harvey M. Wagner, Ph.D, Catalyst,
2. ASX 500 – Women Leaders: Research Note, Tina Brothers, Reibey Institute, 2011,
3. Women Matter , Georges Desvaux, Sandrine Devillard and Sandra Sancier-
Sultan, McKinsey and Company,
4. Australia’s Hidden Resource: The Economic Case For Increasing Female
Participation, Tim Toohey, Goldman Sachs JB Were, 2009,
5. Avivah Wittenberg Cox, How Women Mean Business: A Step By Step Guide
to Profiting from Gender Balanced Business, 2010,
6. ASX Corporate Governance Council, 2010,
7. 2011 Boardroom Diversity Index, Women on Boards,
8. 2011 Gender Diversity on Australian Boards Survey, Women on Boards,
9. 2010 Board of Directors Survey, Heidrick and Struggles and womencorporatedirectors,

10. Critical Mass on Corporate Boards: Why Three or More Women Enhance Governance, Alison M. Konrad, Vicki Kramer, Sumru Erkut, 2006,
11. Gender Agenda: Unlocking the power of diversity in the boardroom, Insync Surveys,

December 2011