This week's featured blog explains why more women in top management roles can only be a good thing for business.

Let’s talk about board diversity.

Whether it’s a token gesture or a genuine commitment to diversity, having women on the board or management team can make a company look good.

Adding a woman in the mix of dark-suited men not only gives the profile spread in the annual report a splash of colour, it signals that the business is progressive.

This is not a trivial matter, as results from a university study, published last year, show. The study found that the diversity of a board influences perceptions about whether an organisation is a good corporate citizen. Gender being the most visible element of diversity, having women on a board enhances a business’ corporate social responsibility rating, and therefore corporate reputation.

This stuff matters because customers’ buying behavior is influenced by their perception of your reputation. Furthermore, requests for tender often require information on ESG (environment, social and governance) policies such as on diversity.

This stuff matters for another reason – ASX-listed companies now have to report detailed information on their gender diversity policies. Those with a balance date of 31 December 2011 have just lodged their annual reports with the ASX. These comprise the first batch of reports that must comply with the new corporate governance requirements.

Australian companies are not required to meet quotas (unlike in some European countries, where legislative quotas are in place). The idea is Australian businesses will, out of their own volition, appoint more women because they don’t want to look bad.

I’ve chosen to focus on the investment management sector in this brief analysis because it’s one of the most progressive sectors when it comes to gender diversity on boards, at least at the top tier level. This may come as a surprise to some, as the sector has a reputation for being male-dominated.

In large Australian financial services organisations, quotas are typically not openly enforced. Instead, there is a common understanding that if a woman leaves the board or senior management team, then any appointments in the future might favour female candidates.

As the table below shows, the largest investment management businesses operating in Australia (or, to be more precise, their listed parent companies) have at least one female on the board or management team.

Notably, the US-based business BlackRock has not one woman on its 17-member board. However, there are women in BlackRock’s management team.

Also notable is that the company that has dominated the number one ranking in the banking sector on the Dow Jones Sustainability Index, Westpac, is the only business on this list headed by a woman.

The going rate is around 20 percent females in the team for the largest investment management organisations in Australia. Not bad.

Before we get too complacent, let’s remind ourselves that women do make up half of the population. Also the list below only examines large businesses in the investment management sector. More than half of the ASX200 have not complied with the ASX corporate governance guidelines on diversity, according to Women on Boards.

Feminist groups are lobbying for a broad range of affirmative action measures. Perhaps the most severe is imposing financial penalties for failing to meet diversity requirements. It’s unlikely we’ll go that far in Australia, especially if the current regime proves to be successful.

One simple and effective way to back up the voluntary compliance model is for male leaders to champion diversity, which in my personal experience has been very effective. Leading by example does trickle down. Middle managers learn that their bosses value diversity and make decisions on new appointments and internal promotions with this in mind.

On a purely anecdotal note, having female leaders as media spokespersons is a good thing. Publications usually print headshots of interviewees. Some editors like it when a headshot of a woman breaks the monotony of dark-suited men. Ditto with journalists who find it refreshing to hear a female voice on the other end of the line.

Finally, if reputation is not a good enough reason to take gender diversity seriously, consider this research on US companies. A 2011 study by an organisation called Catalyst found that companies with the most females on the board outperformed those with the least, on return on sales (by 16 percent) and return on invested capital (by 26 percent). Furthermore, a sustained commitment to diversity makes a difference – companies with three or more women board directors in at least four years outperformed those with no female board directors.

Table: Diversity in leading investment management businesses operating in Australia

Business – board or management team Number of females Number of males Head (eg, CEO, MD, Exec Director)
CBA (includes CFS) – board 3 8 Male
CBA (includes CFS) – management team 3 10 Male
Macquarie Bank Group – board 3 6 Male
Macquarie Bank Group – leadership team 1 9 Male
State Street Corporation – board 2 11 Male
State Street Global Advisors – international leadership team 2 11 Male
Vanguard Investments – board 1 4 Male
Vanguard Investments – leadership team 2 10 Male
AMP Group – board 3 7 Male
AMP Group – management team 2 8 Male
BlackRock – board 0 17 Male
Blackrock – management team 3 11 Male
ANZ Group (includes ING) – board 1 7 Male
ANZ Group (includes ING) – management team 3 9 Male
Westpac (includes BT Financial Group) – board 4 6 Female
Westpac (includes BT Financial Group) – executive team 2 10 Female
Allianz (includes PIMCO) – board 2 9 Male
PIMCO – global executive leadership 0 5 Male
Perpetual – board 1 6 Male
Perpetual – executive team 2 8 Male


Caroline Regidor

Caroline Regidor

Caroline Regidor has over a decade's experience working within the media industry and providing comms advice. Brands that have benefited from her expertise include the Commonwealth Bank, Colonial First State, Baulderstone (part of the Lend Lease Group) and Gadens Lawyers.

Prior to specialising in PR and communications, she was a columnist at the Daily Telegraph. To find out more, check out her business blog


Leave a Comment

Word Count: 0