Watching the wave of scandals wash over corporate Australia in recent months has been a sobering reminder that the human rights case for gender diversity is falling short in the eyes of some of our most iconic organisations. Shuddering statistics recently revealed of the abysmally low numbers of female representation in the ASX 200 are not merely a reminder that gender imbalance is rife among Aussie corporations. More so, they underscore that corporates are failing to even somewhat comprehend the business case for gender diversity.
So why do we unrelentingly persist with the language of “fairness” and “equality” in the corporate gender diversity debate over the factual argument that diversity in top-tier leadership is a business imperative that, just like operational risk, can incite long-term systemic issues if unheeded?
Somewhere along the battlelines, we lost our way and a change of tact is needed.
Much like you would instinctively adapt your language to speak with your three-year-old child, there is infinite cause to speak to corporates largely in their language if headway in gender diversity is to be made.
Let’s break it down
CEO of Diversity Council Australia Lisa Annese says establishing the business case for diversity will help conceptualise the argument for our corporates.
“Some people might want to do things because it’s moral and they feel compelled through their values, but that usually doesn’t cut it in a business sense, so they need to have the evidence to support them.”
And oh dear, is the evidence telling.
The 2018 Delivering Through Diversity report by consulting giant McKinsey & Company has revealed there is a positive link between gender diversity in executive teams and an organisation’s profitability. The study found that companies whose leadership teams were considered diverse were 27% more likely to have superior value creation. Accordingly, companies who hired more women in line roles (those involving significant decision making) rather than support roles were also more likely to outperform their peers.
The somewhat logical, and painfully so, human behaviour that leads us to gravitate to people ‘like us’ has led companies to largely ignore such findings to the very detriment of their financial and ethical well-being.
“They like to have what we call an affinity bias with their co-workers. It’s great when you get on with people and you agree on the way things are to be done, but it doesn’t deliver the best outcomes for the business,” said Ms Annese.
‘Not delivering the best outcomes’ is putting it lightly. A study by the University of Michigan’s Scott E. Page has revealed that when teams solve problems from dominantly one perspective such as the solely male perspective, they are effectively welcoming a 30% error rate. That is overtly too great a risk to bear considering the weight our organisations hold and their impact on the livelihood of customers and shareholders alike.
Annika Freyer, CEO of gender diversity initiative Male Champions of Change stresses companies need to embed diversity into their leadership teams if they are going to prosper, both financially and ethically.
“That’s why the results are better, because you’ll come at a good decision if in order to get consensus you’ve convinced people who’ve come to it from a different perspective.”
Oh, women are our customers?
According to the Australian Bureau of Statistics, women and girls make up 50.07% of Australia’s population. The reality of this is blinding. We outnumber men and have done so consecutively since 1983. One would think reflecting over half of Australia’s population and the majority of our consumer economy would warrant us a seat at the deciding table. Not quite. A total of forty-one companies in the ASX 200 still do not have female representation in executive management, according to Chief Executive Women’s 2017 Senior Executive Census.
Blatantly refusing to champion diversity in top-tier management means organisations are effectively failing their clients and stakeholders. After all, what greater disrespect is there than the refusal to reflect one’s customer base in the upper echelons of a company that was built to purportedly serve them?
“Unless your market is singularly white, Anglo Celtic cis-gendered, heterosexual men and nobody else, well then not reflecting that is not paying proper respect to your customers or your shareholders or your stakeholders,” says Ms Annese.
It seems almost laughable that Australian corporates would risk rendering themselves meaningless in their market purely to maintain the patriarchal status quo.
Ms Freyer says organisations run the very real risk of becoming dated if they don’t start conceptualising gender diversity as both a human rights and business imperative.
“The entire business proposition for these organisations is archaic if they’re not reflecting women.”
Whilst merit should certainly be paid to those organisations who champion diverse leadership, Ms Freyer says we must not forget that merely a tokenistic ‘smidge’ of diversity means companies are doing their current female executives a gross disservice.
One only needs to look at the debacle that is the coverage of the Royal Commission at the hands of the Australian media to understand that this sentiment rings frighteningly true. But is it surprising? Only 17% of sources quoted by Australian male journalists are female according to the Women’s Leadership Institute’s 2016 Women in Media Report. That, and only 14% of CEOs quoted are females. This blatant mirroring of corporate Australia by our media is yet another cog in the anti-diversity wheel and the conversation needs to change. Now.
Whilst it feels grossly unwarranted that we should even have to so much as discuss strategic framing of the argument for gender diversity, it is a product of the time and place we live in that we have arrived here. The stark reality is that heralding gender imbalances as “unjust” or “unfair” does little to stir corporates up from their patriarchal slumber. And while there is no silver bullet, we can shift the dial by rousing the business case for diversity. After all, the risks are too dear if we don’t.
As though you need any further motivation to bang down your CEO’s door with facts in hand, take a look at the latest ASX 200 inclusion figures below.