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Want to Make More Money? Hire More Women

October 27, 2010

Having more women on a board means earning investors more money:

The Reibey Institute’s review of women leaders in Australia’s ASX 500 companies in August found companies with women directors delivered an average return on equity that was 10.7 per cent higher than those with all-male boards.

Over five years that margin widened to 11.1 per cent.

The Reibey Institute’s review of women leaders in Australia’s ASX 500 companies in August found companies with women directors delivered an average return on equity that was 10.7 per cent higher than those with all-male boards.

Now an Australian group is planning to implement policies to add more women to the boards of directors of non-profits simply because it’s good business:

The percentage of women holding board directorships in Australian listed companies remains unchanged since 2003, which poses a risk to investors’ returns, says a key adviser to big superannuation funds.

Australian Council of Superannuation Investors (ACSI) is telling 40 non-profit super funds, which collectively manage $300 billion, to keep investment returns in mind when they vote for directors during the upcoming annual meeting season.

ACSI president Michael O’Sullivan said almost nothing had been done about the small proportion of women on boards since the organisations’ survey began in 2001.

“It’s just been flat-lining,” Mr O’Sullivan said after releasing the ACSI research showing women held 11.1 per cent of all ASX 100 company board seats in 2009.

“This is the last place on Earth where women seem not to have penetrated some sort of equitable position.

“Fundamentally, as investors we want to maximise returns and it’s pretty clear in the US, where there’s a lot more research done, there is a real difference.”…

“There is no empirical evidence in favour of having all male boards. In fact, the empirical evidence is the opposite,” Mr O’Sullivan said.

Board and executive experience remained important, but shouldn’t be the sole or predominant criterion for appointments because other skills and experience were required on strategy matters, he said.

ACSI said almost a third of ASX 100 companies had no female directors in 2009.

The ACSI survey echoed similar research released last week by Equal Opportunity for Women in the Workplace, which showed 54 per cent of ASX 200 companies had male-only boards.

New ASX corporate governance guidelines requiring boards to report on female representation to shareholders had spurred 40 new board appointments of women in 2010, but half of these comprised women already in ASX 200 directorships, Mr O’Sullivan said.

He said many women already in directors’ chairs were outstanding, but faced enormous workloads, and more board appointments needed to go to female leaders outside business circles such as universities.

Companies had three years to boost their female director numbers to 25 per cent of the board, and ACSI would press for regulatory change if this wasn’t achieved, said.

I like the fact that research has proven that women don’t necessarily have to have this “perfect” business record to increase profits, and in fact, the governance is actually pushing for more outside appointments, as it just plain seems to increase income.

 

 

 

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