Business Daily Media

Men's Weekly

.

Diversity helps: a new study shows more women on boards can improve how businesses are managed

  • Written by Ramona Zharfpeykan, Lecturer, Department of Accounting and Finance, University of Auckland, Waipapa Taumata Rau
Diversity helps: a new study shows more women on boards can improve how businesses are managed

Despite large multinational companies such as Goldman Sachs, Paramount, Google and others removing their diversity, equity and inclusion policies[1], the evidence is clear: having a diverse team can help businesses make better, more empathetic decisions.

At the top level, a growing body of research[2] shows having more women on corporate boards leads to better decision-making, stronger governance and improved environmental, social and governance (ESG[3]) performance.

Yet, progress remains slow – even in New Zealand. Though we rank highly on the Human Development Index[4], the country lags behind in leadership gender equality[5].

Women make up 50.8% of the population and hold 40.8% of parliamentary leadership roles. But they hold only 28.5% of board seats and 26.4% of executive roles in the New Zealand’s Stock Exchange (NZX) top 50 companies (the NZX50).

And while businesses are encouraged to disclose gender diversity policies by the NZX, there are no mandatory quotas, leaving progress uneven.

However, change is happening. Our new research[6] looked at the the percentage of female directors in NZX-listed firms between 2016 and 2022.

What we found is positive. Using information from financial infrastructure and data provider LSEG’s database on global financial markets[7], we identified a rise in the number of female directors on corporate boards. We also saw a corresponding improvement in the firms’ ESG performance.

Photo of NZX photo with mobile listing of the NZX website in front of it.
Despite making up 50.4% of the population, women hold only 28.5% of board seats and 26.4% of executive roles in NZX50 companies. T. Schneider/Shutterstock[8]

Boosting performance

Between 2016 and 2022, the proportion of female directors in NZX-listed firms increased from 26% to 36%. These same businesses saw an average 33% improvement in their ESG performance.

Notably, governance – one of the key ESG pillars – improved significantly, with a 31% increase on average. Governance specifically refers to the effectiveness of the firm’s management systems, board structure and capacity to protect shareholder interests.

While it’s not possible to say outright that having more women on the board directly influenced governance outcomes, we saw a positive relationship between the two. This suggests having more women in leadership strengthens corporate oversight and ethical decision making.

Gender diversity does not have the same level of importance in all contexts. While social and environmental performance also improved, this study found no significant link between a more gender-diverse board and these higher scores in social and environmental performance.

Our findings are supported by overseas research[9] suggesting board diversity does not strongly influence sustainability outcomes when it comes to issues and groups already covered by legislation.

Therefore, New Zealand’s proactive stance on issues such as the environment, poverty and human rights, as well as encouraging private companies to improve sustainability and transparency, may explain why board diversity had no notable impact on social and environmental performance in this study.

What women bring to the business

Our findings align with studies completed overseas.

In the US, one study[10] found women business leaders tended to prioritise transparency, fairness and stakeholder interests. This made them strong advocates for sustainable and inclusive business practices.

It’s clear that addressing the gender gap in corporate New Zealand isn’t just about fairness. It’s about economic success. Businesses that embrace diversity perform better, attract top talent and enhance their reputations.

The solution isn’t simply about enforcing quotas, but ensuring more qualified women are placed in leadership roles. Companies need to move beyond a “compliance mindset” and recognise true diversity strengthens governance, reduces risk and drives long-term success.

As the world celebrates International Women’s Day on March 8[11], businesses need to realise that increasing female representation at the top isn’t just the right thing to do – it’s the smart thing to do.

References

  1. ^ removing their diversity, equity and inclusion policies (www.forbes.com)
  2. ^ growing body of research (onlinelibrary.wiley.com)
  3. ^ ESG (www.thecorporategovernanceinstitute.com)
  4. ^ Human Development Index (hdr.undp.org)
  5. ^ lags behind in leadership gender equality (www.apec.org)
  6. ^ research (www.emerald.com)
  7. ^ database on global financial markets (www.lseg.com)
  8. ^ T. Schneider/Shutterstock (www.shutterstock.com)
  9. ^ supported by overseas research (link.springer.com)
  10. ^ one study (hbr.org)
  11. ^ International Women’s Day on March 8 (www.internationalwomensday.com)

Authors: Ramona Zharfpeykan, Lecturer, Department of Accounting and Finance, University of Auckland, Waipapa Taumata Rau

Read more https://theconversation.com/diversity-helps-a-new-study-shows-more-women-on-boards-can-improve-how-businesses-are-managed-251473

The quiet majority: why marketers need to cater to low intent shoppers

When shoppers are browsing online, whether for a new phone, holiday, or pair of shoes, they usually know exactly where they stand. Sometimes they’...

Lack of Salary Transparency is Costing Businesses Top Talent, Says Recruiters

As end-of-financial-year reviews approach, new research reveals a growing disconnect between Australian employers and employees on the issue of sa...

Sleep Soundly, Knowing Your People Are Paid Right: Navigating the Complexities of Modern Payroll

The Role of Modern Payroll Modern payroll systems are essential to any organization's financial infrastructure in today's rapidly evolving business...

Tariffs for dummies: Getting to grips with the business of exporting goods and services

It pays to understand how the international taxation system works before you start selling abroad. Take a glance at the business news just now an...

Deputy Unveils Enterprise-Grade Analytics+ to Power Smarter Workforce Decisions for Shift-Based Businesses

Deputy, the world’s leading workforce management platform for shift work, today announced the global launch of Deputy Analytics+, a next-generatio...

UNSW startup accelerator offers $200K to the next generation of Australian deeptech unicorns

UNSW Founders, Australia’s most recommended startup accelerator, has partnered with fund manager Luminary Partners to invest $200,000 each into 18...

Sell by LayBy