It’s now proven that diversity in business – and not just in top leadership positions – can improve overall performance. But exactly how does it lead to an improvement in the bottom line? Here’s what the research says.
In recent years, studies have repeatedly demonstrated that companies generally benefit from a gender-balanced workforce.
These benefits come in many forms - including higher revenues and profits, greater valuations for listed companies [1], and even a better capacity for innovation [2].
While the conversation on gender diversity often focuses on larger businesses, the advantages of more diverse teams aren’t exclusive to blue-chip companies. Family businesses, large and small, need to be across the issue to remain competitive in a tight talent market. Australia’s unemployment rate was 3.9% in January 2024 [3], placing it 60 basis points below current targets [4].
By building fairer and more balanced teams, even smaller businesses can unlock the benefits of diversity.
How gender diversity improves performance
There are several mechanisms by which gender diversity can improve a business’ performance, with one of the starker being that a more diverse team will have more diverse opinions on how to handle a situation.
The way individuals approach a problem – like finding ways to increase sales or improve a product – is shaped by their lived experiences. By having different types of people on your team, your business benefits from a wider array of ideas to drive performance.
While this might seem like ‘common sense’, Boston Consulting Group has data that supports the claim. Their modelling found that in a hypothetical company of 50,000 with an ‘average’ diversity mix, increasing the number of women within the 1,500-strong management roles by just 38 people would increase innovation revenue by 1.00% [5].
Australia’s Workplace Gender Equality Agency (WGEA) also notes that businesses with policies in place to support gender equality have a greater ability to attract and retain talent [6].
By offering flexible working arrangements, for example, more candidates can fill available positions. Similarly, when staff see their employers taking proactive steps to make their workplaces fairer and more equitable, they’re less inclined to switch jobs.
This makes it much simpler for businesses to find and retain talent.
Three ways to improve gender diversity
1. Conduct a gender equality gap analysis
First, it’s helpful to conduct a gender equality gap analysis so you can focus your efforts on the right things that will have the most impact. The Workplace Gender Equality Agency has a handy tool that helps you to analyse the status of gender equality and pinpoint gender equality gaps within your organisation. This will help you determine where you should focus your efforts. Like any other aspect of business, it’s important to understand the problem you are solving for, develop an action plan and measure progress. Two common areas for improvements relate to hiring practices and career progression.
2. Implement better hiring practices
When it comes to making decisions, everyone can exhibit unintentional biases.
These biases can affect the way businesses hire staff, even when efforts are made to avoid them. Fortunately, there are ways to offset the impact of bias.
Anonymising resumés by removing any references to applicants’ gender, age, or cultural background (as examples) will help to leave you focusing on candidates’ professional qualifications and experience to drive hiring decisions [7].
And much like how your business benefits from the broad perspectives offered by diverse teams, your hiring process can also benefit from the varied perspectives offered by multiple interviewers. So, while it might be common for a family business to be dominated by family members at the top, ensure key business decisions around hiring are spread over a diverse (gender, ethnicity, educational background etc.) leadership team.
3. Support career advancement
A 2018 study published in Harvard Business Review found that women are just as likely as their male peers to ask for a pay rise but were less likely to actually receive one [8].
This highlights why businesses need to consider career advancement opportunities for their staff and how to make them equally accessible for everyone – and then equally rewarded. A good place to start is by examining performance review criteria.
These should be clear to both you and your staff, and easy for their performance to be benchmarked. This makes your decisions simpler and more transparent for staff to understand, and gives you a clearer picture of exactly how well each staff member is doing.
Similarly, whoever is conducting the performance review needs to be appropriately trained on what they’re doing and how best to do it. And where family are directly managed by other family members, it may be appropriate to engage a HR professional or other person on the team to be an intermediary for performance reviews.
Establishing a formalised system for performance and remuneration reviews, and training your managers to appropriately implement it, gives everyone a more even playing field for career progression [9].
Mentoring and sponsorship are integral to supporting career advancement in family businesses by offering guidance, knowledge transfer, and opportunities for the next general to learn and grow within the unique dynamics of the family enterprise. This support helps ensure continuity, innovation, and success for the business across generations. Having a mentor or sponsor outside of your business can be extremely valuable, as it provides fresh perspectives, unbiased guidance and access to diverse networks that can help broaden opportunities and accelerate professional growth.
Each of the actions above can help improve gender diversity within your organisation and potentially unlock the associated benefits to your business. But, perhaps more importantly, implementing any of these frameworks provides a good opportunity to review the impact that your business is having on the broader community.
ANZ Commercial provides banking products and services to more than 600,000 businesses, as well as high net-worth private banking clients across Australia. ANZ aims to be the leading bank for Australian businesses looking to start, run or grow their business, and the private bank of choice for multi-generational families. ANZ Commercial provides banking products and services to more than 600,000 businesses.
[1] L Sydoruk, ‘More women at the top proves better for business’, Curtin University, 18 June 2020, accessed 20 February 2024
[2] Victorian Multicultural Commission, ‘Diversity promotes success. Here’s why it should matter to you’, 30 August 2021, accessed 20 February 2024
[3] Australian Bureau of Statistics, ‘Labour Force, Australia’, January 2024 edition, 15 February 2024, accessed 20 February 2024
[4] Australian Chamber of Commerce and Industry, ‘Economics Update | July 21, 2023’, 21 July 2023, accessed 20 February 2024
[5] R Lorenzo, N Voigt, M Tsusaka, M Krentz & K Abouzahr, ‘How Diverse Leadership Teams Boost Innovation’
[6] Workplace Gender Equality Agency, ‘Workplace gender equality: the business case’, 12 November 2018, accessed 20 February 2024
[7] Business Victoria, ‘5 ways you can support women in your business’, 5 March 2019, accessed 20 February 2024
[8] B Artz, A Goodall, A Oswal, ‘Research: Women Ask for Raises as Often as Men, but Are Less Likely to Get Them’, Harvard Business Review, 25 June 2018, accessed 20 February 2024
[9] Business Victoria, ‘5 ways you can support women in your business’, 5 March 2019, accessed 20 February 2024
