Startups Sabotaging Their Future By Excluding Women From Boards: Austrade CEO
The first female chief executive of the Australian Trade and Investment Commission, Stephanie Fahey, talks about the benefits of gender balance in senior management
“Women leaders bring diversity of thinking and that's what we need to run businesses in any country,” Stephanie Fahey, CEO of The Australian Trade and Investment Commission, or Austrade, told Entrepreneur India.
There is enough data to support Fahey’s argument. In a 2019 report by International Labour Organization (ILO) titled Women in Business and Management: The Business Case for Change, almost three-quarters of the 13,000 companies surveyed said that gender diversity in senior management roles resulted in profit increase of between 5 and 20 per cent.
Ask Fahey, and she says diversity brings better decision making. “Women bring different perspectives,” she explained. “For instance, women are major consumers. At most times, they make buying decisions for the household. So, in the case of businesses that target women as the customer, who better to develop product that's going to be attractive to a woman than another woman.”
Not just individual businesses, effective gender inclusivity in workforce also has a positive effect on a nation’s GDP, the ILO report showed.
Perhaps for this reason, an increasing number of countries have committed to bring in gender equality laws affecting work. Australia is one such country. “We have an equal opportunity approach. We have a target of women holding 50 per cent leadership positions across government departments,” Fahey said. As of 30 June 2019, women held 47.9 per cent of government board positions in the Australia, as per government statistics.
As for the overall gender workplace data for Australia, numbers come down. At the end of 2019, women held 14.1 per cent of chair positions, 26.8 per cent of directorships, and represent 17.1 per cent of CEOs and 31.5 per cent of key management personnel, shows data provided by Workplace Gender Equality Agency.
The picture gets grimmer in the case of start-ups. “There are only 23-24 per cent female founders led start-ups in Australia,” Fahey said. However, the bigger problems, according to Fahey, are women representation in start-up board positions and the difficulty women entrepreneurs face in raising funds from investors.
Start-ups Excluding Women
Only about 3 per cent of the venture capitalist (VC) funding goes to female founders, whereas almost 60 per cent of the start-ups do not have a woman on the board, Fahey said. “This new economy tends to exclude women,” she said.
The Austrade is highlighting the issue so that like other businesses, start-ups too can gain from benefits of gender diversity. “This sector is sabotaging its own future by not having women on their boards,” Fahey said.
What Needs to Change
On the investment front, Fahey believes that part of the problem is that there are not enough women VCs. “I think we as women have got a responsibility to ensure that more women entrepreneurs get funded,” Fahey said. “My colleagues, senior women in business often talk about their plans of serving on the board of directors after retiring from their current roles. I tell them why don't you go on to become a part of a VC firm. We need more women making decisions about where that funding goes. Well, of course they can go to boards, but I think it's even more important that they use their expertise to actually become influential in where the VC funding goes.”
Emphasizing on the importance of women supporting women, Fahey mentioned a Canada-based non-profit, SheEO, aimed at funding female entrepreneurs and the need to establish more such funds. In India, She Capital is an early-stage venture capital fund that facilitates fundraising for female founders.
Also Read: The Road to Success for Women Entrepreneurs
Also, data shows that women in positions of power inspire junior female employees to strive for greater heights. In KPMG Women’s Leadership Study, as much as 86 per cent women reported that seeing more women in leadership roles encourage them to get there themselves.