Companies with a single-gender directorship fail at a 37% higher rate, according to new data

Once again, the numbers tell the story of the importance of gender diversity at the decision-making level. New figures show that companies with directors of just one gender had a 37% higher failure rate during 2021, than those with a mix.

The findings this time are from Purpose Bureau, an ESG directory, examining the failure rate across Australian businesses from January to December 2021.

Business failure, according to Purpose Bureau, is defined as applying to businesses that were actively operating in the 12 months prior to their date of deregistration.

Those that lack representation from both men and women were significantly less like to fail than those with all female or all male directorships.

While leadership diversity figures usually tell the story across larger entities, this research is particularly interesting given its scale and how it can be applied to small businesses also. Purpose Bureau says the rate has been measured across almost 1 million businesses.

They found that for every 10,000 businesses, 318 with a single-gender directorship profile fail, compared with 233 for those with mixed directorship gender profiles.

Some sectors were more likely to succumb to the male-only directorships than others. Including in mining, where a massive 81% of businesses were all-male led, and in construction, with 80% all-male led. All female-only directorships were mostly found in education and training, as well as healthcare and social services, with 15% of directorships across these industries being all female.

Purpose Bureau CEO Nick Kamper described these preliminary findings as representing a “very large cohort of Australian businesses” that “clearly suggests that gender diversity in leadership leads to better business outcomes”.

“The research requires further analysis to fully understand the dynamics at play, but it’s further evidence that Australian businesses benefit greatly from a diversity of views and experience at the leadership level.”

This article was first published by Women’s Agenda.