The Impact of Diversity on Board Performance in Australia


Board diversity has been a topic of discussion for many years, and it continues to be a pressing matter in Australia as well as in many other countries. Although Australian companies have made considerable progress in increasing the number of women on their boards, they still fall short when it comes to racial diversity. The push towards greater board diversity has been gaining momentum in recent years, and this is an encouraging development. The question that arises is whether diverse boards lead to better company performance–and if so, how? 

The Importance of Diversity on Boards 

There are ethical and moral reasons for a greater diversity of governments. It is important to recognise the value and contribution of people from different backgrounds and perspectives and to offer underrepresented groups a seat at the table. 

Additionally, research shows that organisations with high board diversity are more likely to outperform their peers. A McKinsey study found that companies with leadership team gender diversity in the top quartile, were 25% more likely to have above-average profitability than companies in the bottom quartile. Another study by Credit Suisse found that companies with at least one woman on the board had higher return on equity and higher valuations. 

The state of Diversity on Boards in Australia 

The number of female board members in Australia has been monitored since 2010 by the Australian Institute of Company Directors (AICD). The proportion of women on ASX 200 boards will increase to 331% in 2021 from just 83% in 2009. While this is a step in the right direction, there is still a long way to go before there is gender parity on corporate boards. 

The lack of diversity extends to other areas as well, including age and ethnicity. Despite having a population that is more than a quarter foreign-born, Diversity Council Australia reports that only 6.2% of its board members are from outside of Europe. In spite of the fact that people over the age of 55 make up a sizable portion of the workforce, only 20% of directors, according to the report, were over 55. 

The Challenges of Achieving Diversity and Inclusion 

There are obstacles to achieving diversity and inclusion on boards. The biggest obstacle is unconscious bias. This refers to the unconsciously held prejudices and presumptions that people have about particular racial, ethnic and other groups. Underrepresented groups may not be given the same opportunities as other groups due to these biases, which can also result in discrimination. 

The lack of a diverse talent pool is another issue. Many businesses argue that they can’t seem to find qualified applicants from underrepresented groups. This argument, however, is frequently untrue because many talented people from various backgrounds are frequently passed over because of unconscious bias and other issues. 

Actions Organisations Can Take 

Organisations can take a number of steps to address these issues and increase diversity and inclusion on their boards. Setting diversity goals is a great start; the aim should be to increase the diversity of the boards in a time frame that suits the changes we are seeing in today’s world. This can assist in keeping the diversity issue on the table and guarantee that advancements are being made. 

Implementing training programs for executives and board members is another initiative that can aid in increasing awareness of unconscious bias and offering countermeasures. They can also impart knowledge on how to foster an inclusive culture and the advantages of diversity and inclusion. 

Businesses can foster an inclusive culture by promoting diversity and inclusion at all levels of the company. Creating employee resource groups for underrepresented groups, providing mentorship and sponsorship opportunities, and ensuring that diversity and inclusion are incorporated into the organisation’s purpose and values are all examples of this. 


For better decision-making, better representation, and better performance, diversity in Board membership is a crucial factor. Although we have seen the progress in achieving greater gender diversity in Australia, we still have a long way to go in terms of diversity in other areas. A compelling argument for organisation to strive for greater diversity on their boards is the data that shows the improved performance of a board when inclusivity is implemented. 

Promoting diversity and inclusion on boards is not without challenges, but that doesn’t necessarily mean that there aren’t steps businesses can take to overcome these obstacles. Organisations can improve their performance and contribute to a more equitable and just society by adopting diversity goals, implementing training programmes, and cultivating an inclusive culture.