DCA’s ground-breaking research reveals the cultural origins of Australia’s business leaders
23 October 2013

In an Australian first, Diversity Council Australia’s new research released today reveals the cultural origins of board members and senior executives in our major listed companies. Whilst it finds some encouraging breadth and depth in cultural diversity amongst business leaders, it also identifies some underrepresentation in key areas, especially when compared with the general population.

Called Capitalising on Culture: A Study of the Cultural Origins of ASX 200 Business Leaders, and produced in partnership with the federal government’s Australian Multicultural Council, and PwC Australia, the Australian Government and IBM Australia, the research analysed the personal and family names and company, occupation and gender of board members and senior executives of ASX 200 companies. From the research, DCA makes a series of recommendations to assist organisations to better measure and capitalise on culture.

Nareen Young, DCA’s CEO said the research provides a unique perspective on Australia’s business leadership.

“For many years we have known the degree of gender diversity on ASX 200 boards but we haven’t had any knowledge of the cultural background of directors. Yet a culturally diverse and capable leadership team can provide enormous benefits for organisations, such as the potential to boost local market share, enter international markets, create strategic alliances, maximise innovation and meet critical talent shortages.

“Our research is an important first step in capturing the cultural mosaic of ASX business leaders. It also provides valuable recommendations on how organisations can better measure and capitalise on culture in executive ranks and the leadership pipeline for the benefit of their businesses,” said Ms Young.

Some of the key findings include:

  • 22.2% of directors are ‘culturally diverse’ (referring to people from non-Anglo-Celtic cultural origins, i.e. European, Asian, African, Middle Eastern and Pacific Islander origins), 21.9% of CEOs, 19.9% of senior executives and 13.5% of chairs. This compares to 32.2% in the general Australian community;
  • When a narrower definition of ‘culturally diverse’ is adopted (i.e. excluding people from North West European cultural origins), the degree of culturally diverse business leaders drops by at least half. The proportion of culturally diverse directors falls to 11.3%, culturally diverse CEOs falls to 11.4%, culturally diverse chairs to 7.0% and culturally diverse senior executive positions to 9.7%. This compares to 24.3% in the general community;
  • Most culturally diverse directors have North West European cultural origins (10.9%);
  • The proportion of business leaders with Asian cultural origins is relatively low compared to the general community, especially given the importance of the Asian region to Australia’s future economic growth. Only 1.9% of executive managers and 4.15% of directors have Asian cultural origins (versus 9.6% in the general community);
  • On a state basis, NSW, WA and VIC have the highest proportion of culturally diverse directors, QLD has the closest match between leader diversity and community diversity, but NSW has the least alignment between leader diversity and community diversity;
  • On an industry basis, the commercial & professional services industry has the highest degree of cultural diversity while the transportation industry and the automobiles & components industry have the lowest; and
  • Culturally diverse female and male leaders are on par with 22.0% of female directorships culturally diverse and 20.4% of male directorships. However, there is a very small pool of culturally diverse female leaders: 29 female versus 233 male.

Luke Sayers, CEO of PwC Australia who sponsored the research said, "In today’s rapidly changing world, a company’s culture and its people are a critical source of differentiation, and will determine whether a company embraces opportunity and change, or becomes obsolete.

“A culturally diverse workforce is essential for organisations that want to attract and retain the best talent, foster an ecosystem of innovation, remain relevant to their clients and capitalise on the many opportunities that exist for Australian businesses in the Asia Pacific,” Mr Sayers said.

Andrew Stevens, Managing Director of IBM Australia and New Zealand who also supported the research, said his organisation understands the advantages of a culturally diverse and aware workforce.

“As a global company operating across nine time zones in 170 countries, where more than 70 languages are spoken, cultural diversity is one of our greatest strengths. Now more than ever it is important to capitalise on the full breadth of talent in the marketplace. A culturally diverse workforce, at all levels from graduate hires through to executives, fosters creativity and innovation which is essential to any company’s ongoing success,” said Mr Stevens.

An interactive executive summary of the research produced by PwC can be found here. DCA members can access a full copy of the research report here and the 11 recommendations for action here.

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