Balancing gender

Last month the Australia Institute released its report on the impact of the recession on women. The news wasn't good. Last week we “celebrated” Equal Pay Day even as our gender pay gap is widening. Lots of talk but little action. This week there will be discussions about mandatory quotas for women on boards at the Victorian Premier’s Women’s Summit. Hopefully it won't be a matter of "Here we go again ...", but our track record isn't encouraging.

The Corporations and Markets Advisory Committee (CAMAC) - set up in 1989 to provide independent advice to the Australian Government on corporations issues and financial markets law and practice - recently released its Diversity on Boards of Directors Report 2009 (PDF 34KB). The findings are predictably conservative. It failed to recommend mandatory quotas for women on boards, such as have been successfully implemented in countries like Norway. For Australian women, it’s a bloody cop out.

The former Minister for Superannuation and Corporate Law, Senator Nick Sherry, sought the advice of the Advisory Committee because:

The issue of diversity on boards has stemmed from observations by commentators that corporate boards tend to be homogenous groups, largely composed of men of similar ages with similar demographic, ethnic, educational and professional backgrounds. There is some evidence that correlates diversity at board level with enhanced corporate performance. Although this does not necessarily demonstrate causation, it does indicate that the concept of board diversity in corporate governance is worthy of further investigation. In addition to this consideration, there are also broader issues of community participation and equality concerns.

I believe that the issue of diversity on corporate boards, with particular regard to the participation of women, is worthy of further investigation. I therefore ask CAMAC examine and advise on the issue of diversity in corporate boards. In particular, I seek your advice on the options for creating an environment that will encourage companies in Australia to foster a governance culture that embraces diversity in the composition of their boards.

In a brief section entitled “Problems with quota approach”, CAMAC cited A. Maki, “Norway’s ‘Golden Skirts’ Risk Metrics Risk & Governance Blog", February 22, 2008 and “Norwegian firms’ boards” from The Economist (January 3, 2008) in support of its anti-Norwegian approach. And while the CAMAC focused on the “teething issues” any country would expect to experience when making legislative changes, it failed to highlight obvious positive elements. What about the other factors outlined like:

… the Confederation of Norwegian Enterprise launching a program called Female Future in response to the increased demand for female leadership. It has trained about 600 women for board and leadership positions.

… the nomination committees of corporations globally being dominated by male directors who generally propose men to serve on boards. Although Norway’s 40 per cent rule puts a burden on boards, studies have shown that greater female representation has positive effects. For example, a study by the Conference Board of Canada in 2002 found that corporations with female board directors have superior governance practices, particularly on oversight and control of audit and risk. Another example: a joint study of 89 European companies by McKinsey and Amazone Euro Fund concluded that companies with the most gender-diverse management teams outperformed their peers in return on investment by 10 per cent, and in pre-tax and pre-interest earnings by 48 per cent. The study also noted that stock prices at gender-diverse companies grew 1.7 per cent faster than the share prices of less diverse peers.

There was initial scepticism about the mandatory quota system in Norway, but it abated as the success stories emerged. Reported comments include:

If I had to generalize about the differences between men and women on boards? Women are more interested in getting the facts. Much more prepared; ask many more questions. Men tend to shoot from the hip. Women on boards are also more interested in how the organization will actually work. Think of an acquisition or a re-org to take a company more global. When women are in the discussion, they ask questions like: 'don't just show me the Powerpoint. Who are these people? What are their responsibilities? Matrix type questions. Women tend to see the organization as more of a living thing.

And:

In general, diversity makes better decisions: experience, education, age, nationality, gender. They must reflect your customers and your markets. [Previous to the legislation], we had not thought any of this through as deliberately as we should have …

In July this year Fast Company Expert Blogger Kate Sweetman wrote:

Many of the board members that I interviewed had resisted the legislation. Almost every one, in fact. Both men and women in the private sector objected to the "quotation" as they call it (in the US, we would call it a quota). You can guess the reasons: quotas are wrong because they are about diversity and business is about meritocracy; quotas are simply a form of institutionalised reverse discrimination - what about the men?; government has no business interfering with the workings of business; quotas on boards flew in the face of shareholder rights; if qualified women existed, we would already have them on the boards; women don't really want this anyway.

Two years later, in a series of one-on-one interviews, every single person said that the boards were measurably improved with the addition of the women. A couple of the boards already had a lot of women: those folks tended to think that a legislation solution had not been necessary. But those who experienced the resistance to having women on boards and then lived the difference when the issue was forced supported the legislation. The reason: the change would never have happened unless it was required.

Did anyone on CAMAC or in Minister Sherry’s office bother to contact Arni Nole, Director General of Norway’s Ministry of Children and Equality, for first-hand advice before dismissing mandatory quota systems out of hand?

Compare Australia’s chauvinistic conservatism with the foresight of Karita Bekkemellem, Norway’s former Minister of Children and Equality, when she said in 2006:

Europe faces the challenges of an increasing elderly population together with falling birth-rates. In such a picture, it is important to make use of all the human resources in a country, and not just half of it, to keep the economy going.

The problem is not that Europe does not possess qualified women; the problem is that their qualifications are ignored. In other words; women do not get the opportunities they are qualified for! What a waste!!

In Norway we traditionally score high on Gender Representation. So why then regulate this policy area by a new law?

Because we realized, that the wanted development in Norway did not go fast enough! We do not have the patience to wait another 100 years!”

Unfortunately Australian women will have to wait another 100 years unless the Rudd Government grasps the double-bind dilemma for women in leadership, sees the role for mandatory quotas in defusing gender schemas that infect the business environment and actually starts to take seriously its obligations under Articles 4 and 5 of the Convention on the Elimination of All Forms of Discrimination against Women.