Board Representation: Balancing the Gender Mix

David Gonski, Chancellor of the University of New South Wales and chairman of ASX Ltd, Coca Cola Amatil Ltd and Investec Bank Ltd, is well known to Australians for his senior role in business. He is also recognised as a champion for affirmative action around the placement of women on company boards. On Thursday 5 August 2010, David Gonski addressed The Sydney Institute, as part of a discussion on ways to improve the numbers of women on corporate boards in Australia. David Gonski was introduced by Sydney Institute board member Carol Schwartz.  The paper which follows is an edited transcript of David Gonski’s address.

BOARD REPRESENTATION: BALANCING THE GENDER MIX

DAVID GONSKI

Let me first say, if you are looking for a big debate between Liz Broderick and I, you have come to the wrong place. And the exit is right there. I respect Liz immensely and I have watched her career over time; she has done a wonderful job. But for her support of quotas, Elizabeth Broderick would be a perfect person.

Let me also start by saying I am disappointed, as a male, that in 2008 the proportion of female company directors of Australia’s top 200 listed companies was only 8.3 per cent. I am pleased though, and Liz did acknowledge this, that now the number is now 9.3 per cent, and that it has grown in the last three to six months by 1 per cent. It is not 40 per cent, but it is on its way. This is the sort of problem we have with the top echelons of business. But, as the chancellor of a university, I don’t see that in my university. When I go next door to the children’s hospital, where my wife works, I don’t see that either. When I go to Prince of Wales Hospital, which is usually as a patient, I am very lucky to be surrounded by the top women who run that place, and run it so well. When I was on the board of St Vincent’s Hospital, the nuns – all women – were in charge.

Secondly, I feel quite relaxed as a citizen of New South Wales knowing that my Premier is a woman, that my Governor is a woman, that my Prime Minister is a woman, and that my Governor-General is a woman. I have no problems whatsoever with that, and I believe the land continues to survive and thrive. So why is it in business that we are falling behind?

As those who have heard me before know, I believe there are three reasons. First, as Liz has mentioned, men have come to the conclusion that there are no suitable candidates, and I will come back to that. If pressed, some men would say that women do not fit in to the boardroom structure. Most boardrooms now do have loos for both sexes, but that wasn’t the case when I first because a director 28 years ago. And finally, there is what I call the self-fulfilling prophecy, which that we want people who are experienced on boards to be on boards, and therefore if you’re not on a board you can’t possibly go on one.  It’s the familiar line: “If you’re a neurosurgeon I want you to have done at least 3000 cases before you operate on me.” As women are not prevalent on boards, therefore they shouldn’t be invited on to boards.

Let me just take some of these excuses and look at them. The most important is that there isn’t a talent pool of women sufficiently developed to go on boards. If you define who you want on a board in particular way, that is the right conclusion. If you, for example, want somebody who is over 6 foot 6 inches, and has played men’s football for the last 30 years, or fought in the all-male army, probably women would not apply, and nor should they. We talk a lot about the fact that boards should be made up of CEOs. Indeed many boards only look for people who have led companies at the most senior level. Many have heard me say before that, as a person who has never been a CEO, it is quite amazing to me that for the last 28 years I have had many board appointments.

The fact is that we do not need only CEOs on our boards. The fact is, also , that a board full of CEOs would be one of the worst boards you could possibly have, because you need a range of personalities – especially those prepared to accept that they’re not the boss. It seems to me that as soon as you say you don’t need only CEOs on boards, suddenly the pool that you can look at in terms of gender, gets enormous. We all know very well the fine women who have come through law, the fine woman who have come through medicine, the designers, the consultants. All of them, in my view, have a place on my idea of a board. So I reject the first excuse, which is the most common.

The second argument, which probably doesn’t really dignify any thought, is the question of whether they would fit in. There is actually an issue there. I have said, and I have said many times, that my concept of a board is like an orchestra. You cannot possibly run a major company if everybody plays the timpani. It will be just a mess of drums. You need violinists, you need viola players, you need flautists, you need clarinettists. It is the same on a board – you need diversity. That is why I suspect Carol Schwartz’s numbers are probably right, where it says that it is proven that having females on boards is a correlation to success, because it is an open mindedness, it is the use of everybody in the community rather than trying to just get the timpanists to run the place.

I might say that gender is the issue of today. Age will be the issue of tomorrow. I do believe there is a place for older people to be on boards. I don’t believe that women don’t fit in. It is essential that they be allowed to come in. And if we are going to have a situation where they don’t fit, then change it. If you change it you will optimise your business. If you don’t change it, you will end up with old people like me sitting round the board.

So how do we achieve this? The fact is that saying to corporates they must have a target – a policy in terms of gender and must report annually how they are going – will shame people over time. We are all winners, particularly those that are listed companies. We want our constituents to believe we are right. And people are taking this seriously. They’re certainly asking us a lot of questions on what we mean by our philosophy.

Then is the mentoring scheme that the Australian Institute of Company Directors, has started. There are, as I understand it, 56 chairmen who have signed up to mentor one or two females to try and make sure that they are not only board-ready, but will move to the next stage.

Shareholders have a stake in this. They should, for the benefit of their business and particularly where businesses are consumer based. If they want 100 per cent coverage of their consumers, they need to have women on their boards. As such, they should be asking companies that don’t have sufficient representation to change that. I absolutely agree with Liz that it is a problem of men. We do have to change, and the number of us who think this way is growing towards a majority who believe they have got to do something.

So let’s come to the debate about quotas. I am impressed that Liz has become such a politician. She now calls quotas “temporary special measures”. But there are a few temporary special measures I might like – such as 100 per cent taxation which would be great for government revenues. My philosophy is not that you don’t need some sort of impetus. But I also believe we are a country that must allow business the freedom to make its own decisions. If business leaders don’t come to this decision, personally, I think they will fail in time. They will not be in tune with what is going on. They will not be great businesses.

The other point I’d make is that putting women on boards under a quota arrangement means that they’ll be seen as inferior. I have experienced it, let me tell you, in terms of overseas boards, where I have been the notional Australian on the board. The Americans dominated the board anyway. And I didn’t like it, not one bit. I was there, I thought, because of me, because of who I am, not because I’m Australian. I would not like to be a woman put on a board because of a quota. The pool is big enough for women to get there on merit. Temporary special measures or not, we should not go that way. You start with quotas, you want women on boards. The next step is, maybe, you want representation from those who work for the company. Then we start, maybe, wanting officials from government on boards. Why do we want to do that to businesses? Why do we not extol the virtues of the change, making people proud to be involved in it, rather than compelling them?

In conclusion, I believe that Liz Broderick and her group have done a most wonderful job. But I don’t think we need the threat of quotas. It is obvious to anyone with half a brain that to exclude what is basically 52 per cent of the population from boards that are involved in selling and dealing with the population is nutty. And we have to allow women to come in on our terms, which are that they come in as who they are, not because the government tells us, and not because basically we are compelled to do it. My view is that men have been unwise up to now, but they will realise that. In the years to come, companies that don’t transform their boards and take the best of the population, which includes women, will be in my view on the scrap heap soon enough. So don’t give them the excuse by legislating so they can say it was the government that forced them.