Board Representation: Balancing the Gender Mix

Elizabeth Broderick is the Sex Discrimination Commissioner and Commissioner responsible for Age Discrimination in the Australian Human Rights Commission. Prior to her appointment, Elizabeth Broderick was a partner at Blake Dawson and the 2001-02 Telstra NSW Business Woman of the Year and Australia Corporate Business Woman of the Year. On Thursday 5 August 2010, Elizabeth Broderick addressed The Sydney Institute to discuss the how best to tackle the lack of women on Australian executive boards. Elizabeth Broderick was introduced by Sydney Institute board member Carol Schwartz

BOARD REPRESENTATION: BALANCING THE GENDER MIX

ELIZABETH BRODERICK

It’s a privilege to be introduced by such a wise agent of social change as Carol Schwartz here tonight. Let me begin by acknowledging that we are meeting here on the traditional lands of the Gadigal people of the Eora nation, and to pay my respects to their elders past and present.

Today, I want to do three things. Firstly, I want to examine the data both here and internationally about the gender mix on boards. I know we all come from different backgrounds, and have different degrees of knowledge. Secondly, I want to make some brief observations about that. I also want to make some brief observations about what IU (?) think needs to be done. Thirdly, and finally, I want to talk specifically about the issues of targets and quotas.

Before I start, let me acknowledge the contribution that my co-presenter David Gonski has made to this debate. He has put the issue of women’s under representation on Australian boards onto our national agenda. As many of you know, David Gonski has been a long time advocate for change. He has encouraged business leaders to take some responsibility for the situation that currently exists. And also to take responsibility for changing this picture. I know that David Gonski has worked in both the public and private spheres to educate, to cajole and to influence others to take action. I really commend him on his leadership.

David Gonski and I agree on many things. We are in strong agreement that the current representation of women at board level is unacceptable in this country. We also agree that while much needs to be done, we also need a change of direction. Where we have some divergence of opinion, however, is on how that change might occur. This is why it is so important that we continue to debate and discuss these issues. This is why I’d like to thank the Sydney Institute, particularly Gerard and Anne, for providing a platform for that discussion. I’m really pleased to see when I look at the board of the Sydney Institute, almost 40 per cent of that board is women. And women that are punching above their weight. They are some of the feistiest women I know. So good on The Sydney Institute.

So let me outline the problem. These are the facts. Australia is leading the world in women’s educational attainment. That is, we are educating our women better and longer than almost any other country in the world. And when we look at the university and tertiary statistics, the majority of university graduates are female. Despite this, we have a declining rate of women’s workforce participation. In the last year, the World Economic Forum Gender Gap Report has told us that Australia has dropped ten places in one year. So we are going backwards, and that includes at the senior leadership level.

Here in Australia, 59 per cent of women are in paid work. That compares with 62 per cent of women in paid work in New Zealand, 67 per cent in the UK and 70 per cent in Norway. Australian women start with the same level of intelligence and commitment as men, but the reality is that they are missing in action at the most senior levels. To illustrate this, we need look no further than corporate Australia.

The 2008 census for the Equal Opportunity in the Workplace Agency (EOWA) told us that only 8.3 per cent of Australian board directorships are held by women when we’re looking at ASX 200 companies. Women chair only two per cent of boards. And when we look at the management level, in the 2008 statistics, two per cent of Chief Executive Officer positions are held by women. The most disturbing statistic is that only 5.9 per cent of executive-line management positions, or positions that have responsibility for profit and loss, are held by women. And that is down from 7.5 per cent in 2006.

Just two months ago Metric International, which is a global ratings agency, released its data that discloses Australia’s global position. In the March 2010 report, Australia was notable for two reasons. Firstly, we have now dropped behind all our OECD counterparts on the number of women on corporate boards, with the exception of Japan. Secondly, we have had the largest decline over the past two years, together which Hungary, Peru, the Philippines and Poland. So, the failure to change this picture of leadership in Australia puts us at a significant disadvantage internationally. We have a huge wastage of female talent in this country. There is no nation or government, no industry or sector which can afford this kind of loss. Without significant intervention by business and government, the number of women progressing in the workplace will shrink even further.

Solving the problem isn’t easy. We know that because, if it was, we should have done it by now. It’s difficult and complex. Part of the problem is that, until now, much of the focus has been on fixing women – providing assertiveness training, mentoring, networking and self-branding strategies. And these are all important. But, by themselves, they are just not enough.

Most of the discrimination that exists today is not overt. I see it every day in the work that I do as a sex discrimination commissioner. It is built into the systems, the cultures and the institutions that exist in Australia. It’s often the result of an unconscious bias, a bias that relies on our inbuilt gender schemers that develop a shorthand way of trying to understand and process information.

In summary, the barriers to women’s workforce participation mainly fall into three categories. Firstly, belief barriers. There are two deeply held beliefs here in Australia.  One is what the ideal worker looks like. The ideal worker is someone available twenty-four/seven with no visible caring responsibilities and is usually male. The second belief barrier is the good mother stereotype. In Australia, a good mother is always with her children. These belief barriers are holding women back.

Then there are cultural barriers or the systems we have in place inside our organisations, systems about selection, promotion, and career development. These often reproduce disadvantage for women. It’s not often deliberate, but that’s their impact. The third barrier is structural. Hopefully one of the structural barriers will be removed on 1 January 2011 when we have a paid parental leave scheme. This will be a huge step forwards for this Australia. But there is also the lack of affordable childcare, and a lack of accessible childcare. I meet women everyday who tell me they actually pay to go to work.

Solving the issue of women’s under representation on boards requires some kind of systematic intervention. It requires us to devise a new approach, a new plan, and new solutions. I want to make a few observations about what our new plan should include. Firstly, our plan must not be confined to change in women. Nor can it be just about change between men and women. I firmly believe that we will not see significant progress until men start working with men to solve this problem. After all, it is men who dominate nearly every institution in this country, particularly in corporate Australia. If there is to be a change, it needs to be male CEOs and business leaders that to champion it. That’s why it’s so terrific to see men like David Gonski and other concerned and passionate advocates, who are prepared to pick up that advocacy mantle and to lead by example. That’s my first observation.

A second observation is that we need to see this issue of women’s leadership in the broader context of gender equality. People say, you’re a human rights commissioner, why do you care whether educated, articulate women are actually on boards, or at senior level across our country? It doesn’t threaten basic humanities such as food, shelter and housing. But let’s be clear; there’s a strong connection between how women are treated in corporate and business life and how women are treated everywhere across our country and internationally.

The statistics on women’s leadership reflect our progress towards gender equality, just like the statistcs on sexual harassment, just like our records on addressing violence against women, the gender pay gap or the disparity in retirement settings. Irene Lang, president of Catalyst and a big thinker on gender in the US, says that until women are equitably represented in the private economic sector they will be marginalised in very other arena. That’s the equality argument. But we must also not forget the research that Carol Schwartz referred to. Increased corporate performance correlates with greater gender diversity at a senior level. It is not a causal link but a strong correlation. Whether you prefer the justice or equality argument, or you prefer the profitability argument or the, let’s improve corporate performance argument, the outcome is the same: we need more women at the top.

My third observation is that we need to be clear about what it is that we’re working towards. As the mother of a young boy and a young girl, I want to work towards a future where neither of my children’s decisions or ambitions in regards to work and family are dictated by their gender. I want a future where men and women are equally represented in all forums of leadership, influence and decision making. In practical and business terms, what does this look like? Well, as Jan Elsner, a strong leadership commentator said, we need to build critical mass in the presence of existing barriers. It is critical mass that will create the change that we’re talking about because only critical mass will create the change rather than the other way around, where we believed that change would create critical mass. When I think about what we need here, I’m thinking about a minimum of 40 per cent of each gender on all company boards within five years.

My fourth observation is that once we’ve agreed what it is we want, then we need to put all the options and the possibilities on the table. It should be our ambitions which define our methods and tools, and not the other way around. Without a significant change in our approach, all we can expect is more of the same.

I want to finish now by talking specifically about targets and quotas. In efforts to promote women into leadership roles, there’s no doubt in my mind that there was a major turning point about twelve months ago in relation to the thinking on quotas and targets. Until then, the prevailing view was that the system was merit based and the problem was with women who either wouldn’t or couldn’t step up and take high office. In September 2009, there was a major conference about women on boards. There was agreement that Australia was going backwards and was likely to descend into freefall without some systemic intervention.

At that time, I agonised about whether I would use the “Q” word – whether or not I’d call for a mandatory quota of women on boards. After must consideration, and having followed this for 20 years, I decided that we needed a lively debate about quotas. The type of debate would be an important vehicle for identifying common ground and for calling business to action. And it’s so reassuring to see now that we can have an open discussion about targets and quotas; that these words have become part of the mainstream debate and they’re being used by many people, senior directors both male and female, across the country. People who probably, twelve months ago, would have been aghast at the very suggestion. So change is happening.

The government announced last week a 40 per cent minimum gender neutral target for all federal government boards to be achieved within five years. I was interested in the minister’s speech launching that part of her election commitment. She said: “The federal government will lead by example.” And there have been changes in the ASX Corporate Governance Council. This represents the first systemic intervention in this area. The good news is that the statistics from the Australian Institute of Company Directors show that, whereas in 2009 five per cent of appointments to ASX 200 boards were female, in the first six months of this year, 25 per cent of appointments to ASX 200 boards have been female. That is a really significant jump.

These are promising signs, but will they be enough? With this in mind, I want to talk about quotas or what might accurately be called “temporary special measures”. The hostility towards quotas in Australia has long been held not just by men. It’s also held by women. There’s a pervasive view, at least in certain circles here in Australia, that quotas constitute favourable treatment for women and that this will undermine the principle of merit by either promoting women who clearly are not up to the job, or by undercutting women in the workplace by creating the impression that they’re not actually there on the basis of merit, but because of a quota. So I think we need to talk openly about the principle of merit and what it means.

It’s a very good principle. It aims to ensure that leadership selection processes are fair, that they’re impartial and transparent. It means the outcome isn’t based on where you went to university, or where you went to school, or whom your parents know. The merit principle is intended to eliminate favouritism, nepotism, bias and of course sexism. Unfortunately it is now being using to defend just that. It’s time that we started to apply the merit principle to women, and quotas are one way of bringing women’s merit out into the open.

When Michael Lavarch, a former Federal Attorney General, amended the Sex Discrimination Act in 1995, he anticipated that one day we might need temporary special measures, including quotas. And he was clear that these sorts of measures should be presented and understood as an expression of equality rather than as an exception to it. By this he meant that there’s a difference between formal equality and substantive equality. Are we interested in equal chances, or equal outcomes? Sometimes we just have to treat people differently to get true equality. And there’s any number of arguments against quotas, of why we shouldn’t consider quotas.

Some have suggested that since the ultimate say on board composition in the private sector belongs to shareholders (they are after all the owners of a business) that quotas would cut across the power of shareholders to choose the directors who will be accountable to them for the stewardship of their investments. The argument goes that it is owners who invest in companies and risk their money; they should therefore have the right to decide who they want to represent them on the board. But shareholders’ decisions have never been completely unfettered. The introduction of quotas would only mean that if a female candidate who was unacceptable to the board was put forward, then we’d need to find an alternative female candidate.

Others have asked if, with quotas, there would be a sufficient supply of appropriately talented women to fill the positions. To that I say that if Norway can find 1,000 women in a population of 4.5 million, we can find 430 women in a population of 22 million to get to 40 per cent on the boards of the ASX 200 companies. Having recently been involved in the Australian Institute of Company Directors’ mentoring program, I have no concern about the supply of appropriately talented and qualified women in this country. The current issue is with the demand side of the equation.

In closing, I wanted to mention an entry on a blog about quotas which followed an article I wrote a couple of months ago. The blogger’s name is Tim Chapman. He writes:

There are really only two conclusions to draw from the evidence presented in Elizabeth’s article. Either women are, as a sex, inferior, or there’s a problem in our culture that requires going beyond eliminating structural discrimination. As a man, I agree with the assessment that men have to take equal responsibility to address what is clearly a fault in society’s culture. Quotas are an excellent idea. They are a jolt to the culture; a culture where, after a full generation of women in education, the statistics in Elizabeth’s article are a great disappointment. I agree that quotas wouldn’t be without problems; they would result in many individual cases in which maybe better suited men were passed over because of their sex. And, as a man, I may one day myself lose out because of a quota system. But even hundreds of such individual cases cannot be compared to the fact that, currently, half of our society is not getting the opportunity to contribute to the best of its potential. I’d gladly miss out on a few jobs I deserved if it meant that our culture changed to the point that, in my daughter’s lifetime, women were participating proportionately across a range of occupations without the need of a quota system to get them there. Because, if we let things continue at their own pace, it will not be my daughter’s generation, but perhaps my great-grand-daughter’s generation, and that’s too long to wait.

I felt like saying when I read that, Tim where are you? Can I marry you?

Undoubtedly, there will be a resistance to these new solutions. They’re challenging the status quo, and we have to expect that. Let’s not just talk amongst ourselves. Let’s find the men that also need to know that we need this change. And let’s urge them to start speaking up where it really makes a difference, and that is at the top. Because, here in Australia, gender is back on the agenda. Let us build a strong and sustainable economy; an economy based on the skills of all our people. And an economy that recognises and rewards the contributions of men and women equally.