Forget quotas, diversity campaigns are better for women on boards

Global diversity campaign 30% Club is launching in Australia, hoping to lead the nation's most influential company directors in a push to see women make up 30 per cent of ASX 200 boards by 2018.

"[Board diversity] is a lot more effective if companies do it because they want to and in their own way."
Patricia Cross, Country Lead for 30% Club Australia

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Well-known Australian director and Country Lead for 30% Club Australia Patricia Cross is at the forefront. She sits down with BlueNotes Associate Editor Amanda Gome to explain why Australia needs a gender diversity club, admits quotas will change things faster but maintains they are not better and discusses what can be done about the 35 boards on the ASX200 which still have all-male boardrooms.

Amanda Gome: Patricia, why does Australia need the 30% club? Why can't Australia get to 30 per cent females on boards without setting targets?

Patricia Cross: The case for diversity is solid. Our research shows at ASX-200 companies for every seven men put on boards each year only three women are.

If we continue at this pace it will take until 2023 to get to 30 per cent representation and that's not good enough. If we dial it up the hire rate to four women for six men, we will reach 30 per cent by 2018. That is doable.

Gome: When does significant change take place? When a board appoints its first female director?

Cross: No. The change from 10 per cent to 30 per cent is significant culturally. You need to get to 30 per cent so the minority have a voice. Two is nice but three is where you are participating. The next major leap is to get from 30 per cent to 50 per cent.

Gome: So why set a 30 per cent target and not 50 per cent?

Cross: If you speak to chairmen of top companies there is almost universal support for a voluntary 30 per cent target. It's an easily achievable first step and one that makes a difference.

The ASX200 already has many enthusiastic male chairs with three or four women on their boards. We are looking for this coalition of enthusiastic people to champion the cause.

Gome: What are the major hurdles Australia faces to putting more women on boards?

Cross: People claim a meritocracy is not consistent with diversity. This is a myth that needs debunking. There are plenty of highly qualified women that should be tried on boards. Their only problem is they're not the typical well-known ex-CEO males.

Gome: Is the 30% club ground-breaking? How quickly will change happen based on models overseas?

Cross: If you think about it, this is the logical next step. No one says having females on boards is bad for business and there is too much research pointing to the contrary: it leads to better performance.

What is going to change the game is strong support from the Australian Institute of Company Directors. They have put a 30 per cent by 2018 target out there and their 35,000 members represent many companies from large to small. This push has a lot of authority.

Another gamechanger is the Australian Council of Superannuation Investors which is targeting 30 per cent of women on boards in which they have a significant interest by 2017.

Governance professionals and investors in general are becoming a lot more interested in gender diversity on investee boards such as AXA (which has diversity as a top five criteria) and asset manager Black Rock because they want improved performance.

Gome: Wouldn't quotas drive change faster?

Cross: Yes they would. In Norway you have to be at 40 per cent or delist. But does this drive meaningful change if it is not necessarily endorsed by the business? It is a lot more effective if companies do it because they want to and in their own way.

Gome: There are 35 boards in the top 200 ASX companies with no women. What can be done about this?

Cross: I would be surprised if those companies weren't discussing it already. It's a combination of a bigger public push, a coalition of enthusiastic leaders championing the cause combined with individual approaches.

In the UK some chairs and directors have been very hands on while many are happy to lend names. If someone isn't at 30 per cent, we want them and want to assist them. This is not a name and shame game.

We also want everyone included from Chief Executive Women and the Male Champions of Change, Women on Boards, Women's Leadership Australia along with women in the social space who are also doing a great job led by media like Women's Agenda.

Gome: How will the chairs of member companies be held to account?

Cross: The good thing about the target is ASX reporting is transparent so we will all know if they miss the target.

Gome: What have been the attitudes of the chairs? Has it taken much to get them over the line?

Cross: I have been dealing with many of the top 30 to 50 Chairs and it hasn't taken much to get them over the line at all. Many have well-laid plans in place. Even those who aren't already there have plans and are supportive of the target. These are the ones we especially want to help.

Gome: You've sat on seven large listed company boards. Is the lack of diversity at senior management levels a serious concern in the boardrooms?

Cross: It is a big topic in terms of the composition of boards, what can we do about it, how do we go about recruiting, how do we present this to the recruiters, what's the right personality fit, what do we need to do to adjust the criteria. Even those at 30 to 40 per cent are discussing it and conscious of the mix.

Diversity in senior ranks has even more focus and it is not just female board members pushing for diversity.

Gome: Building the pipeline of potential leaders is also a focus of the club. In a BlueNotes story examining KPMG research done for the 30% Club it was pointed out it was significant women were two times less likely to be promoted as men and four times less likely to leave as men.

That suggests female candidates may be overlooked. In fact the research concluded a lack of promotion not resilience is the reason women don't make executive level. Is it important that we get more women focussed on getting to the top? Or we focus on what's stopping them?

Cross: We have to do both. We have got to get women to understand they can get to the top and it's attainable.

We have to look at culture we create and deal with issues like unconscious bias. We also have to look at ways to encourage promotion including flexibility combined with inclusiveness.

This is a significant challenge in Australia where we have the most pronounced 'nappy gap' in the OECD for superannuation of women because our women drop out of the system.

Gome: Say we get to 30 per cent by 2018. What will change? Will it mean more women on management boards, more women in senior management? Will things be run differently? Better?

Cross: You would expect better company outcomes including better returns to shareholders which is important to all of us.

I think we can expect a cutting-edge performance but the company being run in a more inclusive way embracing the softer side of leadership that women bring.

Of course there will be better insights into customer behaviour, particularly in areas like retail where females make up to 80 per cent of spending decisions.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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