Ideas for women: Board gender quotas for five years from 2016 | Women's Agenda

Ideas for women: Board gender quotas for five years from 2016

This is the fourth ‘idea’ in our Eight game-changing ideas for women at work series, published over the next two weeks.

What if gender quotas for all boards were compulsory for five years from 2016? Imagine if companies were actually forced to prioritise the composition of their directors, rather than simply tick a box and feel that they can sit back and proudly boast that they have one woman on the board? What if there were in fact more than one woman on most boards – and what if there were four or five? Our career opportunities would suddenly feel limitless, as they are for men – with the only hindrance being merit.

The slow pace of board renewal, which is really only based on an honour system, appears to be almost as frustrating for the current crop of progressive-thinking directors as it is for the women waiting for their chance. According to a report by the Australian Institute of Company Directors, a recent survey of 145 Australian directors, conducted by Heidrick & Struggles and Women Corporate Directors, revealed that 81.3% described their board’s approach to exiting unwanted directors as “less than effective”.

So clearly boards need help to speed up the process that has seen very little change in their gender diversity mix in recent years. We remain stuck at a level of less than one in five directors and it’s simply outrageous when there are so many talented, experienced, skilled, capable female leaders emerging in every industry. It’s clear that momentum has been lost.. EOWA’s 2008 Australian Census of Women in Leadership shows that six years ago 8.3% of directors on ASX-200 boards were female. Between 2009 and 2013 that statistic climbed by a couple of percentage points each year but appears to have stalled with a year-on-year increase of just 0.9% for 2013-2014.

The cases for and against quotas have been long argued with meritocracy as the central theme. The penny dropped for me on quotas a year ago and I have argued with vigour for them ever since.

Norway has provided a solid case study for enforced quotas. The 40% quota for female directors was introduced in 2006 with two years notice to be enforceable from 2008. And guess what? It’s been business as usual in Norway with OECD Secretary-General Angel Gurria stating in commentary on the Economic Survey of Norway 2014 that “Norway’s new government has taken over responsibility for a prosperous, well-managed economy, where people are generally happy.”

As the statistics are currently hovering below the 20% mark in Australia, I propose we step boldly forth inspired by Norway and go for a revolution with 40% quotas for ASX-200 boards. Boards could undoubtedly reach the 20% level now if they really wanted to simply by giving the current small crop of seasoned female directors another board gig each. But that wouldn’t expand the pool and force a focus on the gender mix of the future leaders pipeline.

If women held 40% of all board seats on ASX-200 companies and that minimum was enforced with meaningful penalties – in Norway companies can be forcibly dissolved if they don’t comply – there would be an urgent need to address succession planning. There is currently a disconnect between board directors and women in executive roles. While the representation of women on boards has at least doubled in the past six years, albeit off a low base, the numbers of ASX-200 female CEOs is arguably unrepresentative of the quality of the total female talent pool as it stands today. The 2012 Australian Census of Women in Leadership identified that women comprised only 3.5% of ASX-200 CEOs and 2.4% of the ASX-500.

Simply placing quotas for more women on boards alone won’t necessarily increase the representation of women in the board pipeline as quickly as is required, as most women on ASX-200 boards are appointed from outside of the organisation. So we need to broaden the pool of actual female CEOs and senior executives too. Let’s put a quota on that. If it increased to 10% it would be a marked improvement.

The quality of the leadership pipeline has its origins in the graduate program but then needs to be sustained throughout the subsequent management levels in an organisation. More attention would need to be devoted to those years when women traditionally leave an organisation to start a family. Programs would need to be put in place to ensure the potential female leaders want to return to their place in the leadership pipeline following the birth of a child, and then supported financially and flexibly when they do. It’s not just good for female careers. The retention of quality staff should be a business imperative. The Workplace Gender Equality Agency estimates that a departing employee can cost an organisation 75% of their annual wage to replace. The Grattan Institute found that a 6% increase in female workforce participation can potentially add $25b to the Australian economy. 

Every good business strategy is informed by the desired outcome. So by starting with a target statistic for board quotas we have the potential to impact the start of the process too, because everything will need to change if there is to be any hope of achieving a significant step-change in the gender mix. Every stage of the pipeline that builds towards 40% female board representation will need to be addressed – and that’s one of the reasons that I am not only an advocate for quotas, but for aggressive, aspirational ones. Let’s not do this as a half-measure. Slap down that big, hairy audacious goal and go for it.

The five-year enforcement would see us through to 2021 when the results of the succession planning would be realised. Spinning through a cycle of a fair leadership mix would then inspire talented young women with leadership potential to believe they can do it too. Organisations would have a track record of viable pathways to the top for women, with the potential for some positive case studies around leaders returning to management roles post maternity leave. Success should lead to confidence in the process. An increased number of visible leaders in the business should lead to an increased number of women putting their hands up for promotions. An increased pool of women from which to select the next generation of leaders should then negate the discussions around meritocracy.

No one arguing for quotas has ever suggested selecting any woman for a leadership role simply because of gender. We are pushing for the promotion of talented, capable women. The imposition of quotas with a viable notice period places the onus on the organisation to ensure they have the policies, procedures, culture and opportunities in place to attract and retain the very best female talent who will in turn be the talent pool for female directors in the future.

A recent Australian Financial Review report revealed that Pottinger Analytics estimates if left to the current rate of progress at best we can expect 12% of ASX-200 companies to have 50:50 gender representation by 2050. And that means possibly not in my lifetime or in the career expectancy of the majority of women currently sitting in the leadership pipeline. Something needs to change, and soon.

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