BackgroundInterest for increasing the number of women on boards
and other key positions has increased due to calls from those who
advocate for greater gender equality. Furthermore evidence that
firms whose boards have a greater number of female directors, are
more likely to outperform those whose boards are not as gender
diverse has also increased interest in increasing female
participation rates in the board room.[footnoteRef:1] In 2010 ASX
introduced changes to its Corporate Governance Principles and
Recommendations on the reporting of diversity. These measures were
aimed at increasing the number of female board directors. These
recommendations require all companies listed on the ASX to as of 1
January 2011 to adopt and disclose a diversity policy, establish
measurable objectives for achieving gender diversity and assess
annually both the objectives and progress towards achievement,
disclose in annual reports the measureable objectives for achieving
gender diversity and progress towards achieving them and the
proportion of women employees in the whole organisation, senior
executive positions and on the board, and the mix of skills and
diversity for which the board is looking to achieve in membership
of the board.[footnoteRef:2] [1: Nilofer Merchant, Quotas for Women
on Boards are Wrong, Harvard Business Review 24 May 2013 ] [2:
Deloitte, Women in the Boardroom <
http://www.deloitte.com/assets/Dcom-Tanzania/Local%20Assets/Documents/Deloitte%20Article_Women%20in%20the%20boardroom.pdf>]
However subsequent reports since the implementation of the
policy began has shown a very modest increase in the number of
women directorships from 8.7% in 2010 to 10.9%. Furthermore the
number of female board directors has risen by only 0.2% between
2002 and 2010.[footnoteRef:3] [3: Jennifer Whelan, and Robert Wood,
Targets and Quotas for Women in Leadership: A Global Review of
Policy, Practice and Psychological Research Melbourne Business
School, 15 ]
Policy Solution The percentage of female representatives in the
board room and other senior line management positions which is
considered an important means of getting (256 words)experience for
board room positions is still very low and is increasing at a slow
pace.[footnoteRef:4] As a result there have been calls for quotas
from organisations such as the Australian Human Rights Commission
which in its 2010 Gender Equality Blueprint report recommended that
a minimum target of 40 precent for each gender should be set for
all Australian government boards, senior ranks of public service,
companies providing goods and services to the Australian government
and publicly listed companies in Australia.[footnoteRef:5] This
report will examine the arguments for and against such a policy.
[4: Corporations and Markets Advisory Committee, Diversity of
Boards of Directors (Report, Corporations and Markets Advisory
Committee, 2009) 27 ] [5: Elizabeth Broderick, Cassandra Goldie and
Elena Rosenman, 2010 Gender Equality Blueprint (2010) Australian
Human Rights Commission <
http://www.humanrights.gov.au/sites/default/files/document/publication/Gender_Equality_Blueprint.pdf>]
Analysis of the solution
Arguments against
Companies may circumvent the requirementsOne argument that has
been presented is that if the reason for such low or no female
representation on boards is due to bias against the abilities of
female directors, introducing quotas would not create a real
culture change. Without such a change organisations, which have
this mindset, would merely have the important discussions, in
arenas other than the boardroom where female directors who were
appointed by quota are not present such as through pre meeting
dinners, calls or golf.[footnoteRef:6] It is argued that if change
is forced it will often be rejected.[footnoteRef:7] [6: Nilofer
Merchant, Quotas for Women on Boards are Wrong, Harvard Business
Review 24 May 2013 ] [7: Nilofer Merchant, Quotas for Women on
Boards are Wrong, Harvard Business Review 24 May 2013 ]
(197 Words)Lack of qualified female candidatesIt is argued that
there is a lack of qualified women to hold board director positions
in Australian and that the imposition of quotas will mean that the
industry may have to promote women who are less qualified then
their male counterparts. This argument may well hold water as
available data shows the number of women in executive key
management line roles is 4.1 precent.[footnoteRef:8] The lack of
available female candidates was also provided as an explanation for
why diversity recommendations of ASX were not by some
firms.[footnoteRef:9] In Norway which has mandatory quotas set
reported a a drop in the average age of board members dropped by 8
years and women who were appointed after the legislation took place
had less experience than women who were appointed prior to
legislation taking effect and other male board
members.[footnoteRef:10] [8: Jennifer Whelan, and Robert Wood,
Targets and Quotas for Women in Leadership: A Global Review of
Policy, Practice and Psychological Research Melbourne Business
School, 15 ] [9: KPMG, ASX Corporate Governance Council Principles
and Recommendations on Diversity: Analysis of Disclosures for
Financial Years ended between 21 Dec 2011 and 30 December 2012
(Australian Securities Exchange, 2013) 29.] [10: Jennifer Whelan,
and Robert Wood, Targets and Quotas for Women in Leadership: A
Global Review of Policy, Practice and Psychological Research
Melbourne Business School, 25 ]
May lead to female board candidates facing issues of validity
While there is no limited research available on the issue of
candidates appointed by quota there is research available for
similar types of appointments through policies such as affirmative
action in the United States. Candidates who are appointed on this
basis are often viewed as less competent and deserving and
candidates who are hired on this basis often feel marginalised,
less deserving, and perform poorly compared to women hired on a
merit basis.[footnoteRef:11] [11: Jennifer Whelan, and Robert Wood,
Targets and Quotas for Women in Leadership: A Global Review of
Policy, Practice and Psychological Research Melbourne Business
School, 5, 23 ]
(226 words)
Arguments for Ineffective current practicesCurrent practices of
hiring board directors does not promote gender diversityThere are
some indications that the predominant practice when appointing new
board members is to look to those who are already board
members.[footnoteRef:12] As there are few female board members this
practice has undoubtedly constrained the number of female
candidates available. It is argued that quotas will force firms to
work harder and look outside their traditional pools for candidates
who may be suitable. [12: Corporations and Markets Advisory
Committee, Diversity of Boards of Directors (Report, Corporations
and Markets Advisory Committee, 2009) 7]
Gender based discrimination There are indications that women are
still viewed as more suitable for positions as homemakers rather
than in the cutthroat atmosphere of the boardroom. An article in
Forbes magazine reported that a CEO of a FTSE 100 company cautioned
that women might be chewing off more than they could chew by adding
a board appointment to an already full work family
schedule.[footnoteRef:13] Comments such as these highlight that
women are still discriminated against based on biases of female
capabilities. Such attitudes are apparent in our everyday culture
as well, where the female ideal is equated with traditional gender
roles. Where such blatantly sexist attitudes exist it may be hard
to change attitudes and significantly increase the number of women
in the boardroom at a pace fast enough using the current methods
implemented by ASX. It is also important to note that
discrimination based on gender may be the result of an unconscious
bias. Studies indicate that judgements about merit may be
influenced by preconceptions about gender.[footnoteRef:14] [13:
Hermina Ibarra, The EUs Boardroom Quota Battle is Over, but Women
Cannot Rest Yet, Forbes, 24 May 2013 <
http://www.forbes.com/sites/insead/2012/11/19/the-eus-boardroom-quota-battle-is-over-but-women-cannot-yet-rest/>]
[14: Cordelia Fine, Status Quota: Do Mandatory Gender Quotas Work
(2012) 76 The Monthly <
http://www.themonthly.com.au/issue/2012/march/1330562640/cordelia-fine/status-quota>]
(249 words)Where such situations exist quotas would allow women
to gain a foothold in the boardroom and thereby challenge and show
by example that such biases, both conscious and unconscious, are
unjustified. Evidence that Gender quotas work Since 1995 the United
Nations has had a target of 30 precent for womens parliamentary
representation.[footnoteRef:15] Various countries have implemented
this target. In countries such as Norway where the number of female
parliamentarians have been mandated the number of female candidates
and members have risen in a short time.[footnoteRef:16] At present
there is no reliable evidence that quotas have resulted in less
effective political representation due to their non-merit
basis.[footnoteRef:17] [15: Jennifer Whelan, and Robert Wood,
Targets and Quotas for Women in Leadership: A Global Review of
Policy, Practice and Psychological Research Melbourne Business
School, 20 ] [16: Jennifer Whelan, and Robert Wood, Targets and
Quotas for Women in Leadership: A Global Review of Policy, Practice
and Psychological Research Melbourne Business School, 20 ] [17:
Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in
Leadership: A Global Review of Policy, Practice and Psychological
Research Melbourne Business School, 20 ]
Other evidence of quotas working include Norways mandatory quota
for the percentage of female board members. The quota has not led
to a reduction in productivity as many predicted but rather a jump
by 4 places in World Competitiveness Yearbook.[footnoteRef:18] [18:
Ginka Toegel and Jean-Louis Barsoux, Boards of Directors Need
Quotas for Women Bloomberg Businessweek, 24 May 2013, <
http://www.businessweek.com/debateroom/archives/2011/02/boards_of_directors_need_quotas_for_women_1.html>]
Furthermore the experience of India, which legislated a
mandatory requirement that leadership positions, be reserved for
women in randomly selected village councils has been very positive.
Today Indian women are more likely to stand and win elected potions
that were previously reserved.[footnoteRef:19] It has also improved
the perception of (195 Words) [19: Cordelia Fine, Status Quota: Do
Mandatory Gender Quotas Work (2012) 76 The Monthly <
http://www.themonthly.com.au/issue/2012/march/1330562640/cordelia-fine/status-quota>]
womens leadership abilities. Parental aspirations for their
daughters have changed and education gaps narrowed. This collective
evidence of countries that have imposed mandatory gender quotas to
improve female participation has been largely positive. Evidence
that such targets work is a strong argument in their favour.
Recommendation/ Conclusion While the evidence pointing towards
the effectiveness of quotas is numerous it is my recommendation
that the policy not be implemented at present. This is due to a
number of factors such as the fact that the new ASX recommendations
have been in place only for a short period of time and adequate
time must be given for companies to implement these recommendations
before we move on to more drastic solutions. Quotas are likely to
polarise opinion and members who are appointed by quotas may not be
seen as legitimate, hence where there is scope for firms to bring
about increases in female participation rates in the board room
through its own initiatives such as the diversity plans developed
according to ASX recommendations these schemes should be given
preference. This is supported by the fact that the ASX report has
indicated that firms largely understand the benefits of having a
more diverse board,[footnoteRef:20] and several firms are
introducing measures which will have positive long term
implications such as training more women and increasing their
levels in other senior level positions so that there are good
female candidates in the pipeline for board
positions.[footnoteRef:21] It is likely that as these pipelines
mature we will see more women in the broad room. I would recommend
that the implementation of quotas be delayed. And that discussion
on this topic should be renewed after reviewing the effectiveness
of the current measures. [20: KPMG, ASX Corporate Governance
Council Principles and Recommendations on Diversity: Analysis of
Disclosures for Financial Years ended between 21 Dec 2011 and 30
December 2012 (Australian Securities Exchange, 2013) 5.] [21: KPMG,
ASX Corporate Governance Council Principles and Recommendations on
Diversity: Analysis of Disclosures for Financial Years ended
between 21 Dec 2011 and 30 December 2012 (Australian Securities
Exchange, 2013) 22.]
(284 words)
Bibliography
Broderick, Elizabeth, Cassandra Goldie and Elena Rosenman, 2010
Gender Equality Blueprint (2010) Australian Human Rights Commission
Corporations and Markets Advisory Committee, Diversity of Boards of
Directors (Report, Corporations and Markets Advisory Committee,
2009) Deloitte, Women in the Boardroom Fine, Cordelia, Status
Quota: Do Mandatory Gender Quotas Work (2012) 76 The Monthly
Ibarra, Hermina, The EUs Boardroom Quota Battle is Over, but Women
Cannot Rest Yet, Forbes, 24 May 2013 KPMG, ASX Corporate Governance
Council Principles and Recommendations on Diversity: Analysis of
Disclosures for Financial Years ended between 21 Dec 2011 and 30
December 2012 (Australian Securities Exchange) Merchant, Nilofer,
Quotas for Women on Boards are Wrong, Harvard Business Review
Toegel, Ginka, and Jean-Louis Barsoux, Boards of Directors Need
Quotas for Women Bloomberg Businessweek. Whelan, Jennifer, and
Robert Wood, Targets and Quotas for Women in Leadership: A Global
Review of Policy, Practice and Psychological Research Melbourne
Business School
1
1
