Cross-Examination: The Underrepresentation of Women on Boards
By Anuja Mitra
Minister for Women Julie Anne Genter recently caused a stir with her comments that “old white men” on private sector boards needed to make room for others. Genter stated that boards across New Zealand comprise overwhelmingly of men, many of them older men, and that they should step aside to welcome new and diverse talent in their place. National Leader Simon Bridges dubbed her remarks “silly”, while ACT’s David Seymour criticised her on Twitter for being discriminatory towards white men. One Christchurch man even filed a human rights complaint claiming he was tired of “the continual denigration and stereotyping of European males of older ages” (word is yet to emerge on the results of this complaint). However, Genter’s statements were backed by the Prime Minister, who acknowledged the gender imbalance on boards and felt that our nation should be “honest” about the problem.Female Representation by NumbersThe past few years have seen a considerable amount of research into the representation of women on company boards. Many of these reports use different methods to attain slightly different results, but all present a similar conclusion: progress has been made, but the figures remain bleak.
The vast majority of leadership roles within the listed companies — 81% to be exact — were held by men.
January 2018 saw the release of the New Zealand Stock Exchange (NZX) Gender Diversity Statistics for the previous year. In compliance with the rules, listed issuers on NZX’s main board must report data relating to the gender breakdown of director and officer positions in their business. The statistics revealed that 51% of NZX main board issuers had a diversity policy in place for their company; up from 44% in 2016. Despite this, women held just 19% of director and officer positions. This had gone up 2% from the previous year, yet the reality remained that the vast majority of leadership roles within the listed companies — 81% to be exact — were held by men.The 2017 New Zealand Census of Women on Boards presented similar findings. Examining the gender makeup of NZX companies, the study found that 137 out of 618 directorships were held by women. Only 6 companies out of the top 100 had an equal gender balance of board directors, while 25 had no women at all on their board. Judy McGregor, who worked on the report, stated that there is no “supply problem” when it comes to well-qualified women, making it “inexcusable” that so many companies lack female board members. She highlights an important point: there is no dearth of skilled female talent, but a lack of sufficient effort to attract and recruit them. Women are now more qualified than men, with six out of ten university degrees (including degrees in STEM) being gained by women. Though some saw the increase in female board members compared to previous years as encouraging, there may not be that much to celebrate. At the current rate of progress, the National Business Review estimates that it will take until 2030 to close the gender gap in governance.The picture looks even more grim when New Zealand is compared to other nations. The Census above concluded that we are falling behind other Western countries in our amount of women in management roles, and this appears to be confirmed by a recent Grant Thornton International report. The report identified New Zealand as one of the worst performing countries when it came to women in senior positions, placing us below other nations such as Australia and Canada. Francesca Lagerberg of Grant Thornton feared that even businesses who had at least one woman on their board were more fixated with “box-ticking” than tangible progress. Even though 75% of businesses globally had one or more women on their management team, the proportion of the team that is female declined from last year. This indicates that women are being “spread [more] thinly” across high-ranking positions. Researchers have found that it takes three women on a board to effect real change, making the presence of just one woman less meaningful than it may initially seem.Diversity Pays?Despite the growing push for businesses to include more women in their core teams, many stay resistant to change. Yet change could be the key to company success. A Westpac-commissioned report claims that every 1% rise in female managers increases return on assets by 0.7%. This means that if New Zealand businesses achieved gender parity, an average 1.5 percentage point profit increase would follow and participation benefits would boost the economy by approximately $881 million (equivalent to 0.33% GDP).The notion that more women equals better company performance has been echoed in previous reports and international studies. However, arguments that connect women with higher profits have been criticised for lacking causality and not taking into account all the variables. Some say that women should not be portrayed as “miracle workers” for an organisation, but human beings deserving of opportunities on their merits. Indeed, we may inquire why we need a financial incentive to justify appointing women to high-ranking positions — as if diversity and equal opportunity are not good enough reasons in themselves.Getting Women on BoardThe gender imbalance on boards has been made clear, and so has the need to remedy this problem. But the question remains: how exactly can businesses strive for greater female representation in their top tiers?Many recommendations have been put forward both by private bodies as well as the government. Counting for Change, the website displaying the findings of the 2017 NZ Census of Women on Boards, suggests that companies cement “ongoing initiatives” to maintain and increase gender diversity. These might be mentoring and coaching by chairs and senior directors, improving board selection and recruitment processes and increasing the appointment of alternate directors. A 2016 Ministry of Women Report also provided guidance for how businesses can engineer change. Their recommendations included:
- Taking a voluntary approach with CEOs committed to gender diversity
- Ensuring cross-sector coordination for maximum impact
- Increasing board turnover opportunities for new talent to take the reins
- Making appointment, recruitment and promotion processes more transparent
- Giving women greater access to mentorships and role models
- Instituting family-friendly policies such as flexible work arrangements and parental leave
Quotas are frequently mentioned as a potential way to fight gender imbalance. Though these may be a “quick fix” method, however, they may not be an effective long term solution. The Ministry for Women note problems with quotas such as tokenism and the fact that they “do not change the underlying issues that affect gender diversity.” For these reasons, the 30% Club — an organisation pushing for more female leadership — does not support mandatory quotas.What is apparent is the need for complex and evolving processes that focus on the short and the long term. Businesses should implement multi-pronged strategies to create a more inclusive culture overall. This would tackle the deeper barriers women face when climbing the career ladder, such as unconscious bias and harassment.The gender imbalance on company boards is at odds with New Zealand’s vision of itself as a progressive nation where equal opportunities are available to all. Hopefully, greater awareness of the problem translates to greater action. We still have far to go in closing the pay gap and appreciating women’s work. Closing the gender gap in governance should form the next step: appreciating women’s success.
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Featured imaged source: https://edition.cnn.com/2018/01/23/us/fraley-rosie-the-riveter-dies/index.html “‘Old white men should make way for others - Julie Anne Genter” (24 March 2018) Newshub <www.newshub.co.nz> “Julie Anne Genter comments on old white men ‘silly’” (26 March 2018) Newshub <www.newshub.co.nz> Newshub, above n 1. “Man lodges complaint to Human Rights Commission over Julie Anne Genter's 'old white men' comments” (26 March 2018) Newshub <www.newshub.co.nz> “Jacinda Ardern weighs in on 'old white men' board problem” (27 March 2018) Newshub <www.newshub.co.nz>. NZX Gender Diversity Statistics - January 2018 (NZX, 2018) at 1. At 2. At 3. “Findings and Recommendations” Counting for Change <www.countingforchangenz> Above n 9. “Quarter of NZ's top 100 companies have no women directors” (19 May 2017) Radio NZ <www.radionz.co.nz> Above n 11. Fiona Rotherham “Census of women on boards: Should only a small gain be celebrated?” (19 May 2017) National Business Review <www.nbr.co.nz> Deloitte Access Economics Westpac New Zealand Diversity Dividend Report (Deloitte New Zealand, 2017) at 13. Rotherham, above n 13. Grant Thornton Women in Business: New Perspectives on Risk and Reward (Grant Thornton International, 2017) at 11. Grant Thornton International “Gender balance remains elusive” (Press release, 2018). Above n 17. Ministry for Women Increasing the Representation of Women on Private Sector Boards: A Review of Initiatives in Selected Countries (Ministry for Women, August 2016) at 3. Deloitte, above n 14, at 5-6. See for example Business New Zealand, The Institute of Directors in New Zealand and the Ministry of Women's Affairs, Women on Boards (2009); Credit Suisse The CS Gender 3000: The Reward for Change (2016). Kim Elsesser “The Truth About Women's Impact On Corporate Boards (It's Not Good News)” (June 23 2016) Forbes <www.forbes.com>; “100 Women: Do women on boards increase company profits?” (2 October 2017) BBC <www.bbc.com> Elsesser, above n 22. Counting for Change, above n 9. Ministry for Women, above n 19, at 3-6. At 23-24. “Who We Are” 30% Club <30percentclub.org> Ministry for Women, above n 19, at 6.