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Targets and quotas: a two-pronged approach to increase board diversity

Despite great aspirations and considerable effort towards attaining more women in leadership, progress over the last 10 years has at best been slow, as a recent report from the Australian Bureau of Statistics…

Onwards and upwards: using quotas and targets could pave a leadership path for more women. www.shutterstock.com

Despite great aspirations and considerable effort towards attaining more women in leadership, progress over the last 10 years has at best been slow, as a recent report from the Australian Bureau of Statistics reveals. Men continue to greatly outnumber women across all leadership positions in the public and private sector, for essentially the same reasons as before, with little change to utilise the talent of women or acknowledge their potential.

Advancing diversity in boards in Australia: which way is up?

Debate continues over the best way to increase the participation of women in leadership positions in business. The number of countries opting for mandatory quotas of women for boards of directors is increasing, though the consensus in Australia is to go for voluntary targets.

The Business Council of Australia and the Australian Industry Group have argued against quotas, insisting that simply achieving a change in board membership did not lead to other necessary changes in female participation in executive ranks in the countries that adopted quotas. They argue for “merit-based appointments”, though the question persists: how is merit defined, nurtured and developed?

But some business leaders in Australia are breaking ranks and calling for quotas. The first to put her head above the parapet was the Governor-General of Australia, Quentin Bryce, who said in 2011: “I believe the old boys' network is a powerful one. No one gives up power and privilege willingly, do they?“ She also received emphatic support from shadow treasurer Joe Hockey, who demanded “punitive measures” to enforce change with a quota of 30% women for boards.

Early this year, veteran banker Peter Hunt of Greenhill & Co insisted incremental change was not working. What we need, he argued, is a paradigm shift. He called for a change in the Corporations Act to include a quota of at least 25% female directors. Federal Sex Discrimination Commissioner Liz Broderick backed him up, saying that “if it’s necessary to give a jolt to a misaligned system we should do it”. The chairman of Qantas Superannuation and Colonial First State Investments, Anne Ward, argued that quotas for female board directors was the most viable way forward.

Meanwhile, seven European countries — Norway, France, Belgium, Iceland, Italy, the Netherlands, and Spain — have now applied quotas. Each of them has experienced a rapid advance in the participation of women on boards. As a result of quotas, France has now reached 25% women directors in the top 17 companies, an increase from 7.2% in 2004, while in the US where targets have long been established the improvement has been sustained but slower in female participation in boards.

Thomas Clarke

Do targets work?

Currently, 114 companies in the ASX 200 and 232 companies in the ASX 500 have adopted a diversity policy. In the ASX 200, just over half of all companies are setting measurable objectives. The standout performers in setting numerical targets include Mirvac with 35% women board membership by 2015; Woolworths with 25% by 2015; Coca Cola, Brambles, Telstra, and NAB with 30% by 2015; and BHP Billiton, Envestra and Virgin with 25% by 2014.

This change in women in board membership is accompanied by even more ambitious numerical targets for women in senior executive positions. ANZ aimed for 40% in 2012; Westpac has targeted 40% by 2014; GPT has aimed for 40% by 2015; and Leighton Holdings has aimed for 40% by 2016.

A remarkable transformation is projected in the boardrooms and executive ranks of corporate Australia. It will be fascinating to examine this unfolding, and to consider the consequences.

Targets and quotas?

It is clear that the introduction of quotas in Norway had a dramatic impact on the debate surrounding quotas. The possibility that quotas might well be introduced in other jurisdictions was a sharp spur to action that did not exist before. It is unlikely that the commitment to significant targets would have been as considerable if a move towards firmer regulatory action was not clearly visible. It was the introduction of quotas in Norway that made it feasible to commit to ambitious targets in Australia and elsewhere.

If countries that have adopted quotas sustain more rapid progress in gender diversity on boards, then there will be insistent calls for the adoption of quotas in all jurisdictions. Quotas establish precedents, which targets strive to achieve by voluntary means. Targets stimulate corporate initiatives to facilitate the progress of women to board positions, which quota systems may learn from. Rather than viewing quotas and targets as entirely different approaches, they can be seen to be mutually reinforcing.

UTS Centre for Corporate Governance is organising two events on 6 March 2013 as part of the UN International Women’s Day celebrations: A one-day symposium on diversity on boards and a free, evening public lecture and Q &A with an expert panel of senior business women.

Join the conversation

27 Comments sorted by

  1. Dale Bloom

    Analyst

    I would like to see a more democratic type of company board membership.

    About 30% to 40% of the board should come directly from the workforce of the company.

    This would help skill the workforce, it would help to motivate the workforce, and it would diversify the board of directors.

    I would not be accepting of someone who has never picked up a tool, or has rarely stepped off carpet now in the board of directors of a company, but the worker would know much more about the actual day to day operations of the company.

    There is no clear definition of who is a woman anyway, but it would be quite clear who is in the workforce of a company.

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  2. Joan Bennett

    logged in via email @aetlimited.com.au

    Yes, lets start appointing people based on what's between their legs. As a female, I find affirmative action (and quotas) totally offensive. People will think the woman just got the role because she is a woman (eg a token). Appoint people on merit and don’t push anyone who doesn’t really want to do it.

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  3. Anthony Nolan

    Ruminant

    "Debate continues over the best way to increase the participation of women in leadership positions in business."

    I'm sure it does, but why? Can't white, educated Australian women look after their own interests?

    Hell, Meredith Hellicar certainly knew how to do the corporate tango when she oversaw the offshoring of James Hardies' so as to insulate the company from asbestos compensation claims. That's the sort of leadership that we expect from boards of directors so don't be too polite girls, don't be too polite, show a bit of fight, girls, show a bit of fight!

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    1. Suzy Gneist

      Multiple: self-employed, employed, student, mother, volunteer, Free-flyer

      In reply to Anthony Nolan

      I think the expectation for women to follow the same strategies as men are accustomed to, ie. fighting their way up, only reinforces a culture that exists now.
      From my perspective, the women who have been successful in the past 'in a man's world' are those who incorporate male values and strategies the best, not necessarily those who can add new strategies and methods into the predominant corporate culture (with rare exceptions).
      For me one of the most important contributions women can bring into the corporate environment is a caring ethic - for people and the planet - something the future is in dire need of.

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    2. Anthony Nolan

      Ruminant

      In reply to Suzy Gneist

      I'm delighted that someone actually got my comment! In a liberal democratic society, which we are now, equality of opportunity and a rough parity of outcomes are both key indicators of democratic vigour and health.

      That said, however, I am in awe at the hope that women bring any other values to public culture than existent, dominant values. If the main difference between men and women is the 'reproductive difference' (Connell) then what accounts for the belief that women are the bearers of a…

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    3. Suzy Gneist

      Multiple: self-employed, employed, student, mother, volunteer, Free-flyer

      In reply to Anthony Nolan

      I would agree that there are differences between male and females - if these are correlated biologically then this is no reason to value them differently. I recall that analysis done in regard to micro-loans for example showed that loans to women showed greater effect in lifting living standards for those around them by being invested in family and community assets (tangible and non-tangible) compared to loans given to men. (Of course Dale will most likely disagree with this view ;)
      Yes, we aspire…

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    4. Suzy Gneist

      Multiple: self-employed, employed, student, mother, volunteer, Free-flyer

      In reply to Anthony Nolan

      Re: Psychopath incorporated - I agree that the current corp. structure values many of the wrong outcomes, which is why I believe that a balance is required and that an ethical shift is necessary. In my view this shift has to incorporate a caring ethic that goes deeper than a charitable lipservice and this ethic must be adopted by all members of the structure. I only suggest that women may be able to contribute to this shift, I do not suggest that a caring ethic is an exclusive female domain. However, the current lack of it suggests that the dominant male structure may not be able to contribute this balance in an effective way on its own. No way of knowing until we try something different than business as usual.

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    5. Kim Darcy

      Analyst

      In reply to Suzy Gneist

      If you are going to base your argument on sex-determined differences in values and strategies - and I'm not necessarily saying you should not - you will have to accept the much larger can of worms that opens about all issues related to sex roles in our society.

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    6. Suzy Gneist

      Multiple: self-employed, employed, student, mother, volunteer, Free-flyer

      In reply to Kim Darcy

      Yes, I don't see why we should not re-examine all of our attitudes in this regard on a regular basis. Just recently we were faced locally with a school captains choice of two individuals which did not provide a gender balance (it included no male representative) - this was raised by parents as an undesirable outcome and to be avoided in future. Equality should be felt either way - I'm not saying it's completely one-sided now, we've come a fair way, but in some areas it tends to remain one-sided (whichever side that may be). Even more reason to start early - in childhood - to stress the importance of equal representation and valuing differences even if the underlying hierarchical structure does not value this outcome within its own guidelines.

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  4. Bronwyn OBrien

    Admin Assistant

    Does anyone think that forcing 'boys clubs' to hire women because it's mandatory might make it harder for women in the work force?

    I would like to see an article on how women who are hired as a result of this mandatory quota thing are actually treated by their male peers.

    Making a law doesn't change a bad attitude, it just makes those with the bad attitude bitter.

    Perhaps I've got it all wrong, I just know from my own experience if you are working somewhere because someone was required to take you on, it's not necessarily a very pleasant place to work.

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    1. John Perry

      Teacher

      In reply to Bronwyn OBrien

      Of course people will be bitter, but I would argue that this is more because people in general don't like change, and those with vested interests in maintaining the status quo like it even less.

      Like any change that has to be enforced, though - and don't forget, in this case the enforcement is with little carrots and little sticks - in a relatively short time it will come to be accepted and everyone will be wondering what all the fuss was about. To use another, similar example, very few people grizzle these days about having to make buildings more accessible to people with disabilities.

      It's a short term pain that is worth the long term gain.

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    2. Kim Darcy

      Analyst

      In reply to John Perry

      What an extraordinary attitude, given that the most gender psychotic industry in Australia is public school teachers!

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    3. John Perry

      Teacher

      In reply to Kim Darcy

      "Public school teachers" "is" an "industry"? I can just imagine what a teacher would have to say about that one.

      And "gender psychotic"? Oh, please ...

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  5. Haydon Dennison

    Student

    I don't doubt that there exists, on many boards of directors and in many corporations, a hostile and unfavourable attitude towards women. This needs to be addressed in some manner.

    Having said that, introducing supposed "equality measures", such as targets and/or quotas for the percentage of women who should be on the board, are nothing but discriminatory (against both genders, no less) and demeaning towards women. Discriminatory towards the men who may not be able to get the job they once attained…

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    1. Suzy Gneist

      Multiple: self-employed, employed, student, mother, volunteer, Free-flyer

      In reply to Haydon Dennison

      I agree, a truly egalitarian society is based on value shifts. The distinctions we make are all imposed by culture and not real, in a sense that they define a person - whether male or female, rational or emotional - in the end 'merit' is based on the dominant culture's values, currently mostly measured in continued growth economic output and disregarding other social and environmental improved outcomes.

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    2. Dale Bloom

      Analyst

      In reply to Suzy Gneist

      Our Prime Minister constantly talks about growth, but she must be “too male”.

      This does seem like a “grass is greener” type of approach.

      “What we need is a female Prime Minister”, and what a disappointment that was.

      Now, “What we need is more women on company boards of directors”, and what a disappointment that is likely to be also.

      As for women being “carers”, that is totally debateable.

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  6. Pat Moore

    gardener

    As a "minority" long privatised to an individual man as personal wife/domestic & reproductive unpaid labour until comparative recent history in the West, women have not had the same relationship to public social structure and institutions of the political economy as men traditionally have. Long excluded from formal education, independent social existence and any equal participation in a "meritocracy", it answers the question "why were there no great women artists, musicians, few scientists etc…

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  7. Robert Attila

    Business Analyst

    Business analysis starts by determining what the core definition of the problem is or the desired outcome of the client. Without that you'll never knowing where your headed, why & when the goal is reached.

    So in that vein the authors suggest that the problem is, what precisely? That there arent equal numbers on the boards? Or not enough? How much is enough? Why 25%, why not 26%, or 83%?

    Any glossing over of these questions as irrelevant, trivial or 'inconvenient' ignores the real problem with…

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    1. Thomas Clarke

      Professor, Centre for Corporate Governance at University of Technology, Sydney

      In reply to Robert Attila

      Dear Robert

      This article on Women in Leadership was intended as a contribution to the ongoing debate on whether Australia might adopt targets or quotas to advance the participation of women in leadership positions (in this instance with reference to boards of companies).

      This debate rests upon a much larger debate on the importance of gender diversity and other forms of diversity in business and society generally. There was not space in a short article to go into these fundamental arguments…

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    2. Robert Attila

      Business Analyst

      In reply to Thomas Clarke

      Hi Thomas,

      Thankyou for responding. Its refreshing to receive a reasoned logical response. ;)
      And best of luck finding a real solution. :)
      Apologies for what may be an untidy response. Time is sadly very lacking.

      To further elucidate my belief, I have no issue promoting women to boards, mgt, wherever. There is no argument from me against the merit of that objective (with the exception of women on the front line of armed forces or police for painfully obvious reasons.) I believe in the value…

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    3. John Perry

      Teacher

      In reply to Robert Attila

      "At first a certain group just had to wear a symbol on their clothes, but then they were forced out of their civil service jobs, university and law court positions, and other areas of public life to make way for another certain group. Then laws proclaimed them second-class citizens. Then regulations segregated them further and made daily life very difficult for them. They could not attend public schools; go to cinema, or vacation resorts; or reside or even walk in certain sections of cities..."

      I'm surprised no one has called Godwin's on this one.

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    4. Jean du Plessis

      Professor of Law, Deakin University, Australia

      In reply to John Perry

      Just yesterday an article on board and gender diversity was published by me, Ingo Saenger (a German academic)and Richard Foster (Chairman of Institute of Directors of Southern Africa) in the Deakin Law Review. It is perhaps a bit long and academic, but provides more international perspectives on this very important topic:
      http://www.deakin.edu.au/buslaw/law/dlr/current.php

      http://www.deakin.edu.au/buslaw/law/dlr/docs/vol17-iss2/vol17-2-1.pdf

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    5. Robert Attila

      Business Analyst

      In reply to John Perry

      I'm surprised no one has called you on this..."Godwin's law itself can be abused as a distraction, diversion or even as censorship, fallaciously miscasting an opponent's argument as hyperbole when the comparisons made by the argument are actually appropriate.[9] Similar criticisms of the "law" (or "at least the distorted version which purports to prohibit all comparisons to German crimes") have been made by Glenn Greenwald."

      My point is not invalid just because you dont like my example of how one thing leads to another.

      Either prove Godwin's law applies or keep your "surprised" opinions to yourself. Otherwise your are merely mud slinging.

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    6. John Perry

      Teacher

      In reply to Robert Attila

      Of course. I am "mud slinging" (by drawing attention to the ridiculous, and frankly quite offensive, nature of your comparison), but your conflating Affirmative Action with Nazi Germany is perfectly reasonable!

      And the way you put all that without a trace of irony is quite impressive.

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    7. Robert Attila

      Business Analyst

      In reply to John Perry

      1. You have no right to be offended on another's behalf. If you do then thats your choice & no one cares. You seem easily offended just to to have something to argue about.

      2. You choose to interpret my example in an incorrect way. That's your fault not mine. Try reading ALL of what i said without a sarcastic overtone & you may see something quite different.

      And finally, my granddad was executed at the end of the war, as were 80,000 others for their homes & properties, but primarily ethnic cleansing. So you'll forgive me if your mock offence rings hollow & meaningless.

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