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Getting on board: Quotas and Gender Equality (2011)

Discrimination Sex Discrimination

Getting on board: Quotas and Gender Equality

Speech by Elizabeth Broderick
Sex Discrimination Commissioner and Commissioner responsible for Age Discrimination
Australian Human Rights Commission

Gender Matters Third Women on Boards Conference
Sheraton on the Park
161 Elizabeth Street Sydney

29 April, 2011

I am delighted to be here with you again at the 3rd Women on Boards Conference. I want to congratulate Ruth, Claire and their team for bringing together a talented line-up of speakers, international guests and a comprehensive program.

Also thank you Claire and Ruth for the work you do every day as a strong voice for women at decision-making level.

The 2009 WOB conference will certainly be remembered as the event that galvanised the business community into immediate action - to start addressing the under-representation of women on boards and in decision-making roles. The 2009 conference put the issue on the nations agenda.

I want to welcome Mai-Lill to Sydney. For a number of years we have looked to Norway for inspiration we were particularly inspired when we learnt that Mr Lysbakken, your Minister for Children, Equality and Gender, recently took four months paid parental leave over the northern winter to look after his young daughter and was to be replaced in Cabinet by a female minister. The fact that you have a male minister one who is prepared to take 4 mths paternity leave is something that can only dream of here in Australia.

Welcome also to the Norwegian Amassador Eriksen who has been a strong advocate for gender equality both in Australia and Norway.

I also want to welcome to Sydney the Hon Hekia Parata, the recently appointed NZ Minister for Women. I met with Hekia yesterday - we had an in-depth discussion on the number of initiatives that have emerged since the 2009 conference. NZ faces many of the same challenges that we do, so it is good to share experiences and learnings with our trans-Tasman neighbours.

Finally, I want to acknowledge the talented Aboriginal women in the corporate sector. I have had the pleasure of both meeting and working with a number of them.

Let me acknowledge that we are gathered on the traditional land of the Gadigal people of the Eora Nation. I pay my deepest respects to their elders both past and present.

When I was here in September 2009, I advocated strongly that we had come to a point where a mandatory quota for women on boards seemed like the only effective option. Not only had we stopped moving ahead at glacial pace but we were falling off the map. Examining the trend data provided by EOWA, showed the persistently low representation of women in leadership positions over several years, and suggested that targets and quotas were a necessary part of the solution.

Today, I want to take this conversation further. I want to review the developments of the past 18 months and highlight some of the emerging issues relating to gender equality in the corporate sector. I will do three things:

  • Firstly, examine how far we have come since 2009;
  • Secondly, recount some observations from my role as SDC and to talk a little about the more recent initiatives to progress womens under-representation government and private sector; and
  • Thirdly, talk a little about quotas and the merit principle

Two years ago, I stood on this exact same platform to make the case for change and to call business to action.

We have come a long way in the last 2 years. I am pleased to say that women on boards is now a major issue of debate in Australia. Individuals, corporations, regulators and governments have become engaged in a process that has facilitated a series of important reforms and initiatives.

These developments are producing some exciting early results, but this should not obscure the fact that there is still much to do.

As Claire Braund notes, significantly addressing the percentage of women on boards and committees remains an ongoing challenge for us all.[1]

Over the past three years, I have strongly advocated that the under-representation of women on boards and at senior management level is an issue that needs to be addressed, immediately and at the highest levels. The fact is that most people agree. But being convinced of the benefits of gender equality in the workplace and actually delivering on this conviction are two entirely different matters. The recent AHRI Gender Equity study found that 70% of companies supported gender equity, but less than 30% had policies and programs in place that were supportive. The road to gender equality is paved with many good intentions but good intentions are not enough. We need continuing and sustained action. And thats why conferences like this are important to plan the next phase.

A number of the previous speakers have run through the facts. I apologise if you already know them but I think it is important that we keep reiterating the business case. We often assume people are aware of these facts but in my conversations particularly with male decision makers that is not always the case.

  • Australia is leading the world on womens educational attainment. We are educating our women better and longer than most other countries. In fact the majority of university graduates in Australia are female.[2]
  • Despite this we have a declining rate of womens workforce participation. According to the World Economic Forum 2010 report, Australia ranks poorly in workforce participation - coming in at 44.
  • 59% of women in Australia are in paid work, compared with 72% NZ, 69% in UK and 76% in Norway.
  • Women start with the same level of educational achievement (if not better) as well as the same level of intelligence and commitment as men.
  • But they are missing in action at the senior levels of the workforce and that is across every sector.

Less than a decade ago, the proportion of women on boards in Australia was comparable with the level in Norway, around 8%. But after 2003, when a mandatory quota was introduced in Norway, we began to see a stark divergence. By 2008 Norway was pushing towards its target of 40%, while representation in Australia languished at about one-fifth of that level (8.3%).[3] And if you look beyond the ASX 201 to 300, only 4.3% of directorships are held by women.

Even today we still have 79 of our ASX200 boards that have no women.

Questions of equality aside, why should we care?

Many of you here today will represent individual organisations. And the business case for organisations is clear. The research correlates increased corporate performance with greater gender diversity at the senior level. Companies with better gender diversity at the senior levels, do better.

But I am charged with looking at this issue from both a national and international perspective.

From a national perspective, when unemployment is under 5% and skills shortages are once again a concern, utilising all the talent that exists in our country makes good sense. As the 2010 Goldman Sachs report argues, lifting the participation rates of women will deliver an increase to Australias GDP of 11%. If we lifted both participation and productivity to levels equal to men the boost to the GDP would be 20%. Now Im not for a minute suggesting woman should be forced to work. But what I am suggesting is that the barriers to women participating to the extent they wish to and choose to should be removed.

And from an international level, a failure to change the picture of leadership in business in Australia will put us at a significant competitive disadvantage. All our OECD counterparts are working on this issue. They recognise that utilising the talents of all of their people will ensure their country remains internationally competitive. So must we.

We continue to have a significant wastage of female talent in our country. This should be a concern for all Australians.

But unlike two years ago the news is not all grim. There have been a number of exciting developments.

In 2010, there was an almost 600% uplift in the number of women appointed to ASX boards compared with 2009. The actual numbers are quite small (10 women in 2009 versus 59 in 2010)[4] but the strong message is that weve turned the corner and were on our way. This positive trend has continued into the first months of 2011, with 20 more appointees making up almost one-third of all new board members. As of April 2011 11.7% of all ASX 200 board directorships are held by women. If you examine the top 25 companies today, almost 20% (18%) of the directorships are now held by women. This is significant progress.

The Australian Institute of Company Directors who prepare the real time data acknowledge, these figures are the highest they have been in Australia, but also that we still have a long way to go if we are to meet the goal of a minimum of 40% representation of both genders on boards by 2015.

The increase in representation of women over the last 12 months has been a good start, but we need to at least double this rate of increase if we are to reach our goal. We need 17% of ASX 200 board directorships to be held by women by end of 2011, 25% by end of 2012, 30% by end of 2013, 35% by end of 2014 and a minimum of 40% of ASX200 directorships held by each gender by the end of 2015. It is possible. But it will require focus and determination.

As you well know, much of the impetus for this rapid improvement has come from the changes to the ASX Corporate Governance Recommendations and Principles which require all publicly listed companies (2,500) to set measurable objectives. Most organisations have interpreted measurable objectives as targets - so to set targets at board level, at senior executive level and to report annually against these targets on an if not why not basis.

As many organisations are realising, irrespective of whether we remain with targets or move to a system of mandatory quotas for any change to be enduring we need to address the underlying systemic causes of the lack of women at decision making level. So where to begin?

Up until now much of the focus has been on fixing women by providing assertiveness training, mentoring, networking and self branding strategies. But this is not enough. Most of the discrimination that exists today is not overt. It is built into the systems, cultures and institutions that exist in Australia. It is often the result of unconscious bias bias that relies on our inbuilt gender schemas and develops as a shorthand way of helping us understand the world.

In summary the barriers to womens workplace progression fall into three categories:

  • (a) belief barriers - deeply held cultural beliefs such as good mother stereotype, ideal worker stereotype
  • (b) cultural barriers selection, promotion and career development systems reproduce disadvantage for women
  • (c) structural barriers lack of affordable childcare, no paid parental leave scheme etc.

We assume that if we remove these barriers the solution will be found. The research is unclear on this point. However what is clear is that solving the issue of womens under-representation requires systemic intervention. It requires us to be bold and creative. It requires all options to be on the table.

A few observations from being closely involved in this issue for many years now.

Firstly, we need to move to critical mass quickly. As Jan Elsner, a leadership commentator has said We need to build critical mass in the presence of existing barriers. Critical mass will create the change we are seeking. And I think thats an important point critical mass will create the change rather than the other way around. Norway is a great example of this.

A window of opportunity to achieve critical mass has opened over the last 18 months. Over the next 12 months we will most likely progress to around 15% of women on ASX200 boards following which the pace of change will slow and the pressure for change will reduce. This is the experience of the US where the number of women on Fortune 500 companies has remained at 15% for over a decade. We cannot allow this to happen.

Secondly, men are an important part of the solution. I am not suggesting that we need men to save us. We can do that very well ourselves thank you very much. But what I am doing is recognising an existing situation. After all it is men who dominate nearly every institution in this country, particularly in corporate Australia. If there is to be change, male CEOs and business leaders have to champion it.

The genius of the Norwegian experience was that the quota law was championed by a male, conservative politician who was the Minister for Trade and Industry not the Minister for Gender Equality.

We need male leaders all across this country taking up the advocacy mantle and leading by example. To this end, I have established a male champions of change group a group of influential, committed and powerful men who can take the message of equality out to other men.

These men have agreed to use their individual and collective influence to keep this issue on the nations agenda and to drive change within their own organisations.

They have signed on to a charter which includes 6 things they agree to become public spokespersons for gender equality as individuals and collectively, to share their experiences and strategies more broadly within the corporate sector, to increase the dialogue among their peers and to build a network of CEO champions.

They are building gender equality into the strategy of their company operations, they are actively lobbying for more affordable and accessible childcare re-defining infrastructure to include social infrastructure. They are taking the conversation to other men. They are commissioning research and holding others accountable for change.

To cite one positive example of how this group can spark change, in July last year, Glen Boreham, then CEO of IBM brought together 10 male CEOs of IT companies to discuss the issue of gender equality and womens under-representation. They decided to press for more women on the AIIA Board, the peak national body representing ICT companies. The target was to double the number of women on the board with one year but within 6 months they have reached that target with the appointments of Tracey Fellowes, MD of Microsoft and Jackie Korhonen, MD of Infosys joining the existing 2 female board directors. Hardly a decrease in the quality of board members, youll agree. The Board now has 36% female representation and they are aiming for more.

Another example. Stephen Fitzgerald, CEO of Goldman Sachs has set up a small team to review every salary recommendation through a gender lens. Where a discrepancy is identified and there is no plausible explanation the team has the power to unilaterally alter the pay recommendation.

To cite another example of strong male leadership, Peter Wilson, a former CEO and now National President of the Australian Human Resources Institute, writing in the AFR in April says:

Australian boards need to adopt a three-in-three target by systematically working towards appointing at least three female non-executive directors within three years this would set most companies in the direction of a 40 per cent female target by 2015.

He goes on to say: Execution would be relatively seamless if one male director stepped down in favour of a board-ready female each year for the next 3 years. Since the ASX dropped its indicative guide to directors serving no more than 10 years, a number of our very senior male directors have deftly extended their years of service considerably. The corporate governance literature shows that board independence diminishes with lengthening director tenure.

Peter is a strong advocate for a progressive, stable and sustained change to board mix.

And there are many more examples too many to discuss here.

Two things occur to me firstly, there is a growing recognition that solving this issue is everyones business not just womens business and thats got to be a step in the right direction. Secondly, to most effectively engage men I need to not only make the business case but also a personal case. I need to focus on what men gain (slaughter house to merchant bank) shared financial resp, rewarding relationships, freedom to define oneself according to ones own values rather than traditional gender norms.

Thirdly, and this is becoming more important the longer the debate moves on this debate cannot be sidelined as a wealthy, white womens debate - we must place the issue of womens leadership and womens under-representation at decision making level in the broader context of gender inequality.

The statistics on womens leadership reflect our progress towards gender equality, just like our record on addressing other gender equality related issues such as violence against women, sexual harassment, the gender pay gap and gap in retirement savings. When I visit DV shelters as I regularly do, women ask me how is the campaign for more women on boards. It is a highly visible indicator of how women are doing in Australia.

As Irene Lang, President of Catalyst has said Until women are equitably represented in leadership in the private, economic sector, they will be marginalised in every other arena.

Now lets turn to that topic of such lively debate and controversy: Quotas. There is a difference between a target and a mandatory quota. We currently have a system of targets where the target is set by the company, depending on the industry and the aspirations of the company. A failure to meet the target has no consequence except potentially reputational damage.

A quota is a top down approach usually implemented through legislation. It is more a one size fits all approach and most often consequences follow from a companys inability to meet the quota. In Norway, forced dissolution of the company was the penalty.

Quotas remain a live option in Australia, despite the hostility that the idea has encountered from both men and women. But what would introducing a mandatory quota mean? Would it demean those promoted under a quota system, or leave our businesses at a competitive disadvantage? Lets examine a few issues.

There is a pervasive view at least in some circles - that both quotas and targets constitute favourable treatment for women and that this will undermine the principle of merit by either promoting women who are not up to the job or by under-cutting women in the workplace by creating the impression that they are not there on the basis of merit.

So, I think we need to talk openly about what the principle of merit means. Its a very good principle. It aims to ensure that leadership selection processes are fair, impartial and transparent. It means the outcome isnt based on where you went to university, or who you know, or what your parents do. The merit principle is intended to eliminate favouritism, nepotism and bias and yes sexism.[5] But unfortunately, its now being used to defend just that.

Its time that we applied the merit principle to women. My strong view is that quotas and targets are one way of bringing womens merit out into the open. As we have heard from the Norwegian experience, the quota law has played a pivotal role in making womens talent and experience visible.

When Michael Lavarch, the former Commonwealth Attorney-General amended the Sex Discrimination Act in 1995, he anticipated the need for temporary special measures including quotas. He was clear that these sorts of measures should be presented and understood as an expression of equality rather than an exception to it.[6] By this he meant that there is a difference between formal equality and substantive equality are we interested in equal chances or equal outcomes? Sometimes we have to treat people differently to get to true equality. That is the significant cultural hurdle that we must overcome.

Some have suggested that there will be insufficient supply of appropriately talented women to fill the positions if quotas are introduced. To that I say, if Norway can find 1,000 suitably qualified women in a population of 4 million, youd think Australia could find 500 women in a population of 22 million. Having been involved in the AICD identification process for board ready women for the last 2 years, I have no concern about the lack of supply of appropriately qualified women. Last year I could have named most women on the AICDs list of board ready women. This year was particularly inspiring as I saw a whole new breed of women coming through women from mining, agriculture, technology, science, construction male dominated industries the women are there and at senior levels. The numerous initiatives by the BCA, AICD, Women on Boards, AHRI and other individual organisations to identify and grow female talent are paying dividends. Of course it will be more difficult in certain industries but not impossible.

Turning to the recent increased representation of women on ASX boards we might ask if board standards have been lowered to accommodate these new female members that these new board directors are somehow less meritorious. I think youll agree they are not. Women such as Carol Schwartz, Catherine Brenner, Alison Watkins, Belinda Hutchinson, Sam Mostyn, Ilana Atlas, Christine McLoughlin, Yasmin Allen and 70 other talented and impressive women have received new appointments.

Some will argue that we will see the emergence of an old girls network as we have with the old boys network that the power is concentrated in the hands of a very few. That remains to be seen. It is encouraging that 55% of the new female appointments made in 2010 were women who had not previously sat on an ASX200 board.

As Mai-lill has said of the Norwegian experience - As to the argument that the power is still within the hands of the few, whether men or women, the numbers tell a different story. That is also emerging as the Australian story.

But addressing the under-representation of women at board level may be the easy part. Creating lasting cultural change creating cultures that are inclusive of women will be more difficult. One of the lessons learned from the Norwegian quota system has been the limited impact of the quota law on increasing the number of women in executive line management roles.

Avivah Wittenberg-Cox a noted gender consultant puts it this way:

There is massive corporate mis-adaptation to todays talent realities and the subsequent inability to retain and develop women as well as men. I call this gender asbestos. Its hidden in the walls, cultures and mindsets of many organisations. But ridding the structure of these cultural toxins will require more than pointing accusingly at the mess. It requires a detailed plan for how to move forward and a compelling, attractive portrait of the result. Stop asking Whats wrong with women that theyre not making it to the top? Start asking Whats wrong with companies if they cant retain and promote the majority of educated [people]?

 

Corporate reform has been paralleled by strong government action. In 2010 the federal government announced:

 

  • A target of 40 per cent women, 40 per cent men across all government boards and committees. State and territory government boards have had gender equality targets for boards in place in most states for the last couple of years. They have had a dramatic impact. Lets hope that the new federal reforms prove equally as positive.
    • Scholarships for at least 70 women to undertake Australian Institute of Company Directors courses;
  • New Women in Sport Register boost womens representation on sporting club boards, and report to government[7]

The government has also just completed a review of the Equal Opportunity in the Workplace Act was in partnership with businesses, unions, industry groups, and researchers. The reform package announced last month will strengthen the Acts focus on gender equality, highlighting pay equity, and unpaid caring responsibilities as key dimensions in achieving equal outcomes in the workplace.

Reporting will be more simple and transparent; compliance will be stronger and fairer; and the associated Workplace Gender Equality Agency will have an advanced role in supporting and advising industry.

It is also great to see Helen Conway, the ex General Counsel of Caltex appointed as the Agencys new head. She has a long track record of success in business
The 18 months since I have addressed this forum have certainly been eventful. The issues that we spoke about back in 2009 are now firmly in the minds of Australians. And that is a significant achievement an achievement only made possible by the continuing influential advocacy of each of you. Thank you.

To borrow again from Claire (Braund), A lot of people and organisations have suddenly found religion on the women on boards issue - we now need to harness this awareness and start to affect real change.

Its an exciting time for women in business. Change is happening. Business initiatives and government reform have begun to alter a landscape that has remained depressingly static for far too many years. ASX guidelines, legislative reforms, and initiatives like the male champions of change are all playing their part.

Here in Australia, gender equality is firmly back on the agenda we must ensure it stays on the agenda. Let us build a strong and sustainable economy, a strong and sustainable society one based on the skills of all our people, one that recognises, rewards and respects the contributions of men and women equally.

Thank you.


 

[1] Women on Boards, 100th International Womens Day: Women still marking time in the boardroom, http://www.womenonboards.org.au/news/media110308.htm, (viewed on 21 April 2011)
[2] World Economic Forum, The Global Gender Gap Report 2010, (2010)
[3] Ministry of Children, Equality and Social Inclusion, Representation of both sexes on company boards, http://www.regjeringen.no/en/dep/bld/Topics/equality/rules-on-gender-representation-on-compan.html?id=416864, (viewed on 21 April 2011)
[4] As above
[5] Burton, C, (1999), Merit, gender and corporate governance, Women, Public Policy and the State
[6] Commonwealth, Parliamentary Debates, House of Representatives, 28 June 1995 (The Hon Michael Lavarch, Attorney-General)
[7] T Plibersek, Equality for Women, Australian Labour Party Policy Statement 2010, (2010)

 

Elizabeth Broderick, Sex Discrimination Commissioner