Where to in 2011?

By Claire Braund
December 2010

If 2010 was the year that gender diversity finally gained some real traction in company boardrooms, the media and more broadly, then what does 2011 hold for this critical issue? In this article Claire Braund, Executive Director of the highly respected Women on Boards group, looks at the some of the reasons behind this change and if Australia can start to reframe our understanding of how gender equity can look in our workplaces and boardrooms.

Many have dated the tipping point at which gender suddenly rushed into the collective consciousness of Australian business as the 2nd Diversity on Boards Conference (hosted by Women on Boards) in September 2009. At this event, Sex Discrimination Commissioner, Elizabeth Broderick, put on public record for the first time her support for quotas, ASX Chair David Gonski came out strongly against them, ground-breaking female director Helen Lynch outlined her preference for targets tied to performance and remuneration and the room exploded with support for Arni Hole, the head of the government department responsible for implementing the 40 per cent under represented gender quota in Norway.

Importantly the need for gender diversity started to be discussed in the Australian media beyond the confines of ‘Corporate Woman’, the long running weekly column penned by respected author and journalist, Catherine Fox, in the Australian Financial Review. Scarcely a week has gone by in 2010 without an article or story on gender diversity (or the lack thereof) in the ASX200 or more broadly across the business community.

The cynics among us might say that business realised the writing was on the wall when the ASX Corporate Governance Council announced its intention in late 2009 of adding gender to reporting requirements for listed companies. Lobbied heavily by Women on Boards and others, the changes spearheaded by former Chair of the ASX CGC, Eric Mayne, specify that companies should disclose in their annual report:

• the measurable gender diversity objectives set;
• progress towards achieving them; and
• the proportion of women at board, senior management and whole of organisation levels

From July 2011, compliance with CGR diversity reporting requirements will be reported and companies that materially fail to comply with “if not, why not” disclosure requirements will be written to by the ASX reminding them of their reporting obligations under Listing Rule 4.10.3. However, unlike Norway where you can be delisted from the stock exchange for not complying with the 40 per cent quota law, no penalties will apply in Australia apart from the resulting bad press and public scrutiny which may follow failure to report.

The use of the carrot rather the big stick approach in Australia has raised the issue of whether corporate Australia will simply put enough women on its boards and in senior leadership roles to be seen ‘be doing the right thing’ or if real cultural change will flow?

All the signs are that those in the ASX100 – and possible ASX200 – will move to implement the CGC recommendations on gender diversity, but beyond that lies the unknown. A survey conducted by Chartered Secretaries Australia (CSA) in August 2010 indicated that while 86 per cent of ASX companies were aware of the impending changes, more than 60 percent of boards had not discussed how they would comply with the changes. Significantly, 22 of the 23 ASX500+ companies who responded had not discussed how they might meet the requirements.

This finding is not surprising given the attitude on display at the 2010 AGM of bio tech company Cellestis, when a male shareholder asked the all male board whether it would be complying with the new guidelines on gender diversity for ASX companies. The Chairman Ronald Pitcher responded along these lines. That they would only appoint women on merit and that women were harder to find because they needed to take time off for biological functions like having children.

Speaking to an Australian Institute of Company Directors lunch in Melbourne on 2 December 2010, veteran director Elizabeth Proust, said she did not believe the current focus on meeting gender targets was generating much cultural change. Ms Proust, the chair of Nestle Australia and director of Perpetual, said “Corporate Australian still views women as wives and secretaries,” (AFR, 3 December, p. 17). She also echoed the comments of several other prominent female directors in the past 12 months, when she said that a few years ago she was not in favour of quotas, but could not see Australia achieving the standard set by Norway without some sort of Government mandate.

In Norway, the Quota Law requiring companies to appoint 40 per cent of the under-represented gender to their boards was announced by the Minister for Trade and Industry in a conservative government, in 2002 and approved by Parliament in 2003. The law affecting state owned and inter-municipal companies went into force by January 2004, with a two year period of transition. The law affecting around 500 public listed companies was enforced in 2006, with most complying by July 2008. About 100 companies also delisted from the Stock Exchange in this time so were not required to comply.

At the end of 2009 more than 40 per cent of board seats on Norwegian PLC’s were held by women. The Quota Law is now widely accepted in Norway by the business, shareholder and wider community, women’s talent and experience is more visible and the governance of Norwegian companies has been improved with a greater focus on selection criteria for directors

However a major study by the Norwegian Institute for Social Research at the University of Oslo on the impact of the Norwegian quota law on boards showed that as yet there has been little evidence of an increase in women’s access to a wider scope of management positions. Only 10 per cent of senior managers in all Norwegian PLC’s are women and there are virtually no female CEOs.

The number of women in management will be the big issue for companies in all jurisdictions in 2011. While 2010 has seen 52 positions on ASX200 boards taken by women - increasing the percentage of female directors to an historic high of 10.3 per cent in this benchmark area – there has been little movement in management and senior executive ranks. Women hold eight per cent of executive roles and just 4.1 per cent of line management roles on ASX200 companies, compared with 24.1 per cent of support roles – up from 17.1 per cent in 2008. (Source: Equal Opportunity for Women in the Workplace Agency Census 2010)

Much attention in companies is being paid to how to recruit and retain women into management and executive roles through talent and leadership programs. Experts urge women to stay in, or be promoted into, line management roles as these get you on the radar for top executive jobs and board roles. While the functions of HR, marketing, communications and other support roles are important they are not necessarily career enhancers - a perception that clearly needs to change.

In giving women this advice we really addressing the deep ingrained cultural issues to which Elizabeth Proust referred in her speech? After all, organisations such as IBM, has exemplary flexible work practices and programs to fit most employee situations. However even IBM has not increased the numbers of women in senior leadership roles. Why not? Perhaps the vexed issue of being a mother and a worker are just too diametrically opposed in our conservative culture?

A major area of cultural reform in Norway is the thinking around its best practice parental leave program. In 2010 the scheme was expanded to 47 weeks fully paid or 57 weeks at 80 per cent with 12 weeks for fathers. The father’s entitlement cannot be used by the mother and is lost if not taken.  Placing an emphasis on the father’s 12 week entitlement is a way of ensuring employers expectations concerning leave and absence can be more equally shared across male and female employees. In other words, both sexes are seen as an equal ‘risk’ due to family commitments. This is viewed as crucial to addressing the problem of women not returning to work after maternity leave and not receiving promotions for taking a career break.

In Norway, having children and working are regarded as the two major contributions an individual makes to the economy and well being of society as a whole – so it is in everyone’s interests to make them mutually inclusive, rather than mutually exclusive. This thinking has driven its social reform programs over the past 30-40 years.

Harald Norvik, the chairman of Telenor and Aschehoug and a director ConocoPhillips and Petroleum Geo-Services, believes that companies are going to have to reframe their thinking around the time that people and women in particular take out of workplace.

The 63-year-old former Government advisor and CEO of Statoil, the world’s biggest offshore oil and gas company and 36th largest company, said parenthood should be regarded as an investment in developing leadership capabilities as having children is great training in the key principles of participative leadership - listening, motivating and inspiring others.

Many Norwegian social programs are underpinned by revenues and taxes from oil and gas resources which go into the US$500bil Government Pension fund of Norway – one of the world’s largest investment funds. Regarded as superannuation for the country, the Government takes a maximum of four per cent per of the fund’s return on investment each year.

Perhaps there are some useful parallels to be drawn for another country rich in natural resources which is riding a boom and looking to address major shortfalls in its labour force in 2016 by retaining more women in the workforce?