In a year where sexual abuse and harassment scandals have plagued the top of federal politics, Australian businesses have quietly marked another milestone in workplace gender equality.
For the first time, every company in the ASX 200 Index now has at least one female director, with female representation on boards reaching 33.7%. Although tied or slightly behind some European countries, Australia is ahead of the United States, where the percentage of women directors on S&P 500 boards is 29.9%.
Boards have come under pressure over the past decade from investors, such as major pension funds and multiple advocacy groups, including the 30% Club, Women on Boards, Chief Executive Women, Champions of Change and the Australian Institute of Corporate Directors, to improve their gender diversity. The threat of quotas in 2009 was also a catalyst for action.
As progress has been made, attention is now turning to increasing the number of women in leadership roles, such as chief executive and chief financial officer. As part of this push, some banks and other financial institutions are tying a company’s borrowing costs to gender equality goals. It’s a trend that first emerged in the US, UK and more recently in Australia.
Last month, Coles announced that it had refinanced $1.3 billion of its debt with loans tied to three key sustainability goals, which included the proportion of women in leadership positions. If Coles fails to meet his targets, he will pay more interest on his loan.
Board director Diane Smith-Gander, chair of the Buy Now, Pay Later Zip group and the Committee for Australia’s Economic Development, said Coles was to be applauded for such a move. “The targets have to be set and the targets have to have bite. And that’s definitely a way of providing targets with teeth, so I’m very supportive of that.
Terry Fitzsimmons, senior lecturer at the University of Queensland Business School, co-author of a report Towards gender parity on the board, which has been backed by the Australian Institute of Chief Executives and the Australian Council for Gender Equality, expects more banks to link borrowing to sustainability goals. “Money talks,” he says bluntly.
It will take 65 years for women in Australia to reach parity with men in CEO positions in companies with 100 or more employees
Terry Fitzsimmons, Senior Lecturer at the University of Queensland Business School
Fitzsimmons says that while the strong growth in the number of women directors on boards over the past decade has been impressive, more needs to be done to increase the number of women in leadership positions. He estimates that it will take 65 years for women in Australia to achieve parity with men in CEO positions in companies with 100 or more employees. For women in leadership positions that report to the CEO, the expectation is slightly lower at around four decades.
“The pool of women in leadership positions is a real problem in Australia, and the only way to tackle it is at the grassroots level,” he says. “I’ve argued for a few years now that we need a national workplace gender equality strategy. One that examines education systems and structural inequalities in the economy around wage setting. There are a lot of things that we haven’t even started to do as a country that we need to address, including the stereotypes that are going to continue to perpetuate this cycle of women not going into operational roles or in industries where you tend to see CEOs emerging.” He is establishing a center that will lobby for a national gender equality strategy.
Smith-Gander welcomed Prime Minister Scott Morrison’s recognition in early September that more needed to be done across the country to improve gender equality. “As the Prime Minister told the [women’s] security summit, we have a culture in this country that allows us to turn a blind eye to gender inequality. Until we address this culture, we will never achieve equal representation, which is the goal we must have. So I was very pleased that the Prime Minister said that it is incumbent upon all of us, every Australian, to tackle this culture. And that, of course, gave a very important role to the Prime Minister and to our entire Parliament in solving this cultural problem as well.
Nicola Wakefield Evans, director of Lend Lease and Macquarie and who also chairs the Australian chapter of the 30% Club, says it’s only when you have women on boards or in senior management that conversations start to change around gender equality. “It’s very hard to yell at 40% of the board if 40% are women. It’s much easier if there’s only one woman on the board to dismiss everything she says.
Societal movements such as #MeToo have also increased pressure on companies for there to be more diversity at the top of companies, while changing conversations about how companies deal with issues such as harassment complaints. sexual. In the past, these complaints were often covered by non-disclosure agreements and payments while the offender kept his job. “I’ve been so impressed with a lot of my male colleagues who have really stepped up and made sure organizations have the right processes in place and are talking to our CEOs and leadership teams,” Wakefield Evans says of this.
However, there is still progress to be made. Last year, a sexual harassment scandal involving AMP senior executive Boe Pahari led the insurance group’s chairman, David Murray, to resign after shareholders raised concerns about the company’s mishandling of the complaint. board of directors. At another insurance group QBE, an employee complaint led that company’s board to quickly part ways with CEO Pat Regan, following the outcome of an external investigation into communications about the workplace.
AMP now has a female CEO and President, one of the few ASX 200 companies to do so.
In their most basic form, all-male boardrooms or Australian senior executives who are a male enclave do not reflect the makeup of the company or their customer base. However, the problems run deeper than that, because when you have fewer female CEOs and CFOs at the top of Australia’s biggest companies, even fewer of them take on the role of chairwoman of boards. A company’s board of directors often wants a person to become president, who has been a former CEO or CFO.
“A lot of boards like to have a former CEO or two on the board, and we just don’t have the pipeline of women in Australia who have had big CEO roles,” says Wakefield Evans, who is a former managing partner. of the law firm now known as King & Wood Mallesons. “We need to focus on increasing the number of women in management teams and the number of women responsible for the P&L (profit and loss financial statement). Right now we’re seeing more women being appointed to CFO positions, and that’s a good sign, and I hope it will increase. »
Women made up 6% of chief executives at ASX 300 companies as of June 30, the same as in 2017, according to Chief Executive Women (CEW). The CEW said nearly 80% of CEOs appointed last year held line positions with P&L responsibility, with women making up just 14% of those line leadership positions across the ASX. 300.
Fitzsimmons and Smith-Gander argue that corporations have led the way in gender equality because they have also recognized the economic cost of not having women in higher leadership positions.
A report from the Bankwest Curtin Economics Center released last year showed that having more women on boards leads to better business performance, profitability and productivity. He found that increasing the representation of women by 10 percentage points or more on the boards of ASX-listed companies led to a 4.9% increase in the company’s market value.
“For the corporate sector, it’s a talent and cost issue,” Smith-Gander says. “When educated women come into your organization and leave because the metrics create a poor value proposition for them, that’s a way to drive up the cost to your organization. We also know that the population is aging and therefore we are going to have to use all the talents we have. »
This article is the second in a three-part series on corporate boards.
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