Where is the good news when it comes to getting more women on boards? AHRI Chairman Peter Wilson AM (FCPHR) says there’s a strong business case for companies getting it right.

During the past decade, a debate has gathered momentum about the deplorable state of gender equity in this country. A little more than 20 per cent of board members are women, although there is still a somewhat bipolar nature to the distribution across all companies. The will to improve performance and inclusion of women on boards is also uneven. Further, the rise is flattening out, and reaching even 25 per cent women looks a tall order. 

Some banks, Telstra, and the ASX have sustainable programs for getting women on boards and in senior executive levels. The Institute of Company Directors has called for all ASX200 companies to achieve a target of 30 per cent by 2018. Thirty-three companies have now achieved that, but 31 companies are yet to make their first female board appointment.

By contrast, government board appointments shows both greater genuine aspirations, and also speedier and more effective results. The 2014 gender balance on Australian government boards report shows 40 per cent of public sector board appointments are now held by women, and the Labor governments of Victoria, and Queensland have both committed to targets of 50 per cent by the end of the decade.

The economic evidence from studies by McKinsey, Catalyst and Goldman Sachs is that greater gender equity leads to improved business performance and employee engagement.  Targets are an important first step for better gender equity performance, but the necessary condition is to put in place sustainable people management practices. Westpac is a good example, delivering 44 per cent participation by women in executive leadership ranks, with a 50 per cent target to be achieved by 2017.

To get there, Westpac re-wired its people management practices to require 50 per cent participation by women on boards, on an ‘if not, why not?’ basis.  The practices include participation in short lists to recruit, attendance at courses and senior succession plans. Notwithstanding this excellent result at management level, the nine person Westpac board has only two women, and of the five non-executive board appointees since 2012, four have been men. “We can’t find enough well qualified women” is the common excuse offered by predominantly male boards for their often lame efforts to achieve a better balance.

A case emerged in the public sector last year which demonstrated how more balanced gender results can be achieved. The Minister for Water in the Victorian Andrews government, Lisa Neville, announced new appointments for all non executive board positions on water corporations taking effect on 1st October. The boards weren’t sacked, instead a robust appointment process was established with all directors having to recontest their jobs against new comers who responded to mainstream press advertisements. A total of 1400 existing and aspirant directors contested the 132 positions available and nearly 400 were interviewed by two independent panels, one of which I chaired.

Applications were lodged online against requirements, which included skill-sets for any aspirant director of a corporation with hundreds of millions in revenue, and assets in the billions. The target of half men and half women was achieved almost as an inevitable by-product.

The lessons of the Andrews government’s approach are there for the private sector. There seems strong reason to change the Corporations Law to require 30 per cent of boards to turn themselves over each year to an open and independent process, run by professionals nominated by shareholders and advised by an independent executive search firm. Boards would still make the final decision on recommended panel appointments, but if they chose to ignore the panel’s recommendation, it should be accompanied by an  explanation at the AGM. If three new directors recommended by a panel for appointment over a three-year period were by-passed by an existing board, the latter should be subjected to the same consequence as for two consecutive negative votes on its annual remuneration report.

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