Get on board

The story of women on boards, particularly large corporate boards, is an all-too-familiar saga of hope, dismay and frustration. It has a strong whiff of tokenism and male locker-room cronyism about it, and maybe some element of fear.

For some years now, the story has been running in a similar vein. In the 90s, as women in greater numbers were rising through the ranks of corporations, there was a keen expectation that their destination would be senior executive roles and, ultimately, the boardroom.

There was much talk and rhetoric about women in senior leadership roles. At one hopeful point, the number of women on boards in Australia quickly doubled from 4 per cent to 8 per cent, then progress suddenly and unexpectedly stalled.

According to the 2006 Australian Census of Women in Leadership by Equal Opportunity for Women in the Workplace Agency (EOWA), women hold 8.7 per cent of board directorships in the leading (ASX 200) companies (that is, 129 seats out of 1487), and that figure has moved just 0.5 percentage points since 2004.

What has slammed the brakes on women's progress? Academics, diversity experts, and countless women whose planned career trajectories appeared to be flat-lining, have asked themselves the same question.

It's worth noting Australia is not alone in the glacial progression of women into top boardrooms. In Singapore, statistics on 689 companies show just 8 per cent of directors are women, while in New Zealand's NZSX Top 100, women directors occupy just 7 per cent of board positions.

This compares with 12 per cent in 2005 for companies in the Canadian FP 500; 14.7 per cent in the 2005 US Census of Fortune 500 companies; 11.5 per cent in the 2006 Census of JSE-listed companies in South Africa; and 10.5 per cent in the 2005 UK FTSE 100 Census.

In the first-ever survey of women on boards in the top Global 200 companies (as ranked by Fortune magazine) in 2004 women held just 10.4 per cent of seats.

Although 'diversity' has been a buzzword in recent years, it's clear that while many at the top-end companies claim to have been embracing the idea, they have been preaching, not practising.

Cycle of inexperience

Reasons for the lack of actual progress defy logic. In recent years, companies looking to a sustainable future have been widely advised to hire diversely at all levels, including the board, to represent the gamut of stakeholders in their business. Indeed, The Economist recently urged readers to forget India, China and the internet, because it's women who are driving economic growth around the globe.

Most compelling are the results of a survey released by the New York-based Catalyst consultancy in October, which show that companies with more women on their boards perform better. Fortune 500 companies with the highest percentage of women on their boards saw equity returns 53 per cent higher than companies with the smallest number of women on their boards. The most likely explanation, it is claimed, is that these companies are more in touch with their customer bases.

The reason usually advanced by high-level recruitment firms for the lack of women in many boardrooms is that there are simply not enough women with senior executive or, more specifically, CEO experience to make the move.

While rejecting the notion that candidates for board roles need chief executive experience on their CVs, Anna McPhee, who heads EOWA, points out that what's happening to women at board level is merely the tip of the iceberg.

In corporate Australia 'women are being stopped at every level and in every direction', she observes. Statistics in the broader landscape are not heartening: 50 per cent of all graduates from business, economics and law faculties are women, but they represent only 12 per cent of executives in the ASX 200. There's a clear case for demonstrating business knowledge through line management and P&L experience as a prerequisite for a non-executive directorship (NED). However, the EOWA Census also shows that just over 7 per cent of 'line' roles in the ASX 200 are occupied by women. 'The line management pipeline is only just forming,' says McPhee.

Another reason advanced for the snail-like progression of women into boardrooms is the recruitment process. Ruth Medd CPA heads the strategic organisation Women on Boards. She points out that men have natural networks, and therefore more accessible avenues to promotion into board roles.

Much talk in the past has focused on the predominance of 'old boys' clubs in Australian boardrooms. As McPhee points out, though, the heightened global focus on corporate governance in recent years has erased some of the old-school pinstripes as boards have sharpened their awareness of the need to have the right skills around the table.

Statistics still show that 60 to 80 per cent of directors are appointed by personal knowledge through networks, and just 10 to 20 per cent are made by search firms. ASX 100 companies are much more likely to use a search company.

Women's chances are far better in the government and not-for-profit sectors. These sectors effectively provide spawning grounds to prepare women for the eventual move into the boardrooms of big publicly listed companies, says Medd, whose organisation boasts a membership of some 4500 directors and boardroom aspirants.

Simon Keeley, a consultant with the global recruiter Hewitt Associates, returned to Australia 18 months ago after 12 years working in Asia, is more blunt. The boardroom scenario reflects the prevailing blokey culture of corporate Australia, he says, which is perhaps manifested most blatantly in the tendency to appoint former rugby captains as corporate leaders.

Keeley, who currently heads the employee measurement and culture division of Hewitt's business, hears evidence of the male orientation of Australian corporations in high-level female executives' admissions that they need to take on male characteristics to succeed. 'They talk about a gloatiness' and a machismo,' he says, 'but their male colleagues are not conscious of it.'

Crunching numbers

A closer analysis of the latest statistics reveals some interesting trends.

Boards that give women an opportunity frequently appoint additional female directors. In fact, 13.5 per cent of companies have two or more female directors.

'So on the boards where they have women, their talents and contributions are being recognised and appreciated,' says McPhee. 'They are performing and the boards that have seen this want more of them.'

Women directors, however, are concentrated in half of the top companies. The other half has none. The bigger picture looks like this: Larger companies with more employees have more women on their boards. Companies in telecommunications, retailing, consumer services, and banking and finance, are much more likely to have one or more female directors. Least likely to have women on the board are the car industry, commercial services, capital and real estate.

Another clear trend is that the same women directors are being appointed to more than one board. Boards are generally homing in on tried-and-trusted directors, rather than looking for newcomers although, 17 new faces have joined the ranks since the last EOWA census in 2004.

One of the longest-standing women directors is Diane Grady, who currently sits on the boards of Woolworths, BlueScope Steel, and the Goodman Group, and is a retired non-executive director of Lend Lease (which she joined in 1994), MLC, Wattyl and the Sydney Opera House Trust, among others. A former partner with McKinsey & Co. with a specialisation in consumer goods, growth strategies and change management across a range of sectors, Grady's services are highly sought after. In the strictest sense, though, she doesn't have CEO experience.

Grady is a past president of the elite Chief Executive Women network and chaired a task force that published a CEO Kit for Attracting and Retaining Female Talent. As an insider with a keen interest in seeing more women on boards, she cites several reasons why she believes more women have not been appointed to boards in recent times.

One is a trend towards smaller boards, which has generally limited the opportunities for diversity, not only for women.

Most significant, she says, has been the risk-averse climate precipitated by well-reported corporate failures. Boards have tried to mitigate potential risk by appointing experienced directors and those they already know.

'Former CEOs are perceived to be less risky appointments. But the reality is that in some instances CEOs have grown up in one industry and find it difficult to adapt to other industries,' says Grady, who believes that once the emphasis has shifted from governance regulation, the pendulum will swing for women.

Plans for action

Another frequently appointed NED is Helen Lynch, the deputy chairman of Pacific Brands Limited, and a director of Southcorp and Westpac. She previously chaired the OPSM board and retired as a director of Coles Myer in 2003.

In a recent speech to financial services firm UBS, Lynch highlighted several ways to improve women's representation on boards, including developing a strong feeder system.
'This is about keeping women in senior executive roles for longer and discouraging women from taking up a board career too early,' she says, adding that the right experience in managing businesses is crucial.

International debate is over whether a form of affirmative action, such as legislation in Norway that requires 40 per cent of all board seats to be held by women, is the way to redress the balance. 'Men don't want to appoint tokens and women don't want to be appointed as tokens,' EOWA's McPhee says.

And according to Lynch: 'Women must champion other women.'

With some success, Grady goes out of her way to introduce promising candidates to prominent chairmen they might not otherwise meet. Through Women on Boards, Medd has been organising events that present aspiring women directors with top-level networking opportunities.

Future-gazing

The passage of time and the fast-changing business environment hold promise for putting more women into board roles. Statistically, younger companies (that is those listed since the year 2000) are more likely to have female directors. There's also a greater likelihood of younger directors being women 25 per cent of the 107 directors are under the age of 50 on the ASX 200 which suggests a generational shift is on the way.

Leaving the way open for change is the fact that in the next five years 30 per cent of NED positions in Australia are expected to turn over.

As business gathers further momentum into the 21st century, the importance of having diverse viewpoints around a board table is even more pressing.
'It isn't just about equal status,' McPhee says. 'We have the evidence that boards need them now because they add value.'

Women on boards in Asia

The situation for women on boards in Asian countries is changing.

The representation of women in long-established business hubs, such as Singapore, show similar statistics to Australia. Many blue-chip companies, such as SingTel and Capitaland, have women directors, indicates Professor Mak Yuen Teen, regional director, Research, Asia-Pacific for Watson Wyatt Worldwide.

Women on boards in Singapore are more likely to be executive rather than independent directors. 'There are more female directors who either founded listed companies or have gone up the ranks and attained board positions as executive directors,' he reports. 'Non-executive directors who are females may be largely representatives of the family-controlling shareholders in these companies.'

The percentage of independent directors is very low, which he speculates is due to independent directors being recruited from outside the company. 'This may reflect the relatively informal processes currently used by many Singapore boards to recruit independent directors and boards not having placed gender diversity as a priority when recruiting independent directors.'

Khim Yeow joined Singapore-based TMC Educational Group as an executive director in 1984. She says there are a variety of reasons why there are so few women on boards.

'With the rising call for more entrepreneurs, many talented women nowadays prefer to start their own businesses rather than remain bound to conventional organisations,' she says. 'Also, surveys have identified childcare and family issues as factors contributing to the decline in women representation at senior levels, suggesting that many opt out of the workforce at an earlier stage of their careers because of the need to spend quality time at home.

'Women who are near the top of large organisations report that aspects of corporate culture and style, which up to now have been strongly male-oriented, are the main barriers to their progression and are a significant deterrent. They are ground down by organisational cultures they had played no part in shaping.'

Yeow says closing the gender pay gap would be one way that could motivate more women to stay in their jobs.

Another would be creating more quality flexi-time or part-time roles to increase the number of women in senior positions, which can extend a company's portfolio of skills, and provide role models for younger, high-potential women.

A survey of Chinese companies showed very few women in directorships.

Only one of the three Global 200 companies had a female board member in 2004. But Simon Keeley of Hewitt Associates suggests we should prepare for this to change: the traditional bias towards male children in China is probably about to turn in women's favour.

'Girls have had to fend for themselves more,' he says. 'They noticeably have a greater maturity, and as the economy becomes more sophisticated, women are developing an edge and will start to make a far greater contribution.