Drafting women directors

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Only 11% of the members of the boards of Australia’s 200 largest public companies are women.  I don’t know what the equilibrium proportion of women on boards would be in a world without gender discrimination, but it is surely a lot higher than 11%.  Perhaps quotas will be needed at some stage, but that seems a very blunt instrument, and a bit defeatist really.  I think it would be better if we try other measures first, and I have a specific suggestion.

Directors are elected at the annual general meeting (AGM) of shareholders of firms.  The vast majority are elected unopposed.  Shareholders simply rubber stamp the election of directors that are proposed by the existing board.  If the new board members proposed by the existing board are all men, then the question that should arise from the shareholders is ‘why are you not putting forward some strong women candidates for election to the board’.  The answer to this question is presumably ‘we examined all the potential candidates and of the persons who were available to join our board, these men are the best candidates – gender was not a consideration – it simply turns out that the best available candidates are men’.

That assertion is hard to refute because the shareholders don’t know definitively who the alternative available female candidates for the board positions are.  To get around that problem we could make a list of women who are available for board appointments.  In that case the shareholders could point to the list and ask ‘why is the proposed new director David Johnson a better choice than Mary Serna?.  We know that Mary Serna is available and highly qualified for a directorship on our company.  Why has her name not been put forward?’  A specific challenge to the proposed candidates is obviously more difficult to refute.

So, I think that women who have the ability, experience, time and willingness to be directors of ASX200 companies should send their resumes to the keepers of the list — lets say the Melbourne Business School — where their availability becomes public knowledge.  I know this is asking a lot of the female candidates, but it takes a bit of sacrifice to get thinks changed for the better.   Is it a serious problem or is it not?

If a long list of women suitable for senior directorships cannot be assembled then back to drawing board to find out why not and consider whether 11% is the wrong figure.  But that seems highly improbable.

A long list of good women candidates would presumably be very helpful to the firms that do want to increase their number of female directors.  But crucially, the list would allow very pointed and difficult questions when firms present only male candidates for directors positions at AGMs.

11 Responses to "Drafting women directors"
  1. While you’re at it you could build a list of qualified men as well. The relative lengths of the lists would let you calculate the equilibrium proportion.

  2. Why not simply enforce quotas on the list of candidates for election and then let the shareholders decide which candidates – male or female – to elect as directors? For example, you could require that there are at least half as many women candidates as there are vacant positions.

  3. Why would equilibrium be greater than 11%?Why is it not zero – in which case we have men being discriminated against. For example, how many women fishermen are there? Or mechanics? Or any other job you can think of.  And why are there so few men working in child care? Shall we have a quota for that?

    I think the simple point here is that equal opportunity does not mean equal results.  Men and women, and their relationships with each other, are complex and result in a variety of life choices.  

    Unless there is evidence of active discrimination based on gender, then we can’t really conclude that a problem even exists.

  4. Cameron
    The equilibrium proportion of women directors in a world without discrimination can’t be zero because leadership talent is scarce and it is not all embodied in the male population.  I don’t know what the equilibrium proportion is, but surely it is a lot closer to 50% than zero.  
    Your comparison of directors of ASX200 companies to fishermen and mechanics I think understates the importance of director’s duties by a big margin.
    Sam

  5. “I don’t know what the equilibrium proportion of women on boards would be in a world without gender discrimination, but it is surely a lot higher than 11%.” You probably should have stopped at the comma imho. Pure assertion. And then in the comment you followed up with “I don’t know what the equilibrium proportion is, but surely it is a lot closer to 50% than zero.” So now you are saying > 25%. I’m not saying you are wrong. I am saying you have no idea. Would you expect more than 25% of AFL footballers to be women? Not the same you say? Board members of top companies are in some sense elite and statistically extreme. These is precisely where you find that ratios become extreme. The proportion of people over 2m tall who are women is..very small.
     
    The rest of the article is hard to disagree with in principle. Who would guess that the finance guys sees the solution is providing more information to the market?! But it would have to be well organised and benchmarked information. Otherwise you end up with the destructive and misleading nonsense on the Myschool website.
     
    I would make one further (obvious) comment. New directors are identified and appointed by existing directors. There is a huge amount of group think involved. This results in almost no diversity in world view. Obsessing about the visible dimensions of gender or skin colour really missed the elephant in the (board)room.  

  6. agree…its a club ….and directors that put names forward do not act in the shareholders’ interests……and do not try to tell me that shareholders have enough information to keep the directors honest…..so not only collect female …collect male names and their capabilities/qualifications…..and how about boards publishing a job description and advertise more widely….and maybe they even do not have the capability of choosing the right person to put to shareholders….maybe we should make sure there is a contest and board put several candidates to shareholders with their capabilities

  7. The discussion also assumes that more women want to sit on boards rather than investing their time and skills elsewhere.

  8. There already are lists of women that are interested in, skilled in and available to sit on boards – for example a Victorian list run by DPCD and a not for profit Australia wide org (Boards for Women) that is run out of Sydney. Both of these also provide resources to women around networking, building a CV etc. The problem seems to be more that organisations aren’t looking to have diversity on their boards, as they don’t see the value, and have no incentive, rather than it is too hard to find women who are interested and available.

  9. As Sharon said, there are already lists available for companies that are seriously trying to find qualified female directors.

    But I can’t imagine that I would want to be one of a list of women being discussed at an AGM, particularly if it was a small list. Where would my incentive be to allow my name to be put forward to be torn down by the exisiting Board? (which they would surely do to justify their decision).

    My experience of recruiting suggests that getting better diversity rather than group think and people appointing their friends comes from formalizing the recruitment process. If there is a job description, and a recruitment process that requires advertisement, and shortlists that are somewhat diverse (perhaps just even requiring a shortlist which has someone without an ASX 200 Board on it), then diversity usually increases immediately. Not necessarily as far as it should, but by quite a lot.

    I would also add, that for an immigrant country, there are very few immigrants from non English speaking backgrounds on Australian Boards. Also a problem.

  10. The AICD’s mentoring program is an excellent example of this groupthink that occurs when you get a club of old white men deciding what business should look like. The point is to get alternative views, not to perpetuate stodgy old ideas, duh! Are they going to have mentoring schemes for Asian Australians too? Or Aboriginal Australians? There seems to be a distinct absence of them at senior management and boards.
    Sam, I think your wrong – additional information would not help. Walk through campus on any day, heck walk through MBS anyday, it is full of women who are capable, educated and ambitious. To suggest that they do not want to get onto senior management and boards because the world out there does not know they exist is just plain wrong.
    Enforce quotas. Norway did it, and the world kept going just fine.

  11. Sharon, Jennifer, and Sam’s former student are on to something I think.  The lack of women, aboriginals, and all sorts of non-stereotypical directors is a sign of a poorly performing selection process, and its not that directors don’t have access to a wide range of people.  Basically, directors select their friends.  There is almost no incentive to select based on capability.  Setting quotas will only help hide that.  If directors had to select 50% women for new positions, and they had access to all women’s CVs in Australia, they would still choose the women that were most acceptable to current directors.  Most women would still not stand a chance, because they wouldn’t have the right connections.  Little would have been achieved in helping companies perform better, and little would have been achieved for 99.9% of women (as currently 99.9% of men are also out of contention too).  Quotas won’t hurt, but they won’t address the real problem.  What is needed is both an increase in transparency, more formalisation of the processes, and an increase in non-director influence over the choices made.  A “jury” taken from a list of shareholders might help.  They would have an interest in seeing the most capable candidate chosen, and would want to see objective information to help make the decision.

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