Australian boards are male and pale, by Sally Patten, BOSS editor, AFR, 20 May, 2020
Despite a hefty increase in the number of female board members over the past five years, the directors of Australia's biggest 300 companies remain largely male and pale. An in-depth study of ASX 300 companies found the lack of cultural diversity on boards was particularly stark.
"It is difficult to attract the best people if they can't see themselves reflected at the leadership level," says Macquarie Group director Nicola Wakefield Evans. Janie Barrett
The proportion of directors from non-Anglo-Celtic cultural backgrounds fell to 5 per cent from 5.4 per cent between 2016 and 2020, the study by the Governance Institute of Australia and Watermark Search International, an executive recruitment firm, found.
The proportion of board directors from anywhere outside Australia declined to 29.3 per cent from 30.4 per cent over the same period.
The lack of cultural diversity at the board level reflects a similar pattern at executive levels, with a 2018 report from the Australian Human Rights Commission, University of Sydney, Asia Society Australia and Committee for Sydney noting that only 5.1 per cent of chief executives and senior executives in Australia had a non-European or Indigenous background.
“More progress needs to be made in Australian boardrooms in this area, particularly given the very global nature of trade and business for domestic entities," said Governance Institute chief executive Megan Motto. “Boards must also realise that as well as being fairer and more representative of the society they operate in and of their workforces, that there is also an increasing resistance to investing in companies with homogeneous boards."
Harder to understand customers
Nicola Wakefield Evans, a director of property company LendLease, investment bank Macquarie Group and life insurer MetLife Australia, said that without directors from diversebackgrounds, Australian companies risked finding it harder to understand their customers, manage international supply chains and attract top talent.
"It is difficult to attract the best people if they can't see themselves reflected at the leadership level," she said. Ms Wakefield Evans also chairs the 30% Club, which campaigns to improve gender diversity on boards.
Boards, she argued, were failing to reflect the multicultural aspect of Australian society. "You have to have organisations governed in a way that reflects the society," Ms Wakefield Evans said.
The study found that although the number of companies with 50 per cent or more women on their board had risen to 20 from 16 over the past 12 months, in 2020 less than half the number of ASX 300 boards had more than 30 per cent female directors. This year 29 ASX 300 companies had no women at all.
The lack of female directors was in spite of their superior qualifications. Watermark Search and the Governance Institute found that 7 per cent of female directors had PhDs, against 4 percent of men, 40 per cent had either an MBA or a masters degree, against 33 per cent of men, and 89 per cent of women directors had an undergraduate degree, compared to 73 per cent of their male counterparts.
Female directors were also far more likely to have formal governance training. "That an individual has dedicated the time, resources and effort to attain a qualification such as an MBA or PhD speaks volumes and adds a huge amount of value to a board," Ms Motto said.
"We know that a combination of both experience and ongoing education is essential for those in both a governance professional role, as well as in the boardroom,"
Ms Wakefield Evans said the difference in education levels could be due to the need for women to be better educated and more experienced to rise up the corporate ladder.
Sally Patten edits BOSS, and writes about workplace issues. She was Financial Services of the Financial Review and Personal Finance editor of the AFR, Age and Sydney Morning Herald. She edited business news for The Times of London. Connect with Sally on Twitter. Email Sally at firstname.lastname@example.org