COVER STORY : Boards without Broads – The dearth of diversity in New Zealand

High profile political and legal leaders aside, this country’s early embrace of gender equity seems to have stalled somewhere below the senior executive ranks of corporate New Zealand.
According to the latest census on women’s participation in the workforce, women’s progress into the nation’s boardrooms is proceeding at glacial pace. In 2006, they held 7.13 percent of directorships in our top 100 publicly listed companies; this year it’s 8.65 percent with 45 women holding 54 directorships out of total 624 positions. The tally in the New Zealand Debt Market is just 5.73 percent, while the alternative market (NZAX) is heading determinedly south – from 16.39 percent in 2004 to 5.74 percent in 2006 and new low of 5.07 percent in 2008.
Things look better in the public sector where an intentional push toward increasing female participation over more than decade had raised representation on Crown Company boards to 35.43 percent in 2006 – though that slipped to 34.07 percent in the latest count. The total government board and committee stock-take for women’s representation is 42 percent but slowing progress raises concerns that the public sector won’t reach its target of 50 percent by 2010.
Given that women now represent more than 46 percent of the workforce, why don’t more make it to the upper levels of business? Is it lack of desire, absence of ambition, or conflict with family responsibilities? Are there just not enough women with the skills to take on top jobs? Or has the existing skew become self-perpetuating as bloke-laden boards opt to go with the comfort of their kind?
And does this lack of broads make boards less broad-minded? This is not flippant question given increasing evidence that the diversity of input going into problem solving or decision making tends to improve the output.
Last year, research study found that Fortune 500 companies with the highest representation of women board directors attained significantly higher financial performance, on average, than those with the lowest representation of women board directors. And those with three or more women directors did notably better.
The four-year Catalyst study (The Bottom Line: Corporate Performance and Women’s Representation on Boards) tracked the performance of 520 companies on three critical financial measures: return on equity (ROE), return on sales (ROS) and return on invested capital (ROIC). It found those with the highest number of women directors outperformed those with the least by 53 percent on ROE, 42 percent on ROS and 66 percent on ROIC. This correlation between gender diversity on boards and corporate performance can, it says, be found across most industries – from consumer discretionary to information technology.
It’s not an isolated finding. Another recent study from the London Business School has found professional teams with an even gender mix deliver optimal performance in most areas that drive innovation – they are more likely to experiment, share knowledge and fulfil tasks. After surveying more than 100 teams of “knowledge workers” at 21 companies across 17 countries, the study concluded that mixed teams work best because individuals tend to contribute less fully and confidently if they are in minority – and this applies to men as much as women.
It found gender imbalances, on the other hand, create significant deterioration in knowledge-based work with regard to experimentation, knowledge transfer, the capacity to work across functional or business boundaries and general efficiency. These results were consistent regardless of the sex of the team leader.
Meanwhile, research at the University of Helsinki found companies with female chief executives or board directors achieve 10 percent higher return on capital, regardless of the company or sector.
So – is the local corporate sector doing itself disservice by not more actively promoting women to the nation’s boardrooms? Is the lack of diversity disadvantage for companies operating in increasingly diverse markets?

How do we compare globally?
The good news for New Zealand – or bad news for women – is that ours is not an entirely unique complaint.
A recent study by the European Professional Women’s Network revealed that just 8.5 percent of corporate boardroom seats within Europe’s top 300 companies were held by women, with Scandinavian countries like Norway scoring at the high end (28.8 percent) and Italy at the low (1.9 percent).
In America, the Alliance for Board Diversity shows the vast majority of seats in Fortune 100 companies are still occupied by (mainly white) men – though women at least hold 17.06 percent of directorships. In Canada, the latest figures show women holding 12 percent of company directorships and 15.1 percent of executive positions at top companies. Meanwhile, research by Britain’s Equal Opportunities Commission suggests that at the present rate of women’s progress, it will take 60 years to achieve equality among FTSE 100 companies where the current tally has crept to 11 percent.
Closer to home, Australia’s latest tally for female directors on top 200 ASX-listed companies is eight percent – down from 8.6 percent in 2006. Half of its top 200 companies still don’t have even one female director. This compares with around 40 percent on State and Federal government entities and nearly 30 percent on Australia’s largest not-for-profit boards.
One country that has surged ahead is Norway, which can now boast that 40 percent of its corporate board seats are held by women. But it had to pass law to achieve the change. In 1993, women occupied just three percent of the seats and by 2002, that figure had risen to six percent – rate that would have seen the country take century to hit the 40 percent mark. So in 2003, Norway enacted law requiring companies to meet the target. And despite an outcry about the lack of women with relevant skills, the general consensus today is that this newfound diversity is good thing.
Is that sort of fast tracking one answer to increasing female representation on Kiwi corporate boards?
Well probably not, says Equal Employment Opportunities Commissioner Judy McGregor – not because it wouldn’t work but there just ain’t the political will for it.
“Personally I favour legal frameworks, but I don’t think that is an option in the current climate – and if it isn’t, let’s go with the next strategy that might work. And I think the answer lies with finding male champions because they are the key in terms of access to corporate boardrooms.”
She believes the census is very valuable in that it puts the current situation in front of everyone.
“We do send it to every chair of every board so I think the value is there – but I don’t think women outside the corporate sector can really be the advocates for change – the solution has to come from inside the sector.”
That said, she finds it bewildering that none of the arguments advanced for the business benefits of women’s presence on boards seem to have made any impact.
“There’s now increasing evidence that bottom-line outcomes are improved by women’s presence. There are increasing numbers of women with discretionary income making major purchasing decisions as consumers and clients, increasing numbers of women in the workforce generally – and in the workforce of companies that don’t want them on the boards. None of this seems to make an impact so it’s bewildering in both business sense and social justice sense.”
So what is holding women back?
Lack of relevant experience at senior management level is one answer, according to Nicki Crauford, chief executive of the Institute of Directors.
“Unless we get women participating at senior management level, they’re not going to be participating in the boardroom and I think that will take quite long time to shift.”
When you combine this with the diminishing number of senior management roles – due to general shrinkage in New Zealand’s corporate sector – then there are even fewer oppo

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