New Zealand’s brief fling with women at the top of its primary governing institutions is over. And throughout the flirtation, corporate enterprise kept its ruling male face firmly set against anything other than token concessions.
The latest statistics released by global recruiters Korn/Ferry International show that more of New Zealand’s top 100 boards by market capitalisation, exclude women from their boardrooms than any of the seven Asia-Pacific countries surveyed. And, to make matters worse, the percentage of women on Asian boards is about half that of European and North American boards.
Korn/Ferry surveyed boards in Australia, Singapore, Hong Kong, India, Malaysia, China and New Zealand. Of the top 100 boards in those countries, 65 percent of New Zealand boards excluded women directors. That compared with 29 percent in Australia – one trans-Tasman gap that definitely needs bridging, 59 percent in Singapore, 57 percent in India, 56 percent in Malaysia, 43 percent in Hong Kong and 39 percent in China.
And none of the New Zealand companies surveyed employed female chief executives – the lowest level of all the countries surveyed. New Zealand’s tiny, exclusive and generally lowly-rated governance gene pool, determinedly denies itself access to 50 percent of the country’s working, motivated and increasingly better educated population.
Korn/Ferry’s Australasian managing director Katie Lahey agrees that the picture painted by the latest research is, to say the least, depressing. “But,” she says, “I feel more optimistic than I have at any other time in my 40 years of working life. We are, I believe, on the cusp of change. There is, at last, realisation that there is something very strange about boards and senior level management teams being so devoid of women. This issue is at the top of the agenda now for number of very logical, important and coinciding reasons.”
Other countries, including Australia, are now seriously addressing this issue. Some, especially in Europe, have addressed gender imbalance on boards. Fed up waiting for the male-dominated corporate sector to act on its own initiative, governments are changing governance codes and/or implementing quotas. Finland, Sweden, the Netherlands and Denmark have all now introduced measures that increased the number of women on boards.
Aussie initiative
Closer to home, Australia changed its national corporate governance guidelines by which boards must report their organisation’s level of gender diversity. The change came into effect in January. Lahey is surprised at how quickly companies have reacted and embraced the change. With no mandated requirement other than to report the facts of the organisation’s gender balance, the number of women appointed to Australia’s corporate boards has jumped from around eight percent year ago to 14 percent in less than year.
“New Zealand could do worse than follow the Australian approach,” says Lahey. “What it shows is that relatively small change can have major impact. And by reporting the number of male and female employees in business the questions become obvious. With so many women on the payroll, how come there are so few in leadership roles? It does not make sense or look right.”
Women now make up 25 percent of all new appointments to ASX boards, compared to just five percent in 2009 – evidence, if it were needed, that men resist change until there is some regulatory or supervisory compulsion for them to do so. That attitude and reticence to accept that women are up to the job might, in part, explain corporate New Zealand’s generally poor governance record.
Korn/Ferry’s take on its latest survey is that Asian economies, including New Zealand, are at turning point. Companies that fail to bring women onto their boards to provide advice and direction are, it says, taking several major risks. “They risk overlooking qualified director candidates in markets that are drastically short on such talent. They risk missing the opportunity to improve corporate governance by increasing the diversity of voices and views on their boards, and they risk losing the opportunity to better connect with the people piloting the boom – women,” the report says.
Lahey confirms that what is happening in New Zealand is also happening in Asia. Young women are fast becoming more educated than their male peers. There are more Asian, Australian and New Zealand women enrolled in tertiary education than men.
“The lack of women on boards should and, in countries other than New Zealand, is ringing warning bells for corporate leaders,” says Lahey. “The composition of board should reflect the company’s market and customer base. Companies that rely solely on men to make strategic decisions on products, innovation and growth are short-changing themselves on new ideas and different views on how to address their market. New Zealand is lagging behind the rest of the region when it comes to appoint them as directors or senior executives.”
The Korn/Ferry survey also shows that Asian countries which do appoint female directors then often fail to give them leadership positions. “None of the New Zealand companies studied had female CEO,” says Lahey. “The numbers were equally low elsewhere. Female chairpersons are also in short supply. Just four percent of the Australian, Chinese and New Zealand companies studied had female board chair.”
The token
And only 22 of the 700 boards surveyed had more than two female directors in either the executive or independent non-executive director role. Independent studies in the United States suggest that effective boards have at least three females on board of, say, 10. One (female) is seen as token, two are viewed as “in cahoots”. When the third arrives, all three become accepted as part of the larger group.
Bigger companies are more inclined to bring women onto their boards – finding that suggests leaders of larger, more complex enterprises find value in board diversity.
All companies, however, complain about the shortage of good, experienced leaders and directors with the skills to meet the new market challenges. “Broadening the search to include women could immediately widen the talent pool and bring more than just gender diversity to the table,” says Lahey.
With the world’s prevailing financial crisis, companies are trying desperately to improve their governance performance. “Increasing the diversity of boards helps achieve their objective of boosting shareholder value and representing stakeholders. diverse group of directors is more likely to raise questions, challenge the status quo or spot new opportunities,” says Lahey.
To effectively lift their performance, boards must also improve their director selection process, according to the survey. They need to put the same rigorous search guidelines and procedures into place that they do for their top executive candidates. formal, professionally managed selection process that is designed to gather the widest variety of candidates, including women, is more likely to produce more diverse, better functioning board.
More thoughtful practising directors, both male and female, agree the problem in New Zealand is acute. They are equally adamant that the solution lies largely in the hands and minds of the chairmen of New Zealand’s largest companies. Chairs set the tone of the enterprise and the boardroom. They call the shots on board composition. The chairs of New Zealand Top 200 companies could, if they wanted to, begin the process to change the diversity and gender balance of their boards immediately. Few have shown any willingness or inclination to do so.
“Chairs are not prepared to take the risk,” says highly regarded professional director Sandy Maier. “It is like opting for an IBM computer solution in the old days. No one ever got blamed for choosing IBM, even when the choice was technically wrong and ridiculously expensive.”
Male champions
Lahey agrees that chair
