Women on boards – The case for more female directors

Companies in New Zealand may soon have to provide details of the number of women directors, senior managers and staff they have, if moves over the Tasman are adopted here.
The Australian Stock Exchange has recently announced proposals to expand the Corporate Governance Principles and Recommendations to require every listed company – on an ‘if not, why not’ basis – to adopt and disclose diversity policy that includes measurable objectives on gender. Subject to the public consultation process, it is expected these changes will apply from the start of this month.
Meanwhile, in France moves are afoot to mandate women’s participation in boards, following model already in place in Norway which has achieved participation rate of 37 percent.
So why is this so important? Credible international studies have established that balance of men and women on boards results in significantly better company performance, with the Catalyst Report, “The Bottom line: Corporate Performance & Women’s Representation on Boards, 2007”, finding that it resulted in an average 53 percent higher return on equity, 42 percent higher sales performance and 66 percent higher return on invested capital.
If it’s that obvious, then surely New Zealand, with our exemplary record of promoting women’s issues – first to give women the vote, two female prime ministers, chief justice, Women’s Affairs Department – must be doing okay in this area? It seems not. We are significantly behind the rest of the world – and we are going backwards.
Just this year Women’s Affairs Minister Pansy Wong said New Zealand had “dismal record” with only 8.6 percent of women on boards of the top 100 listed companies and she argued that more women should be appointed to boards.
In Norway, the government mandated participation on the basis that ‘diversity is value in itself, and it creates wealth’. There are number of factors that drive this outcome. Firms that have strong women as role models attract the best female employees. These also tend to be firms that take into account issues that affect women such as work-life balance, ensuring that they retain and get the best performance over time from these staff.
Let’s not underestimate the power of the woman consumer. Eighty percent of consumer purchasing decisions are driven by women, and they like to support firms that are women-friendly. Businesses need investors and women are increasingly becoming shareholders.
In Norway, it was acknowledged that board members were generally selected from small circle: “their buddies”. Ironically one of the reasons women are successful is that they are usually outsiders and as such are more likely to challenge and extend the thinking of the board without concern for politics or personal loyalties.
They are also more likely to ask questions men don’t think to ask and tend to be inclined towards risk mitigation and policies and procedures. total of 72 percent of boards with women on them have formal performance appraisals compared to only 49 percent in boards with only men.
Boards often complain it is hard to find suitable women candidates. quick Google search of “women on boards” is all it takes to find the Ministry of Women’s Affairs (www.mwa.govt.nz” target=”_blank”>www.iod.org.nz” target=”_blank”>Visited 12 times, 1 visit(s) today