Interview with David Gonski (1): Diversifying Australian Boardrooms

David Gonski, AC is one of Australia’s most prominent chairmen. He has served on, and led, boards across sectors, most notably in listed companies and in the arts and higher education. As a proponent of good corporate governance, Gonski has championed diversity on Australian corporate boards, and he has actively backed appointments of female directors. In a two-part interview, he spoke to Boards and Governance about why it took a voluntary governance guideline to increase female representation in the boardroom.

“You never know with issues such as these as to whether they are a reflection of what’s going on or whether they instigate change,” says Gonski, referring to the revision of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations to promote more women in Australian boardrooms and in senior executive ranks.

“But there is no doubt that the coming of a new guideline promotes the issue as a board agenda item, it gets people talking and to start to think through whether they’re doing the right thing.”

The Corporate Governance Principles and Recommendations are voluntary guidelines for listed companies to report against annually under a concept of “if not, why not?”.  The Principles were introduced in 2003 and revised in 2007.

The changes to “Principle 3 Promote Ethical and Responsible Decision-Making” mean that companies must now establish a diversity policy. Boards must disclose in the annual report the measurable objectives for achieving gender diversity for the board as well as the progress that has been made towards achieving such set diversity targets.

The creation of a new guideline in October 2010 came at a time when the dearth of female directors on Australian listed company boards was becoming an issue of good governance. For the previous decade, the number of women on the ASX 200 had remained static – only about eight per cent of board seats were held by female directors.

Since the introduction of the new guideline, and aided by high profile mentoring programs such as that organisated by the Business Council of Australia, that figure has risen to 14.2%. (Nevertheless, 60 boards in the ASX200 do not have any female directors).

“The diversity guidelines have certainly had an effect,” says Gonski, who is the chairman of investment bank, Investec, Coca Cola Amatil and the Future Fund. “But even before they were put into effect, there was an enormous injection of discussion and consideration. And this is evident in the number of women on Australian boards now.”

A few months prior to the introduction of the new guideline, organisations such as Women on Boards (WOB) were agitating for the introduction of legislation to enforce gender balance on boards. 

WOB, which provides a registry of women who are "board-ready", had that year invited Arni Hole, the director-general of Norway’s Ministry of Children, Equity and Social Inclusion to speak to its biannual conference. Norway is well-known for introducing legislation to increase the number of women on listed company boards. Under the threat of delisting, the number of female directors rose from six per cent in 2002 to 41 per cent in 2009.

Gonski had also spoken at the same conference, telling the audience: “I would fight very strongly not to have quotas….people are foolish if they don’t have gender diversity but the way to do it isn’t through legislation.” 

Was the threat of black letter law the impetus for change in Australia? David Gonski disagrees.

“I think the new guideline was independent of any such threat (to regulate for gender diversity on listed company boards),” he told me. “I also think it was more of a possibility than a threat. Some people involved with government said that if things didn’t fix themselves it would have to be looked at; but nobody said at the time that it would be enacted. However, the concept of using legislation isn’t something that I favour.”

Gonski is well-known for mentoring women who want to pursue a board position. Boards on which he serves as either a chairman or a non-executive director have appointed women, and he has promoted women on to boards through his own network. But he concedes that the changes should have come earlier.                                                                                                                   

“The coming of more women in boards has been a fantastic development,” he says. “I’m not aware of any negativity and it has been, in my opinion, responsible for a number of positives.

“Firstly, boards are now able to draw from 100% of the population rather than 48%. Secondly, the diversity of views is a positive and the decision-making is greatly enhanced by having people who come from different walks of life and indeed different vantage points.

“There have been many occasions where having women on boards has not only taught people like me around the board table to think about things in a different way but also to solve them in a different way. But I think we left the issue probably too long. And it was wrong that it was left that long.”

In the second part of this interview to be published shortly, I talk to David Gonski about leadership in the boardroom and what’s next in the evolution of the diversification of board composition. We also discuss the concept of “unconscious bias” a term with an academic pedigree and which has become associated with boardroom diversity in Australia.