Top 10 Ways to Lead a Board with a Solo Female Director

Being the only woman in a well-established group of male directors can be tough, especially when the woman is also the first woman to join the board.

Here are some ideas for Chairman, CEOs and non-executive directors (male and female) to remember when the board is transitioning to a broader composition, appointing directors who represent various dimensions of diversity, and not just gender.

1. Be sure that a woman's comments are heard; if the conversation goes on as though the woman has not spoken, reinforce what she has said, and give her credit for it.

2. If you notice a women being ignored or slighted, let her know you see what is happening and then make it clear to others that this unacceptable behaviour.

3. Be aware of informal occasions (sporting events are a typical example) when women directors are not present and board business is discussed.

4. Find time and ways to get to know the women informally to the same extent that you get to know the other men.

5. Don't expect women to raise gender and diversity issues by themselves; be alert to those issues and take the initiative to raise them also.

6. Don't get suspicious that women are conspiring when women are seen talking together or sitting in groups.

7. Put women directors on the nominating committee.

8. Ask women, (and not only those on the nominating committee), to suggest women board candidates.

9. Remind the board that having one, or two women, isn't enough. Nor is having no-one else who represents of other dimensions of diversity, (age, cultural background, nationality, religion, sexuality).

10. Insist that executive search firms and nominating committees provide a shortlist of board candidates who represent multiple dimensions of diversity, and not only gender.

(Adapted from "Critical Mass: The Impact of Three or More Women on Corporate Boards", Alison Konrad, Vicki Kramer and Sumru Erkut, in Organisational Dynamics, Vol 37, No 2, pp145-164, 2008).

"A woman with Asian-experience" and other stereotypes of board diversity

As the debate continues about increasing the diversity of composition on boards, the Norwegian experience of introducing quotas to redress the gender balance of its boards is widely cited as a key example.

Norway was the first country to introduce a quota for increasing the number of women on company boards. The legislation, introduced in 2003, required that at least 40% of both genders be represented. Non-compliant companies were faced with sanctions including forced dissolution.

It is critical to note that Norway didn’t legislate for “the boards of all listed companies to be at least 40 percent female” as is widely quoted in global media.

Instead, it introduced laws to ensure that corporate boards be composed of 40% of the under-represented gender.

The distinction is critical for the debate on gender balance in the boardroom as it removes the focus on feminism and “women’s issues” and instead forces the argument to be about equality in leadership in business and in the boardroom.

The legislation, which was introduced 10 years after the first motion for its introduction was made, was passed in 2003 by a majority of the Norwegian Parliament. It amended ss6-11a of the Norwegian Companies Act to state that both genders should be represented on boards of public limited companies, state and municipality owned companies and co-operative companies (a business organisation owned and operated by a group of individuals for their mutual benefit).

In the boards of publicly-listed companies, both genders should be represented as follows: 

1.       Where there are two or three board members, both genders should be represented;

2.       Where there are four or five board members, both genders should be represented with at least two members each;

3.       Where there are six to eight board members, both genders should be represented with at least members each;

4.       Where there are nine or more members of the board, each gender should be represented with at least 40 per cent each.[i]

The balancing of gender composition on Norwegian boards was initially slow but by 2005 momentum was evident. The proportion of women in 2002 was six per cent, rising to nine per cent in 2004 and 12 per cent in 2005. Then real progress was made with 18 per cent of board seats occupied by women in 2006, 25 per cent in 2007, 36 per cent in 2008 and 40 per cent in 2009[ii].

The Norwegian experience has caused other European countries, such as Holland, Spain and Iceland, to also introduce legislation to achieve gender balance on boards.

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[i] Storkvik, A., and Teigen, M., (2010) “Women on Board: The Norwegian Experience”, Friedrich Ebert Stiftung, International Policy Analysis.

[ii] Teigen, M., (2008) Norwegian quota policies, paper presented at the Nineteeth Meeting of the Helsinki group on Women and Science, 4-5 November, ISF paper, 2008:12

Tokenism: The Hidden Enemy of Board Diversity

Ever since Derek Higgs[i] proposed that non-executive directors be sought from a broader range of potential candidates, including those which would capture likely female appointees, diversifying board composition has become a world-wide trend.

At one end of the spectrum, voluntary codes of governance have been revised to include “diversity” guidelines for increasing the number of women on boards, and in senior executive ranks.[ii] At the other extreme, in 2003 Norway legislated for corporate boards to increase the number of directors in the “under-represented gender”[iii] on the board or else face de-listing by the Norwegian Stock Exchange.[iv]

While statistics show that the number of women represented on Australian corporate boards has increased significantly between 2009 and 2013, the figures come off a very low base. For example, in Australia, the number of female directors on the ASX100 boards increased from 8.7 per cent in 2010[v] to 15.7 per cent in June 2013.[vi] But as of June 2013, 48 boards on the ASX200 do not have any female directors.

A greater number of women are represented on boards in other sectors namely mutual and community banks[vii], governing councils of universities[viii], and government entities[ix]. Medibank Private, which is one of the largest and most influential of government boards in which a federal Minister has final approval of the directors, has reversed the trend: five of the seven members of the board are female, including the chairman, Elizabeth Alexander. (The two men on the board are non-executive director, Paul Vamos, and the Managing Director, George Savvides).[x]

As governments, professional associations and boards continue to redress the gender imbalance on (mainly corporate) boards, two themes recur: 1) that “gender” and “women” are used as a synonyms for “diversity” (as opposed being only one example of the many dimensions of diversity), and; 2) the consequences of diversity of board composition is little understood.[xi]

One of the hurdles to overcome is the habit of “diversity” continuing to be defined as the number of men, versus the number of women, who compose a board of directors. While this misconception continues to be perpetuated, the opportunity to broaden the interest, and subsequently the discussion and academic research, on the impact of diversity on boardroom decision-making remains stymied.

Diversity means having many different characteristics represented (on a board) such as gender, age, cultural background, professional expertise, sexuality and religious affiliations. Diversity does not mean having one or two female directors on a board composed otherwise of men who all share the same characteristics – typically age, gender and professional background.

By limiting the definition of “diversity” as it relates to board composition to women, the opportunity for further discussion and research is likewise restricted. One area of research in which I am engaged currently is considering what it means to “lead for diversity”, meaning what additional skills does a chairman, experienced only in leading a board composed of men similar to him, need in order to accommodate a greater range of people on the board?[xii]

When there is only one person who represents the minority in a group, the spotlight of attention shines brightly. The other group members, shrouded in comfortable familiarity, are suspicious of this person, who looks different, speaks differently, and most confronting of all, thinks differently. Group dynamics theory attests to the practice of groups striving to conform in order to survive; a member who is different to the majority usually has limited choices: conform, or act independently and authentically and risk being rejected by the group.

Minorities in groups, even if this means one woman in a group of male directors, is often called a “token”, and the practice of admitting a person different from the group norm is called “tokenism”. Senior female executives and directors want to avoid being the “token woman” at all costs. Yet in this period of reforming the way boards recruit new directors and plan for succession, “tokenism” is a pertinent issue.

Women directors on ASX200 boards are most likely to find themselves as the lone woman, and occasionally as one of only two female directors. One woman finds the spotlight of attention very bright; but this is shared more easily with two women. Once three women are appointed a “critical mass” occurs and the group sees the women as “members” rather than “our female director”.[xiii]

The problem of tokenism on boards is greater when other dimensions of diversity, such as cultural representation, are sought on a board. In Australia, the Federal Government’s Asian Century White Paper has called for all ASX200 boards to have 33% of directors with “deep Asian experience” by 2025.[xiv]

The definition of “Asian experience” is fraught with misinterpretation,[xv]  and so far, only three per cent of directors of the ASX100 boards were born in an Asian country, namely China, Hong Kong and Singapore.[xvi] There is also a spattering of directors with experience of working in Asia, such as a former ambassador to China. If number of boards surveyed is increased to the ASX200, the number of boards with directors with “deep Asian experience” increases to six per cent.

With this push to increase the number of women and the number of people with “Asian experience”, on corporate boards, it is timely to consider what it means to place a person who represents a minority group into a well-established group.

Whether that person is a woman, a younger person, an indigenous director or a director born in an Asian country – further examination is needed of the impact of introducing a person of “difference” into a group whose membership that has a long tradition of “refreshing” its membership from a similar group of people. Questions to consider include adapting leadership styles for the chairman, training the whole board to better understand different perspectives, and revising induction programs for new directors.

These are areas of deep interest and relevance to my doctoral research and to my work as a board advisor. For further information, please contact me: ann-mareeATboardroomcg.com

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[i] Higgs, D, (2003) Review of the role and effectiveness of non-executive directors

[ii] One example is the Corporate Governance Principles and Recommendations with 2010 Amendments produced by the ASX Corporate Governance Council.

http://www.asxgroup.com.au/media/PDFs/cg_principles_recommendations_with_2010_amendments.pdf

[iii] It is critical to note that Norway didn’t legislate for “the boards of all listed companies to be at least 40 percent female” as is widely quoted in global media. Instead, it introduced laws to ensure that corporate boards be composed of 40% of the under-represented gender. The distinction is critical for the debate on gender balance in the boardroom as it takes away the focus on feminism and “women’s issues” and instead forces the argument to be about equality in leadership in business and in the boardroom.

[iv] Storvick, Aagoth and Teigen, Mari, “Women on Board: The Norwegian Experience”, Friedrich Ebert Stiftung, http://library.fes.de/pdf-files/id/ipa/07309.pdf

[v] http://www.womenonboards.org.au/pubs/bdi/2012/index.htm

[vi] http://www.companydirectors.com.au/Director-Resource-Centre/Governance-and-Director-Issues/Board-Diversity/Statistics

[vii] http://www.womenonboards.org.au/pubs/bdi/2012/creditunions.htm

[viii] Of the governing councils of the Group of Eight (Go8) universities in Australia, 33% of members are female. http://www.go8.edu.au/

[ix] As at 30 June 2012, women held 38.4% of Government board appointments (up from 35.3% in 2011). Over the 2011-2012 financial year, 41% of the 1633 new board appointments were awarded to women. http://www.fahcsia.gov.au/our-responsibilities/women/publications-articles/gender-balance-on-australian-government-boards-report-2011-2012

[x] http://www.medibank.com.au/About-Us/Corporate-Information/Our-Board-and-Governance/Board-member-profiles.aspx

[xi] Adams, R, “Women in the boardroom and their impact on governance and performance,” forthcoming, Journal of Financial Economics.

[xii] Moodie, A., (2011) “The Chairman of the Future: Leading for Diversity in the Boardroom”, Keeping Good Companies, August.

[xiii] Torchia, M., Calabro, A., & Huse, M., (2011) “Women Directors on Corporate Boards: From Tokenism to Critical Mass”, Journal of Business Ethics, Vol 102 No 2, pp299-317

[xiv] The Asian Century White Paper, Prime Minister and Cabinet, Federal Government of Australia, 2013. http://asiancentury.dpmc.gov.au/white-paper

[xv] Interview with Ann-Maree Moodie, ABC News Radio, on the Federal Government's Asian Century White Paper which recommends the composition of ASX 200 boards include a third of directors with deep Asian experience" by 2025. October 29, 2012. www.abc.net.au/newsradio/listen/daily.htm

[xvi] Durkin, P., “Top boards fail Asia test”, The Australian Financial Review, 14 June 2013.

iPads in the Boardroom (2)

Delivering board papers via an iPad or other tablet device is a growing trend among companies seeking cost-effectiveness and convenience. But electronic delivery of board packs is fraught with legal, risk and security challenges.

Until recently, most companies printed and bound board papers and couriered the pack to the directors prior to the next board meeting. The board packs were cumbersome, heavy and there was always the risk of the papers being lost in transit or unable to be delivered because no-one was home to receive them. There were also security issues if the packs were left the front door unattended.

Over the past 12 months, a number of companies have launched products which deliver board papers securely via an app, and company secretaries are presenting shiny new iPads to their directors. Other directors who are already veterans of using tablets to read and annotate their board papers choose to use their private iPads for all the boards on which they serve.

Where once the board table was strewn with folders, papers, stick-it notes and pens, now the mantra is BYOD:  Bring Your Own Device.

Board members believe that receiving their board papers via a tablet device is inevitable. But in the rush to embrace new technologies in the boardroom, directors must be cognisant of the potential legal ramifications of digital delivery.

In this article I illustrate this by discussing hyperlinks, annotations and passwords.

Hyperlinks

Ironically, one of the common complaints directors make about reading board papers on their tablet device is the size of the board pack. When the board pack was prepared in hard copy its thickness was obvious. The size of digitally-delivered board pack is much harder to determine and directors only learn what’s ahead for their weekend reading by the length of time it takes for the pack to download.

The download time can be related to the speed of the internet connection.  But the more common reason is the size of the pack and whether the papers feature complicated graphics. One way to overcome the download time is to use hyperlinks.

For an IT expert, a hyperlink the obvious solution to complaints about the size of the board pack and the length of time it takes to download.  The problem with hyperlinks from a legal perspective is that a hyperlink is easy to miss when a director is reading and annotating the papers.

Legally, if a hyperlink is part of the board pack the directors have an obligation to read its contents just as if it were a board paper. It’s a flimsy strategy in the event of a court case that a director will use the defence: "but it was in a hyperlink and I didn’t click on it".

Annotations

Another tricky legal area for director is annotations. There are a number of apps which allow directors to annotate their board papers easily and conveniently. The issue is less about how to make annotations than it is what to do with the mark-ups after the board meeting.

If the papers were to become material to a court case in years to come, would a director remember why he circled a word on page 43, wrote an exclamation mark on page 126 or doodled a smiley face at the bottom left-hard corner of page 152?

The ANZ Bank last year announced that under legal advice it had deferred introducing iPads to the boardroom, citing concerns about data security. “Under Australian law the annotation is a problem,” ANZ Bank’s chief information officer Anne Weatherston told The Australian Financial Review at the time. “While we can secure the board paper, any annotations you make sit outside of the network and we cannot capture them or store them as a corporate-owned document.”

The Board of the ANZ Bank now uses iPads with the papers contained in a secure app. “However there are legal risks regarding annotations,” Ms Weatherston told Boards and Governance. “As such we do not allow board paper annotations on the iPad.” 

Boards are addressing the issue in different ways. In some cases, the board papers and the annotations are deleted manually from the iPads either by the directors or the company secretary at the end of each board meeting. In other companies, this is done remotely.

Some directors who are especially concerned about electronic annotations use a small notebook in which to write their annotations the old-fashioned way, and shred the notebook after the board meeting.

Passwords

Remembering passwords is the bane of life in the digital age. From internet banking and bill paying to the websites of professional  associations, regular online shopping websites and social networking sites, remembering each and every password is very difficult and tiresome.

Board papers delivered on iPads or other tablet devices are protected to a larger or lesser degree by the level of security provided by the company and/or the app the company secretary uses. However, if the director allows the four-digit password on the iPad to be easily visible when it’s entered, the device can be easily stolen and the information extracted. Public places including airport lounges and the business class cabin of an aircraft where directors often fly are common areas of potential risk.

Two factor passwords are one way to address easily deciphered security codes. One factor is something known to the user and is a password. The other factor could be a token, a fingerprint or facial recognition.

Complicated passwords that contain a mix of numerals and letters in upper and lower case are another option to increase security - but they are much more difficult to remember.

Conclusion

When board papers were delivered in hard copy there were just as many legal, risk and security issues facing the company and its board.

The packs could be stolen, photocopied, emailed to competitors, left behind in airport lounges and taxis. The digital age has not eliminated these risks but in some ways it has made security more difficult to ensure.

As directors become more familiar with using iPads or tablets as just another business tool, downloading board papers, reading and annotating them and keeping them secure will become a matter of course.

In the meantime, creating a board protocol or policy on how papers can be kept secure is a worthwhile board agenda item for discussion.

The Risk of Ivory Tower Thinking in GFC 2.0

When the barista announced my order was ready, I noticed that my takeaway flat white had come with a bonus – a bite-sized biscuit placed on the lid. The price of the coffee hadn’t changed but my view of the café had. A simple little treat had made me feel that my custom was appreciated.

The role of the board and the role of management are different but complementary. It is not the role of a board member to delve deeply into the daily detail of management. And it is certainly the not done thing to bring minutiae to the board table. A much-cited example of such behaviour is the director of a supermarket chain who complains in a board meeting that the oranges were poorly displayed at his local.

But it is the role of the director to understand how changes to the economy are impacting on daily life, consumer buying decisions, and what competitors are doing. It is the role of the director to understand how the company he or she represents interacts with its customers. And it is the role of the director to take a “deep dive” - to use the jargon - into the everyday life of the stakeholders of the company.

As the world faces more economic downturns, there is no better way to see the impact at a grassroots level than by taking a walk around your local shopping strip. I took such a tour on the weekend and learned – at least anecdotally – that retailers are much better prepared now than in 2008/2009 as we face the real possibility of a second GFC.

The popular hairdresser had placed a sandwich board on the street with the words – “Appointments available today”. Whether it was a slow day, whether certain days are slower than others, or whether it is just a way of driving people physically into the shop it didn’t matter. The sign showed a degree of inventiveness to gain custom.

In the café , I overheard a discussion about the shop next door which had closed. “She just wasn’t prepared to sign another three-year lease,” said the café’s proprietor. Replied her waitress: “Why would she when everyone sells on eBay these days?”.

Right in front of me was a lesson for commercial property owners and agents – is it better to offer shorter leases in the current climate than risk no income from an empty shop? And for retailers, is a bricks-and-mortar presence the right way to run a fashion boutique anymore?

After decades of new management practices urging boards, CEOs and business owners to shave costs by reducing service; to sell services that were once part of the price - the tide has turned. Boards and the executive teams they work with would do well to think about the simpler points-of-difference to ensure the success of their companies in these difficult times.

Take the “bikkie” or “cookie” test – what is your company doing to make your customers smile? As a company director why not be a customer – walk into your store, visit your company’s sites, pick up the phone and wait in a “queue” listening to bad music to have your question dealt with by a “customer service representative” from your company’s call centre.

The cost of making small changes to show appreciation to your customers is worthwhile expenditure even when times are tough. And the ROI is probably greater than you’d realise because showing genuine appreciation is sadly rare in today’s market.

A new café opened recently in a major shopping centre near my office. It features a simple sign – “Please be seated for table service”. It made me wonder, when had we blithely accepted that it was normal to “pay and order at the counter” when we visit a café? Yet the pleasure I felt was strangely palpable when I realised that I could sit down, relax, and have time to converse with the friendly and helpful waiter who served me.

Is this a sign that companies – no matter how small – are returning to old-fashioned service in order to combat the forces of global economic downturns, e-commerce and information-overload?

I won’t mention any of these examples at my next board meeting but I will be asking if the CEO could prepare a briefing about staff morale, productivity and turnover, whether customer complaints are decreasing and why sales are up – because I have a gut feel about changes to buying patterns and it’s my job as a director to ensure our organisation is prepared.

What happens to the director who "rocks the boat" in the boardroom?

Boards rarely take a vote, preferring to arrive at a decision by consensus.  The most commonly cited reason for this is the perception that a board that votes must be dysfunctional or adversarial.

But what happens when a director is the sole dissenting voice in the boardroom?

There are several ways directors try not to rock the boat. It can be a policy of the board, for example, that directors give the chairman a “heads up” about issues of individual concern before the meeting.

Other chairmen encourage the chief executive to “take the temperature” of directors before the board meeting to ensure a proposal is well explained.

A director who is still dissatisfied, but is disinclined to “hold up the meeting” by digging in on an issue, may speak with the chairman or the chief executive privately afterwards.

If a board discussion has reached a stalemate, a chairman may force the issue and offer a director who has argued against a motion to have his or her name – and the nature of their opposition – formerly recorded in the minutes of the meeting.

This can be a tricky course of action though. As one director once told me : “If you are in the minority and six months later you’re proved to be right, it’s cold comfort to say ‘I told you so’ because at the end of the day, you were simply not compelling enough in your arguments to sway the board at the time.”

There is a subset category in the academic research on group dynamics that is concerned with “group think”. This is a term used to describe a mode of thinking that group members engage in when they become intent on maintaining the status quo.

When this happens, the members of the group lose the ability to think critically. If a board has succumbed to group think, it is more likely to be falsely confident in its collective abilities and knowledge and therefore become more reckless when making decisions.

Tolerance to risk is higher in groups than it is with individuals, because responsibility is diffused in group. If no one person is responsible for the decision, then all will share the consequences of the outcome. The majority model, which is used by many boards, is also a factor in the group being more likely to take the less conservative path.

If the board operates by consensus, the group decision equals or approaches majority opinion; if consensus can’t be reached, majority rule applies.

When faced with a decision that is perceived to be highly risky, board members tend to choose one of three courses of action - they seek the counsel of any board member who is deemed to be the "subject matter expert"; they call for independent advice, or; they defer the decision for as long as required in order to ensure that all the information is available.

When all other factors are stripped away, the role of the board is about one thing: making the right decision for the organisation. If we accept this premise then it follows that how a board makes decisions is a key issue of leadership for the chairman, and a key issue of process for the board.

A board can check itself against this simple but important purpose by evaluating its tolerence for dissent, articulating how it deals with a director who "digs in" on a issue, and determining whether it has a culture of too easily conforming to the majority view.

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Interview with David Gonski (2): The Curse of "Unconscious Bias"

The term “unconscious bias” has a rich academic pedigree steeped in psychological thinking. In layman’s terms, it describes the practice of judging others by stereotype: we hire people we like; people with whom we feel an affiliation. The lack of diversity on Australian boards and in senior executive ranks is often blamed on unconscious bias. In the second part of my interview with David Gonski, AC we talk about why familiarity is considered important in choosing our colleagues and how unconscious bias can stymie good decision-making.

 “We tend to choose from the circles we know and trust,” says Gonski, who is the chairman of Investec, Coca Cola Amatil and the Future Fund. “It’s regarded as less risky to take people who are already in those positions or to take people who’ve had to break in to those roles.

“But the circles you draw from won’t include diversity unless you consciously decide to make them diverse. And my theory is that it is worthwhile doing that. In fact, the actual exercise of exercising your mind to think outside of your circle is a good thing. You can create the benefits of diversity by breaking out and not just having people who are similar to yourself.”

Gonski cites the example of a board colleague with whom he rarely agreed. The director had completed his term on the board and Gonski spoke at his farewell party. “This person was from a very different world with very different thinking,” he says.

“At his farewell I stated publicly that he had created better decisions. He had done this because of his ‘needling’ and his constant questioning; I knew he would give us a hard time on any issue. But as a result, the decisions were more carefully framed and much more talked through. So he actually did a great service for the organisation. He made people think harder – and he made me think harder. I carefully checked everything he said.”

My research on “leading for diversity” at the board table concluded that chairmen who are experienced in leading boards of directors who are representative of their own type will need a set of additional skills to help them lead a diversely-composed board. The skills I identified include patience, understanding, the capacity to accept other viewpoints, the ability to listen and a tolerance for dissent - in addition to the traditional skills that a good chairman will bring to board leadership.

Gonski has the experience of serving on boards composed of men who are similar to him, as well as boards composed of a much broader range of people. He believes his style of chairmanship is congenial to homogeneously-composed boards as much as those boards which are heterogeneous.

“I would hope that my leadership style has not changed as a result of (having more diversity of views around the board tables I sit at),” he says. “I hope that I have always been inclusive and I hope that I have always led, whatever I’ve led, with a concept of diversity in it.

“However, within diversely-composed boards I think some of the decisions that have been made, the rigour with which they’ve been made and the vantage points from which they have been made may have changed. But my actual leadership style? No, I don’t think so.”

Diversity means much more than gender. Other dimensions of diversity include age, ethnicity and geographic location. There are already boards of listed companies in Australia which are diversely composed in the true sense of the term.

In my “leading for diversity in the boardroom” research I highlight the boards of Orica and BHP Billiton, for example. (See my article, International Governance: leading a truly diversely-composed board published in the peer-reviewed journal of Chartered Secretaries Australia, Keeping Good Companies, in February 2012).

The average age of company directors in Australia is already decreasing as many of the newly-appointed female directors are younger than their male counterparts. Gonski believes Australian listed entities are on the cusp of accepting “diversity” as meaning much more than gender.

“As the gender issue is addressed and moves forward, as the concept of diversity is understood more fully, and as the benefits of having both genders is recognised, it’s natural that we will want to see what benefits could be made in having diversity in other ways,” says Gonski.

The next step will be geographic diversity. “We already have some recognition of diversity of technical background,” says Gonski. “When I joined boards, most of the people on boards were lawyers. Now we’re seeing in the larger companies examples of geographic diversification – for instance, having someone who understands Asia is on the board. Someone who has lived there in an Asian country, who has worked there and who has done business there.”

But Gonski warns that exploring other dimensions of diversity may threaten the progress that’s being made on appointing women, especially at a time when 60 of the boards on the ASX 200 don’t have any female directors.

“I would hope that there’s a total positive to all of the aspects of diversity and it doesn’t have the effect of lessening focus on the gender issue in favour of the others,” says Gonski. “It shouldn’t happen, but we need to be aware of it.”

To ensure against a return to closed thinking about board composition, Gonski advocates a careful approach to using personal networks to gain a board seat.

“A personal network can be the very antithesis of breaking down the barriers to diversity,” he says. “You’re going right back to the old days when there was a club, and those in the club got the directorships and those outside the club, didn’t.  You need open windows and open doors to create good decision-making on boards.”

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.