Justin Treagus: Gender issue moves to boardroom

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Listed companies must say how many women are on their boards. Photo / Thinkstock
Listed companies must say how many women are on their boards. Photo / Thinkstock

While the New Zealand Stock Exchange can be commended for "having a go" when it comes to the introduction of a diversity listing rule for boards and senior management, some of us are left wondering what was the point.

The ruling has succeeded in creating mandatory reporting of the number of women on boards and senior leadership positions in listed companies.

Even an equal balance of naturally greying women around a table of equally greying men, with similar schooling, education and expectations can hardly receive plaudits for advancing diversity. Certainly this will not be representative of all the country's boards - but it still follows: gender is not, nor should it be a proxy for diversity.

Behind the drive towards "improvements" in reporting is the belief that diversity is good for business. Credible research supports the notion, particularly in the areas of innovation, product development, growth and access to markets.

The idea is that if more companies provide public statements on their diversity, this will allow "ma and pa investors" to be better equipped to see how diversity is contributing to business growth and function.

Thus they will be better able to make a reasonable assessment on the health of that business, pose diversity-related questions to the board or take their money elsewhere. Simply knowing how many women are on the board will not cut it.

The risk of creating a "gender balance in leadership ruling" under the misnomer of "diversity" is that subsequent reporting will fail to achieve what it has set out to do.

In addition, while more positions open up on boards for women, it may be counter-productive to diversity because the same names and faces take those seats - at least in the short term.

Most diversity research has focused on gender. However, the frequency of gender as a topic for research does not mean it is the most pertinent aspect of diversity for commercial success. It isn't.

It is the invisible and broader aspects of diversity, skill and experience, task-related dimensions such as functional background, organisational tenure, experience and openness to new experience that account for the greater effect on business performance.

The world's trading markets are moving from West to East, globalisation and high-tech communication accelerate the pace of change and market connectedness, and a critical shortage in global skilled and experienced labour looms.

Perhaps the most concerning outcome of NZX's ruling is complacency. There is a sense we have achieved something notable with mandatory gender reporting under the guise of diversity. In reality, we are merely trailing two years behind Australia's safe and similar stock exchange decisions, and content to follow.

Skilled labour shortages are predicted to peak in the mid-2020s for Japan, China and most Western economies when the bulk of the world's baby boomers retire. Growth in the world's labour market will then come from Latin America, Africa and the Middle East.

Diversity in the workplace and the boardroom will not be a nice-to-have; it will be a necessity.
Justin Treagus is chief executive of Omega Talent for Auckland, a not-for-profit organisation that aims to link skilled immigrants with business.

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