Cecilia Robinson: Why do we make it so difficult for females to serve on corporate boards?

Diversity matters, so why do we make it harder for young females to serve on a Board with our outdated corporate governance laws. Photo / 123rf

Opinion

COMMENT:

Like all entrepreneurs, I enjoy identifying a gap in the market, establishing a business, and working hard to see it thrive.

It's in my blood.

And in the process, I hope I have provided Kiwis with new and innovative services that have made their lives easier.

In recent years, I have been lucky enough to use the experience I have gained as an entrepreneur to serve on several boards.

I have loved the opportunity to share my experience to help other businesses grow and succeed.

But I also love being a Mum.

In a modern New Zealand, you should be able to do both.

But after falling pregnant with my third child, I have discovered - to my dismay - it's not so easy.

The problem is that our antiquated legislative framework governing our corporate boards makes no allowance for maternity or parental leave.

So what? Well the problem is directors have extensive legal duties and, as a result, they are exposed to potential personal liabilities under the Companies Act and other legislation, such as the Health and Safety at Work Act.

And while a board can adopt a policy supporting leave of absence provisions for directors, including for paternity leave, this will not exclude a director from their legal liability.

This means that a director who is on a leave of absence for parental leave is still legally liable for the decisions of a board, even though they have not attended any meeting or participated in the decisions that have been made.

And these legal liabilities are not insignificant. In fact, there are 100 sections in the Companies Act that constitute a criminal offence, some of which carry sentences of imprisonment.

This leaves younger female directors who are considering having a child with the impossible choice of either absorbing the risk or taking the safer option of resigning to prevent being held liable if something goes wrong.

This is a ludicrous situation.

Worse, at the very time we are trying to increase diversity around our board tables, we are presenting young women with a barrier discouraging them from pursuing corporate governance roles.

Is it any wonder, therefore, that most of our boardrooms are still dominated by males?

.

In fact, an analysis last year of companies listed on the NZX found that 36 per cent of companies had no females around the Board table, while only 38 per cent had only one female.

In other words, nearly three-quarters of our leading companies have only one or no females sitting at the top table.

And only about one in six company directors is a woman.

Cecilia Robinson, Founder & Co-CEO at Tend, Founder My Food Bag. Photo / Supplied

Why does this matter?

Well, the evidence on the benefits of increasing female representation at the board table is irrefutable.

A 2015 study of 3876 public firms in 47 countries found that companies with more women directors had higher business performance and enhanced board effectiveness.

While a study of Fortune-500 companies, which ranked companies on their number of female directors, found the top quartile achieved higher returns.

And a University of Otago study found that having more women on a board produces fairer gender representation through a company.

Increasing female representation around the board table allows a company to inject fresh perspectives into their decision-making and better reflects who we are as a country.

Half of the country is female, so it is critical that companies inject a female perspective into their decision-making framework.

Diversity matters, so why do we make it harder for young females to serve on a board with our outdated corporate governance laws?

It doesn't have to be this way.

Internationally there are moves under way to address this issue, with discussions in Germany to introduce "family break" provisions into the German Stock Corporation Act.

This would see a board member have all their rights and obligations suspended for a defined period of up to six months.

The introduction of the "family break" provision aims to not only broaden the potential pool of candidates but also make corporate board positions more attractive for younger females.

It is believed this simple legislative change would help increase female board representation in Germany without the need for the introduction of a hard quota.

There is no reason New Zealand can't do the same. In fact, if we are really serious about increasing female board representation we need to.

After all, we are a country that celebrated our Prime Minister being able to hand over responsibility to take parental leave. There is no reason that our female directors shouldn't be able to do the same.

And there are plenty of inspiring, young female business leaders who have a lot to offer corporate New Zealand. I see them every day.

We only need to remove the barriers that are preventing them from doing so.

- Cecilia Robinson is the founder and co-CEO of health startup Tend.