Diversity cannot thrive without a culture of inclusion. Photo / Getty Images
Diversity cannot thrive without a culture of inclusion. Photo / Getty Images
COMMENT:
The recently released 2019 New Zealand Census of Women on Boards has found the boards of the top 100 publicly-listed NZ companies are still overwhelmingly male and Pākehā.
Women made up only 25.9 per cent of board membership. Ten companies had no female directors – 36 had only one.
This representation on leading boards is lower than comparative countries – the UK is at 32.4 per cent and Australia 29.5 per cent.
New Zealand has the world's youngest female head of Government after Finland, almost half of the directors on our state sector boards are women, so why are we so sluggish when it comes to appointing women to top-100 board positions?
It's certainly not due to a lack of interested and talented women. Since 2012, the Institute of Directors has run a Mentoring for Diversity programme. Over 170 mentees have participated, almost 90 per cent of them are women.
Our Future Directors programme provides opportunities for aspiring directors to gain board experience by participating on a board of a New Zealand organisation for a year.
Fifty-seven directors have been appointed through this programme since its inception in 2012, 47 of whom are women.
There are sound financial reasons for New Zealanders to be concerned about the disappointingly slow progress around diversity in general – significant KiwiSaver funds are invested in such companies.
There's a body of international evidence to indicate that diversity enhances business performance. For instance, a Boston Consulting Group study found companies with more diverse management teams have 19 per cent higher revenues due to innovation.
Shots are now being fired across boards' bows, writes Kirsten Patterson, CEO of the Institute of Directors.
There is much debate about whether diversity impacts short-term share price but that shouldn't be the only measure of how boards contribute to build and measure long-term value.
Following the global financial crisis (GFC), Christine Lagarde, former head of the International Monetary Fund, noted that diversity leads to more prudence, and less of the reckless decision-making that provoked the crisis.
It's also recognised that greater diversity improves risk management and sharpens thinking, reducing the potential for groupthink. Diversity is not just a metric to be strived for, it is an integral part of successful modern organisations.
There are likely a number of reasons that more top 100s have not yet taken this "business good" path. Change does take time and some may not want to lose the strengths of their current board. Ways to address these challenges include increasing board numbers or having a 'future director' system.
Shots are now being fired across boards' bows. Sam Stubbs, founder and managing director of the Simplicity KiwiSaver scheme, is one agent of change. He says that, by 2022, Simplicity expects to be significant shareholders in all of New Zealand's listed companies and "if their governance isn't fully diversified by then, as shareholders, we will start making it happen".
Happen it must, but top 100 boards should also be aware of potential pitfalls. The census report suggests the number of boards with just a single female member "raises concerns a 'one and done' approach might exist in some companies". For true benefit to be achieved, as outlined by Christine Lagarde, the approach needs to be one of true inclusion with female directors as key influencers – not tokenism.
The IoD encourages our members to set diversity targets rather than quotas. Quotas can drive box-ticking behaviour which doesn't really change behaviours inside the boardroom.
In Norway, for instance, a board gender quota prompted some firms to delist rather than comply. In France, "circumvention strategies" saw some firms decrease board member numbers to increase the percentage of females.
The consensus also notes the number of top 100 female directors with multiple directorships, suggesting the possible emergence of a "girls club" to rival the traditional "old boys" network.
There is much excellent new talent in the "pipeline". With over 9,000 members, we at the IoD know there is a large pool of well-qualified directors from diverse backgrounds who can serve on boards.
It's time for the top 100 to look further afield, in a number of ways. Gender is only one way of thinking about diversity, and true diversity is about having a balance of gender, ethnicity, age and perspectives; diversity of thought and inclusion. That's good for business and good for New Zealand.
Read more from Auckland Airport chair Patrick Strange here and Spark NZ chair Justine Smythe here.
• Kirsten Patterson is CEO of the Institute of Directors
