Gender bias in the boardroom

Gender bias in the boardroom

Last year, women made up 14% of board directors at NZSX-listed companies, an increase from 11% the year before. But we still have a long, long way to go. We lag behind the UK, US and Australia. At our current rate, estimates suggest it will take another 35 years before New Zealand achieves gender parity in the boardroom.

So perhaps it’s worth considering Norway’s example and giving the issue a legally-binding hurry up?

In 2003, Norway became the first country in the world to impose a gender quota in the boardroom, requiring at least 40% of public limited company board members to be female. (If a company didn’t comply, it would be forcibly shut down.)

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Following this pioneering stand, other countries, including France, Malaysia, Belgium and Italy, have started to introduce their own quotas.

The approach also has many advocates in New Zealand, particularly amongst Kiwi women already at board level. A Harvard Business School survey found that 50 per cent of New Zealand female directors backed the idea of a quota, compared with 29 per cent of men.

“Women’s greater support for quotas signifies where they think the chief problem lies: within the boardroom, where they have seen so little progress,” observed the researchers.

The positives of positive discrimination

Olaug Svarva, Managing Director of one of Norway’s largest companies, thinks their legislation has had enormous benefits. “The nomination committees work in a different way than they did before. You have to look more thoroughly to find females, and this has started a more professional process. Boards have also become more global.”

In his new book, Challenging Boardroom Homogeneity, Professor Aaron Dhir analysed the Norwegian model. He found there are numerous benefits in having several women sitting on a board, from better dialogue and decision-making to more effective risk mitigation.

“The forced repopulation of boards along gender lines has disturbed the traditional order of corporate board governance systems, dislocating established hierarchies of power and privilege in key market-based institutions,” noted Professor Dhir.

In other words, goodbye cronyism and the old boys’ network.

The downside of enforced idealism

A 2014 study published by America’s National Bureau of Economic Research concluded that, while Norway’s 40% goal has been met, the quotas have failed to benefit any women apart from those selected for boards. Equally qualified women haven’t seen their situation improve, and neither have women at earlier stages of their career.

“Thinking that you’ll immediately fix female representation in the corporate sector is a dream,” said study co-author Marianne Bertrand, dishearteningly.

An alternative approach for New Zealand

New Zealand prohibits discrimination on the basis of gender in both the Human Rights Act and the Employment Relations Act. Rather than tamper with this proud commitment to equality, there is an alternative: convince corporate decision-makers that appointing women to boards makes genuine business sense.

The Norwegians have confirmed that there are plenty of women out there with the capability and experience, something Kiwi businesswomen have always known. The New Zealand government is actively supporting initiatives to encourage more female company directors.

And research proves that companies with women on their boards outperform their old-fashioned, out-of-touch competitors.

More than half of all business leaders say they’re committed to the idea of greater diversity at board level. Now, they just need to put their principles into practice. Could the answer really be that simple?

The Business Case for Women on Boards

 Key findings from a report by The Ministry of Women’s Affairs, Business New Zealand and the Institute of Directors:

  • Female directors can help companies gain a competitive advantage and increase profits.
  • Companies that have women on their boards outperform those that do not.
  • Groups with more diverse skills, knowledge and experience are likely to consider a greater range of perspectives and make higher-quality decisions.
  • The presence of women at board level strengthens the company’s customer base and connections to markets. 

“When you look at the small number of women in the boardrooms of New Zealand’s top businesses, you have to wonder whether Kiwi businesswomen are getting the opportunity to succeed that they deserve. And you have to wonder whether our companies are making the best use of the talent on offer. Especially when you consider the evidence… which suggests that companies are more profitable when they have more women on their boards.”

 Prime Minister John Key

See ALSO: Why women don't negotiate the salaries they deserve

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