Australian boards ‘advancing slowly’ in the battle for women directors – Korn Ferry Institute survey
May 6, 2014
36% recommend boards have three or more women
81% say board roles meet expectations
44% do not think progress is sufficient
SYDNEY, May 6, 2014 – The ASX’s “if not, why not” disclosure rule had an immediate and positive impact on board composition in Australia. However, the number of female board appointments has plateaued since 2012 and there is a sense that momentum has been lost, according to a new survey, Beyond “if not, why not”, the pathway to directorship for women in leadership from Korn Ferry, a single source of leadership and talent consulting services.
Korn Ferry surveyed 57 female directors of ASX200 companies, who were appointed to a listed board after the ASX disclosure rule known as “if not, why not” was introduced in 2010. The survey highlights the importance of a strong network, usually gained throughout the course of an executive career, for women who seek board roles. It also reveals that while women’s experiences on boards are mostly positive, diversity on Australia’s listed boards remains an issue.
Close to a third (30%) of female directors surveyed said boards are far more progressive than they were prior to the introduction of the ‘if not why not’ disclosure rule, and more than a quarter (28%) said boards are starting to understand the environment needs to change to attract talented women. Some (22%) said boards appear to be fixed on the idea that one female director ticks the box, and as such, have not made any structural or philosophical changes to attract and appoint more women.
Korn Ferry Australasia’s managing director, Katie Lahey notes the “if not why not” disclosure rule had an immediate impact on board composition in Australia and improved gender diversity on the ASX 200 companies, and on advisory boards and subsidiaries of foreign-owned companies. However, she warns against complacency: “Four years later the percentage of women on boards has plateaued and more diverse boards have not translated into more diverse executive teams. The rising numbers of women joining boards in 2010 and 2011 may have influenced the environment for women directors; however, the number of female appointments has dropped off since 2012, creating a sense that momentum has been lost.”
When asked how chairs and boards can most effectively improve the environment for female NEDs, the female directors surveyed suggested increasing the number of women on the board to three or more (36%) and ensuring all voices around the boardroom table are heard (31%). A smaller number (14%) said ensuring other board members understand the value gender diversity brings to a board would improve the board environment for women.
The small number of women executives was frequently cited as a barrier to a board career for women. According to the survey, the executive suite is valued as the pipeline for boards and until there is a robust group of women participating at that level, listed boards will remain unrepresentative of the shareholders and wider stakeholder groups.
Ms Lahey believes that to build a pipeline of diverse and talented leaders, organisational diversity itself needs to undergo an identity change. It needs to shift from being something an organisation does, to being something an organisation is. “Instead of reacting to a trigger event—such as the ASX disclosure rules—diversity and inclusiveness must become business as usual, with responsibility shared by all stakeholders. Boards must also accept the legitimacy of a pathway to directorship that didn’t start from
a traditional C-suite entry point,” she says.
More than half the female directors surveyed (52%) sat on nonprofit or government boards to gain experience and 44% pursued appropriate corporate roles. A high number of female directors sought out experienced mentors and completed Australian Institute of Company Directors courses when preparing for NED roles (31%).
Korn Ferry recognises there is no magic bullet solution to gender equity, but offers counsel to boards that are not working on improving diversity. “Mono-dimensional boards, ill-equipped to respond to the complex issues shaped by a fast and ever-changing market can increase risk, and not value to their shareholders,” says Ms Lahey.
Download report here: Beyond “if not, why not”, the pathway to directorship for women in leadership
Methodology: Korn Ferry surveyed female directors who were appointed to listed boards after 2010, when the Australian Securities Exchange (ASX) introduced changes to its Corporate Governance Principles and Recommendations on the reporting of diversity—known as the “if not, why not” disclosure rule. Fifty-seven female directors from ASX 200 companies participated in research for this report; 21 were interviewed, and 36 completed an online survey.
About Korn Ferry
At Korn Ferry, we design, build, attract and ignite talent. Since our inception, clients have trusted us to help recruit world-class leadership. Today, we are a single source for leadership and talent consulting services to empower businesses and leaders to reach their goals. Our solutions range from executive recruitment and leadership development programmes, to enterprise learning, succession planning and recruitment process outsourcing (RPO).
About The Korn Ferry Institute
The Korn Ferry Institute, our research and analytics arm, was established to share intelligence and expert points of view on talent and leadership. Through studies, books and a quarterly magazine, Briefings, we aim to increase understanding of how strategic talent decisions contribute to competitive advantage, growth and success.