What Issues Associated with Gender Diversity in Corporate Boards Are Identified in the Article?

What issues associated with gender diversity in corporate boards are identified in the article?

After the era of the financial crisis there has been increasing pressure on companies to exhibit best corporate governance practice. It is widely argued that diversity in board room can be used in board room to strengthen overall corporate governance.

Quotas

Across jurisdiction internationally there has been many tough measures taken in order to address the imbalance of female and male directors on companies’ boards. Mandatory Quotas which was implemented was the most criticized and contested of all forms of government intervention, yet it turned out to be the most successful in gaining female participation on listed companies’ boards. (3) This is shown by Norway having the highest percentage of female representation at board level on publically listed companies.  

There have been many studies conducted to find the right quota of females on a corporate board and it has been found that three women on corporate board is the tipping point at which females are no longer viewed as outsiders on corporate boards. (5) Shetler, above n 1.  In countries that have sought mandatory quotas, 40 percent of either gender representation is the most commonly cited quota. (8) For example, Norway has 40% quota; Brazil has 40% quota for State controlled companies; Australia has 40% for government boards and committees; France is 40% by January 2017; Spain 40% for publically traded companies with over 250 employees; Finland 40%; Iceland 40%. 40 percent reflects a fair split and the ‘right gender balance’ with 50 percent often cited as too restrictive on companies. (9) Jo Armstrong and Sylvia Walby, Gender Quotas in Management Boards (February 2012) European Parliament .  

While progress is being made towards a fairer representation on corporate boards of both genders in Australia, there is still a long way to go.  The rate of increase of female representation on Australian boards has not exceeded 2% per year since 2011. (11) According to the Australian Institute of Company Directors statistics in 2011 women accounted for 13.4% of directorships in the ASX200, in 2012 15.4%, in 2013 17.3% and in 2014 19.3%.   To determine whether gender quotas should be implemented in Australia, it is necessary to comprehensively consider whether having a gender diverse board is in the best interest of the company.

Current standing of Australian boards for Gender Quotas and Diversity

In the latest Australian Institute of Company Directors (AICD) Director Resource Centre release, it has been found that female directorships in the ASX top 200 companies (ASX 200) make up only 19.9 percent of all director appointments. (17) Australian Institute of Company Directors, Appointments to S&P/ASX200 Boards (31 May 2015) Company Director Magazine .   Under legislation passed in 2012, non-public sector employers with 100 or more employees are required to report to the government in relation to various gender equality indicators. (18) Rick Wallace, ‘Women to Make Up Half of Boards, Court Posts, Victorian Premier Says’, The Australian (online), 28 March 2015 .   While the number of women on Australian boards is increasing, there is still fear in the community that the pace will slow if the pressure to change reduces. (19) Speech by Elizabeth Broderick titled ‘Getting on Board: Quotas and Gender Equality’ (Delivered at ‘Gender Matters’, the third Women on Boards Conference, Sheraton on the Park, Sydney 29 April 2011).  This fear arose in the United Kingdom (UK), who have a similar voluntary code to Australia yet are seeing a slight reduction in the appointment of female directors recently. (20) Business and Human Rights Centre, Drive to appoint more women in boardroom failing, study shows [UK] (10 April 2013) .