Gender balance in Australian boardrooms

Abstract

The Australian Securities Exchange (ASX) called for greater gender diversity in Australian boardrooms in 2010 through its ‘soft law’ recommendation for companies to adopt and publicly disclose a diversity policy. The ASX also recommends companies should establish measurable objectives for achieving gender diversity and assess annually both the objectives and progress towards achieving them, disclose in each annual report the proportion of women employees in the whole organization in senior executive positions and on the board, and disclose the mix of skills and diversity the board is looking to achieve among members. The Australian Business Council in 2013 also set a target of 50% female representation in all senior management roles in their member organizations within a decade. Compliance with the ASX and Australian Business Council recommendations is voluntary. The gender diversity principles work on an ‘if not, why not’ basis. Companies that choose not to comply with the recommendations must explain why not in their annual reports. Australia is yet to follow the lead of Norway and other jurisdictions by legislating gender quotas for the public company boardrooms. Meanwhile, studies in 2014–2015 indicated that boardrooms that are more diverse do well and are less impetuous and more successful at logical analysis and problem-solving. While their shares show lower volatility in price, firms with more diverse boards are more likely to pay dividends as well as pay higher dividends per share. The business case for diversity builds, but progress is slow. Australian Senator Nick Xenophon tabled the (Gender Balanced Representation) Bill in 2015 proposing quotas for government boards, to ensure that boards have at least 40% men and 40% women. No penalty was proposed for non-compliance, just public disclosure. However, the Senate Review Committee rejected the quota proposal. This chapter examines the current Australian policy position on gender diversity in boardrooms, contrasting the global legal landscape of gender quotas on corporate board. It assesses the benefits of gender quota legislation and the business case for gender diversity based on equitable, psychological and cultural arguments. Finally, the chapter concludes by examining the relationship between gender diversity within differing sectors and proposing legislative quotas as an interim solution to aid increases in boardroom diversity in Australia.