Boards for balance

A new initiative from Chief Executive Women and the Australian Institute of Company Directors aims to repair Australia’s leaking corporate talent pipeline with support from the top, writes Theodora Turnbull.

One might be forgiven for thinking that there are just not enough women to promote into key leadership roles, given the latest figures.

In Australian organisations, women currently fill only 16.3 per cent of CEO roles and only 28.5 per cent of key management personnel. But all of this is not for lack of women participating in the workforce.

The reality is that since 1985, women have made up more than 50 per cent of our university graduates, and despite entering the workforce in near equal numbers to men, in Australia we are still 40 per cent more likely to have a CEO in the ASX200 named John, Peter or David than a woman.

Women are just not being promoted at the same rate as men. For women, the pipeline is leaking and the progress over the past few years, if at all, has been glacial.

The results of a committed campaign to have more women represented in ASX200 boardrooms has seen the percentage of women increase significantly from 8.3 per cent in 2009, to 25 per cent earlier this year.

A strong commitment is now needed to flood the talent pools and executive pipelines which lead to the boardroom. To do this, more women must be injected into the mix.

Support for improving the gender balance of executive pipelines has already been shown in the UK, with a recent government-backed review setting a voluntary target of 33 per cent of all FTSE 100 executive pipeline positions to be filled by women by 2020.

Targeting Australian executives

Chief Executive Women (CEW) and the Australian Institute of Company Directors (AICD), with support from The Boston Consulting Group (BCG) have developed the Boards for Balance: Your Leadership Shadow program, the first targeted initiative of this kind in Australia.

Boards for Balance boasts a range of leadership actions chairs, directors and CEOs can take to make practical, sustainable steps towards improving gender balance throughout their organisations at senior levels. This valuable resource includes case studies and a personal action plan.

It provides a blueprint for the kinds of questions boards should be asking and the leadership actions they can take on important factors such as governance, leadership, policies, metrics and reporting. The content is based on the lived experiences of CEW and AICD members, together with best practice research by BCG, and the highly-successful Your Leadership Shadow model, created by CEW and the Male Champions of Change.

It also has the backing of 12 experienced Australian directors and executives, who make up the program’s advisory panel and have shaped the program since its conception. They are: Rebecca McGrath FAICD, Diane Smith-Gander FAICD, Kevin McCann AM FAICDLife, Brian Schwartz AM FAICD, Kathleen Bailey-Lord FAICD, Dr Ziggy Switkowski AO FAICD, Graeme Liebelt FAICD, Amanda Mostyn GAICD, Kate Spargo FAICD, Colin Carter AM FAICD, Fiona Balfour FAICD and Graham Kraehe AO FAICD.

Boards for Balance, which launched in May with events in Sydney, Melbourne and Brisbane, was introduced alongside a video produced by CEW and the AICD featuring exclusive interviews with the chairs and CEOs of leading ASX companies. In it, they candidly discuss working through organisational change, the importance of gender diversity at all levels of organisations, and the role of the board and CEO as key influencers on this journey.

David Gonski AC FAICDLife says: “You can’t talk about something unless you walk the talk, and I think it is almost impossible to say to an organisation, ‘do this, but I’m not going to do it myself’. We as a board have to set an example.”

Schwartz agrees. He says: “Unless [gender balance] is driven from the top and unless it is seen to be driven from the top, it’s much harder to get traction.”

Boardroom influence

If the old adage is true, that the “tone is set from the top”, so too is change. Change of this magnitude requires serious sponsorship.

As part of the launch, CEW also piloted Chairman Conversation, a way for boards to partner with their CEO to improve gender balance.

Designed to complement Boards for Balance, Chairman Conversation requires the chair and board to allocate time in their board agenda to the issue. All board members are asked to complete an online self-assessment to help identify the group’s collective maturity and divergence on gender balance in the organisation. This is followed by an in-boardroom session led by CEW and AICD facilitators. The result? Most boards commit to a set of personal and collective leadership actions and receive follow-up support from CEW in the nine to 12 months following the initial consultation.

“Participating in Chairman Conversation and using the resources allows boards to really reflect on their role in driving change, as well as their own perceptions of diversity,” says Bailey-Lord, non-executive director of QBE Insurance (ANZ) – one of three organisations, including Suncorp and Investa Property Management, which piloted the program.

“It’s a great opportunity to do something very pragmatic: to help boards assume the role of change agents and sponsors, and to hold their executive teams to account.”

It asks the board to think about the “leadership shadow” it casts in its organisation: “what I say”, “how I act”, “what I prioritise”, and “how I measure”.

However, it does not always fall solely to directors. James Fazzino MAICD, CEO of Incitec Pivot Limited, realised that he could not achieve the change required without enlisting the help and support of the board. The board had a strong role to play in supporting and fostering his “working on” not just “working in” the business approach, and has been instrumental to the company’s achieving 33 per cent of executive management and 26 per cent of senior management roles being held by women within a short five-year period.

The merits of metrics

“All too often, we look at this issue through the lens of conversations and anecdotes,” explains McGrath, chairman of Investa, “but actual figures and real measures on factors such as pay equity mean that it is a much more tangible, concrete position to start from.”

In fact, research shows that organisations that have internal gender-related metrics and reporting practices are at least twice as likely to deliver successful equality and improvements in their workplaces in general.

In organisations like Macquarie Bank and ANZ for example, the board and executive teams give formal consideration to an extensive range of metrics that cover not only the number of women at different levels of the organisation, but the roles they perform and the likelihood of promotion to a senior executive position. The boards of these companies review these figures at regular intervals throughout the year.

Liebelt sits on the board of ANZ and credits its CEO, Shayne Elliott MAICD, for recent improvements to the gender balance of the bank’s various subsidiary boards. Elliott’s initiative doubled the representation of women on these boards from approximately 20 per cent to 40 per cent through a “very manageable and effective strategy” which involved focusing heavily on nurturing pipeline female talent and making sure the rest of the organisation fundamentally understood the change.

“People will embrace change and support it when they understand why it is we’re changing, and I think it is reasonably easy when you can make it tie back to your business strategy,” Elliott says.

Challenging mindsets

A critical element of the board’s role is to know what to ask the CEO, and when.

Insights taken from gender balance-related metrics can provide boards with the opportunity to challenge the current workforce landscape, to deconstruct the number of women in profit centres, and “make decisions now that will position the organisation properly for balance and diversity a few years down the line,” says Switkowski, chairman of Suncorp Group.

The key, according to a number of experienced directors is the critical question: “why?”

“Why do you think our competitor is doing better than us in this area?”, “Why are there no senior women in the profit-making parts of the business,” or “why is our key female talent leaving?”

These questions can provide boards with unprecedented insights into the mindset of management, bring problem areas to the fore, and even help align the mindset and approach of the board itself.

Answering these questions can help a board steer its organisation to consider holistic leadership attributes and potential rather than solely technical skills. This takes time and a profound shift in mindset, but benchmarking, measuring and goal-setting has the ability to change the way organisations go about recruitment, development and retention. “We are most effective when male leaders ask questions about gender diversity,” says CEW’s President, Kathryn Fagg GAICD, “so it’s not just left up to the women.”

Key questions directors must ask:

1. How am I going to lead the implementation of gender equality in the executive pipeline of the organisation?
2. How am I going to co-opt management into the creation of gender equality in the executive pipeline of the organisation?
3. What policies should be implemented to achieve gender equality in the executive pipeline of the organisation?
4. How is the organisation going to measure its achievements in achieving gender equality in the executive pipeline and how will we know we need to do better?

For a critical introspective exercise to answer these and many other illuminating questions, refer to the board member personal action plan in Boards for Balance: Your Leadership Shadow.

Chair and the CEO: Scentre Group

Scentre Group’s approach to managing and improving gender diversity from top to bottom involves a number of strategies, including incentives, a 50/50 split for candidate shortlists and recruitment panels, and a strong alignment between the chair and CEO.

Brian Schwartz AM FAICD, chair
“There are no sensitives and there is nothing that we don’t feel comfortable talking about or telling each other. One of the things that I expect of Peter [Allen] is that he ‘walks the talk’. So much of the relationship is about being very open about the organisation’s values and culture. It’s fundamentally about trust.”

Peter Allen MAICD, CEO
“I have to work very closely with the board and it’s really important that there’s a shared sense of what our objectives are. Those objectives are part of my KPIs and part of ongoing discussions we have throughout our board meetings. They also play an important part in my relationship with my chairman [Brian Schwartz].”