28 May 2009

Diversifying company boards

by Hedy Cray

There is some guidance available for employers striving to achieve gender balance across their organisation up to senior executive level and beyond.

Since 2002, the Equal Opportunity for Women in the Workplace Agency (EOWA) has published the results of an Australian census on women in leadership roles. The census measures the status of women board directors and executive managers in Australia's top 200 organisations, as listed on the Australian Stock Exchange (ASX 200). The census aims to provide accurate statistics on which the extent of Australian women in executive positions can compared against the international benchmark.

Notably, the 2008 EOWA census revealed that not only do Australian women remain underrepresented in leadership positions, but (against the trend of immediate past years) the level of representation has dropped.

Relevantly, the 2008 EOWA census reported:

  • women remain under-represented in the top most corporate positions in ASX 200 organisations;
  • four Australian boards have women as chair (2 percent) and four companies have a female CEO (2 percent);
  • in the ASX 200 only 10.7 percent of executive managers are women and 8.3 percent are board directors, a drop from 2006 from 12 percent and 8.7 percent respectively;
  • the number of companies without women board directors is 51 percent;
  • the number of boards with two or more women directors is 11.5 percent, a drop from a 13.5 percent in 2006;
  • the percentage of companies with 25 percent or more women board directors is 6 percent, half of what it was in 2006;
  • 45.5 percent of companies have no women executive managers, a drop from 35.5 percent in 2006;
  • the number of boards with two or more women executive managers is 23.5 percent, a fall from 30 percent in 2006;
  • the percentage of companies with 25 percent or more women executive managers is 16.5 percent, falling slightly from 18 percent in 2006; and
  • the percentage of women board directors and executive managers in Australia is lower than in Canada, New Zealand, South Africa, UK and the US.

Most notable was the finding that the number of women on boards and in executive management positions had declined since 2006, and in some cases reverted to pre-2004 levels.

Further, the census found that women who do make it into executive roles are often burdened with support roles to executive staff and line operators. As such, women often do not gain the experience and access to key services that is usually considered necessary to gain a promotion.

The insurance, retailing, banks, consumer services, consumer durables and apparel and telecommunication service industry groups had the highest percentage of women represented on their respective boards, with 15 percent to 17 percent of their board members being female.

The retail, telecommunication services, software and services and pharmaceutical industries had the highest percentage of women as executive managers.

Importantly, the census results indicated that the representation of women in the workforce diminishes as seniority increases. While women in the workforce are nearly equally represented compared to men (44.9 percent) at senior levels, women become increasingly more isolated until, at Board Director level, there are over 10 men for every woman.

Facilitating diversity

While the census reports the decrease of women in executive leadership, particularly since 2006, it provides no answers for why that is so and how this might be addressed.

In any case, from a legal perspective, Australia's approach to date has been two-pronged:

  • anti-discrimination laws with a focus on prohibition (making discriminatory recruitment and promotion practices unlawful); and
  • compulsory equal opportunity reporting requirements for large employers.

While some may argue the legal framework has more to do, to date, Australia has not gone down the path of compulsory quotas as seen in the United States.

Nonetheless, the existing framework does ensure that, at the very least, large employers put in place programs in the workplace that facilitate equal employment opportunities for women.

The Equal Opportunity for Women in the Workplace Act 1999 outlines a reporting framework for employers (with more than 100 or more employees) that in effect requires action to be taken to address and promote equal opportunity in relation to gender.

Under the Act, employers must:

  • develop and implement an Equal Opportunity for Women in the Workplace Program each year; and
  • report annually to EOWA on the Program and its effectiveness.

The Program must identify the issues faced by women in the particular workplace and take action to:

  • eliminate forms of discrimination against women in relation to employment matters; and
  • achieve equal opportunities in the workplace.

Before developing a Program, the employer must consult with employees or their nominated representatives, particularly employees who are women and allocate a manager with responsibility for the Program, including its continuous review.

The Program must include a workplace profile. A workplace profile is factual information as to the composition of an employer's workforce. Some of the key questions that need to be answered in developing a workplace profile include:

  • How many men and women work at the workplace?; and
  • What type of jobs do men and women do?

The Program must provide for action to be taken in response to priority issues. The Program must also provide for a process by which the effectiveness of the action taken in achieving equal opportunity for women in the workplace is evaluated.

Each reporting period an employer must provide EOWA with a public report, which deals with the outcomes of the Program. The Report must:

  • set out the workplace profile;
  • describe the employer's analysis of the issues in the employer's workplace relating to equal opportunity for women;
  • describe the actions taken by the employer during the reporting period to address the priority issues identified in the analysis; and
  • describe the actions the employee plans to take in the next reporting period to address issues in the employer's workplace relating to employment matters that the employer will need to address to achieve equal opportunity for women in the employers workplace.

Meeting best practice

The reporting framework under the Act provides the machinery for an employer to develop programs to promote equal employment opportunity for women. This certainly extends to any issues concerning under-representation at senior levels. However, the Act does not require employers to adopt a prescribed program, which would allow them to meet best practice.

Guidance, however, on what EOWA might consider best practice can be discerned from the criteria it published that must be met when applying for the Employer of Choice for Women Award and Citation. Base requirements EOWA stipulates an applicant should meet include:

  • having equal opportunity for women as a standing agenda item on a Committee chaired by the Chief Executive Officer or the Director Report;
  • provision for female managers to work part-time;
  • a minimum of six weeks' paid maternity leave after 12 months service;
  • sex-based harassment training at induction for all staff and refresher training at least every two years;
  • pay equity at each level of the organisation that is less than 16 percent; and
  • having women comprise at least 28 percent of the managerial positions.

While the framework set out in the Act and the Employer of Choice citation do not go so far as to address once and for all issues concerning equal opportunity for women, together, they certainly continue to be a step in the right direction for employers striving to achieve gender balance across their organisation up to senior executive level and beyond.

Clayton Utz is a 2009 EOWA Employer of Choice.

Thanks to Millen Lo and Kate Heraghty for their help in writing this article.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.