(pictured: Cate Wood)
From next year big super funds, companies and other bodies with more than 100 employees will be forced to report on the gender balance within their organizations. Is this the only reason they should care? Research suggests no – a better gender balance, particularly at the top, has other benefits.
Helen Conway the director of the Workplace Gender Equality Agency, started a road show in Melbourne last week on behalf of Women in Super, talking about the new regulations and the wider issue of women’s position in the workforce. For super funds, this is not just about being employers. It’s about being investors too.
Conway, a former corporate lawyer, said there was a large body of evidence supporting the business case for gender diversity. A focus on gender diversity enabled organizations to access the entire talent pool, and helped attract and retain top performers, she said. The new regulations would help gather more evidence about gender diversity.
“Studies clearly show diverse perspectives lead to better decision making,” Conway said.
She quoted several studies including one by the Reiby Institute (2010) using ASX500 data on “Women Leaders”, a US study by McKinsey in 2012 and another in 2007 on corporate board performance and women’s representation.
Most corporate governance studies focus on boards,rather than management, because data is much more accessible. Studies on women’s roles impacting on corporate performance do the same.
An interesting Harvard study in 2007, however, interviewed both directors and CEOs and some other senior management of Fortune 1000 companies. The focus was, though, still on women’s performance as directors. It found: Women directors make three contributions that men are less likely to make:
- They broaden boards’ discussions to better represent the concerns of a wide set of stakeholders, including employees, customers, and the community at large.
- They can be more dogged than men in pursuing answers to difficult questions (possibly because, as one male CEO put it, “the men feel a gender obligation to behave as though they understand everything”).
- And they tend to bring a more collaborative approach to leadership, which improves communication among directors and between the board and management.
The researchers said: “Reaping the value of these contributions, though, depends on having the right number of women. Solo women on boards often feel isolated and marginalized. When they are effective, it’s not because of but in spite of being the only woman. Adding a second woman to a board helps reduce the sense of isolation, but it doesn’t always cause change and may create its own difficulties. Two women may be perceived as a separate group and may find they have to be careful not to appear to be conspiring. What’s more, they may not be distinguished from each other. One woman we spoke to explained, ‘I raised a question at a board meeting that caused the board to take some important action. Later on, the chairman thanked the other woman on the board for raising the question. No one said anything to correct him.’
“A clear shift occurs when boards have three or more women. At that critical mass, our research shows, women tend to be regarded by other board members not as ‘female directors’ but simply as directors, and they don’t report being isolated or ignored. Three women or more can also change the dynamic on an average-size board. As one woman director said, ‘The competition to get your voice heard is over. It’s a supportive dynamic—less combative, more collaborative. You can see the guys decompress from their normal very aggressive style.’
“This culture change improves the board’s overall performance. One male CEO observed that as more women were added to the board, the original female directors became more active: ‘They were more vocal, more willing to push their issues, more relaxed.’ A woman CEO in our study noted a ‘total and positive change’ with the addition of more women; she said that men on the board acknowledged ‘how terrific the discussions and richness of outcomes have been’ and that with women’s voices, ‘there is a higher level of understanding of the business’.“
Cate Wood, the chair of Women in Super and an experienced fund trustee – currently deputy chair of Care Super – said the three main areas super funds should consider with respect to the new regulations were:
- as employers, if they have more than 100 employees, where they will be required to report according to six gender equality indicators
- as outsourcers, they should include questions in their tender documents about the gender equality indicators of their outsource partners, and
- as investors, both from the point of view of UN PRI guidelines which most funds have signed up to, and as a result of the growing evidence correlating gender equality with better corporate performance.
The Women in Super roadshow continues in Sydney on July 25, Brisbane on July 30 and then the other capital cities.