In 2020, Diligent Institute’s report, A Few Good Women: Gender Inclusion in Public Company Board Leadership, set out to investigate the matter of diversity on Australia public company boards. We were particularly interested in learning more about women’s inclusion in board leadership roles.
The past few years have seen Australia make slow but steady progress towards closing the gap for women on company boards. Twenty-six percent of board seats in Australia were held by women in 2020, increasing three percentage points to 29% in 2021, which is two percentage points above the global average. That reflects well on us as a nation.
However, the global pandemic has put us at risk of unravelling the work, with women globally disproportionately impacted by COVID due to the pressures of juggling work and home. Large organisations have a moral responsibility to act on this challenge, and the public sector must lead by example by continuing to build visibility and influence for women in government.“…women hold more board positions in the public sector than ever before…we cannot lose sight of maintaining this trend.”
Prior to COVID and driven by the Gender Balance on Australian Government Boards initiative, women hold more board positions in the public sector than ever before, and as the country swings into economic recovery, we cannot lose sight of maintaining this trend.
It is critical that boards and senior leadership ask themselves what impact the global pandemic, resulting lockdowns, economic tumult, political and social unrest, a reckoning on racism, natural disasters, and accelerating climate change of the past year had on women’s participation in corporate board leadership.
Increasing racial and ethnic diversity is equally as important to gender diversity, but this data is missing at the board level because it is not publicly disclosed. It is difficult to know the global extent of this problem if it is not accurately measured and benchmarked. Boards that are lagging in this regard can no longer hide behind not disclosing diversity data, as there is a need to disclose racial and ethnic demographics at the board level in order to protect individual privacy and increase diversity overall.
Asking the right questions
It has been proven in a number of studies, including the Chief Executive Women’s Senior Executive Census 2017, that an increase in gender diversity at the board level has a positive impact on financial performance and corporate governance. So, not only does increasing female participation at board level makes sense from a fairness aspect, but it also makes sense from a business perspective.
To learn even more about women’s inclusion in board leadership roles, it is important to explore the following questions:
- What are the rates of participation in committees for female board directors?
- How frequently are women asked to assume leadership positions upon joining the board?
- How well-represented are women in board leadership roles overall?
- How does the rate of women’s participation in board leadership compare to that of men?
Participation rates of female board members in committees
The good news is that despite all the disruption we have experienced in the past year, the rate of female participation at board level continued its upward trajectory, as did female director participation on board committees.
Female representation in committees and representation in board committee chair roles both increased by three percentage points from last year, from 24% to 27% and from 21% to 24%, respectively.
In Australia, the increase in female participation in board committees was more modest, with just a 1% increase from 28% in 2020 to 29% this year, whilst representation in board committee chair roles in Australia remained static, at 30%.
Assuming leadership roles upon joining boards
In Australia, women who make it to board level tend to assume leadership roles on their board in a shorter period of time than their male counterparts, and that trajectory increased in the past year.
In 2020, the average time spent on a board before assuming a leadership position was 4.26 years for men and 4.1 years for women, but in 2021 that gap widened in favour of women, with the waiting time for men remaining fairly static at 4.2 years, but the waiting time for women reduced to just 3.76 years.
This suggests that once women are given the opportunity to ascend to board level, they are seizing the opportunity to demonstrate their value to greater effect than their male counterparts.
Overall female representation in board leadership roles
While men are still a little over twice as likely to be in leadership roles at board level than are women in Australia, the gap is closing at an encouraging rate.
Last year, men in Australia were 2.3 times more likely than women to hold a leadership position at board level. In 2021, that gap reduced to 2.1 times, but there is still some way to go on the road to achieving something close to parity on that measurement.
The rate of female participation at board level
The percentage of women on Australian boards is also on the rise, having increased from 26% last year to 29% this year. This also compares favourably to the global average, which now stands at 27%.
This is almost in line with the ASX corporate governance principles, which suggest that all listed boards strive to have at least 30% female directors.
But, of course, that is the minimum we should expect from our publicly listed companies. Ultimately, the goal should be for gender parity at board level, or at the very least, equal opportunity for both genders to reach the highest echelons of business.“2021 will be an interesting year to watch…for any proactive and reactive challenging of stereotypes”
While 2020 certainly sparked more action in diversity than we have seen previously, 2021 will be an interesting year to watch — in terms of whether companies will proactively or reactively challenge stereotypes.
The fact that female representation on board committees outstrips its representation at board level generally demonstrates that the women who make it that far are highly capable and are there on merit, rather than simply to meet quotas.
The number of women serving on listed company boards has been slowly but steadily increasing over the past decade, yet more progress is needed to ensure women are fully represented in board leadership roles.
We cannot let the events of the last 12 months sideline our push to increase gender diversity, and diversity overall, at boardroom level. Public companies and the public sector have a responsibility and the power to shape a more equitable future, and this starts within our walls.