Woman at the top?
Companies see business sense in promoting women to positions of leadership. The idea of “women at the top” is becoming increasingly common, largely because it makes a level of business sense, for both individual businesses and the economy.
Goldman Sachs, for example, has indicated that closing the gap between male and female employment rates would boost US economic growth by nine per cent. Stephen Fitzgerald, the CEO of Goldman Sachs in Australia observed that “Women are our hidden resource… the gains that we could make… by elevating the representation of women in leadership are substantial”.
Studies have shown that a female presence on boards reduces reckless risk-taking behaviour and that companies with three or four women at the top perform better than those with none.
A 2007 report by McKinsey and Company found that companies with gender diversity outperformed their sector in terms of return on equity, operating result and stock price growth.
When asking the obvious question why all companies do not follow suit, the issue of ‘unconscious bias’ is commonly cited. Secretary of the Federal Treasury Martin Parkinson observed that the organization has not historically valued its female employees and had unconsciously made assumptions about the capabilities and career goals of females with family commitments. It has set a target of 40 per cent of senior executives being women, with 35 percent by 2016.
For some, however, voluntary progress is not fast enough – mandated quotas have moved a step closer in Australia with the Federal Labor Government introducing the Equal Opportunity for Women in the Workplace Amendment Bill 2012.
While under the current Equal Opportunity for Women in the Workplace Act, companies with over 100 employees must devise a workplace action plan and report progress towards gender equality to the Equal Opportunity for Women in the Workplace Agency (EOWWA), the Government believes there has not been enough progress in this respect. It notes that strengthened compulsory reporting is an effective valid tool, having been introduced by the ASX and prompting female board representation at member companies to rise from 8.6 percent in 2010 to 12.7 percent in 2011. Nevertherless, we are still behind the US, with 15.2 percent female board representation, and positively lagging countries such as Norway, which has introduced a mandatory 40 percent quota.
As such, under the new Bill, the Minister will now introduce yet-to-be specified minimum standards for each industry sector. Results, not plans, will now be the order of the day.
The minimum standards relate to relevant ‘gender equality indicators’ such as:
- gender composition of the workforce;
- gender composition of boards and councils;
- equal remuneration between women and men;
- availability and utility of employment terms, conditions and practices relating to flexible working arrangements for employees and to working arrangements supporting employees with family or caring responsibilities; and
- consultation with employees on issues concerning gender equality in the workplace.
Employers with over 100 employees will be required to meet the minimum standards for the reporting period ending 31 March 2015. A relevant employer who fails to meet the minimum standards will be offered advice and assistance from the Agency to improve performance. A relevant employer failing to reach the minimum standards for two consecutive years will have failed to comply with the legislation.
Failure to comply without a reasonable excuse could see an employer named in a report to the Minister or in the media or even render them ineligible for Commonwealth Government contracts or grants.
It is understood that it is not the policy of either major party to support employment or board quotas. The Bill itself, however, does not make the nature of the ‘minimum standards’ clear and thus leaves the issue of quotas somewhat open – the Minister now has a broad head of power to introduce them. There is also a proposed requirement to share sensitive corporate information on firm gender equality with unions, which will also worry some businesses.
Federal Government intervention or not, leadership around issues of cultural change will be crucial in terms of boosting female representation in workforces.