Why it’s time to look at quotas for female directors: Kohler

The debate about mandatory quotas for the number of female company directors has heated up again with comments from Heather Ridout and Elizabeth Proust. Both said they used to be against quotas, but now they are in favour of them.

Ridout is CEO of Australian Industry Group as well as a handful of government bodies; Proust is chair of Nestle Australia and a director of Perpetual, as well as a former senior executive of ANZ. Each of them now says she is disappointed with Australia’s progress towards getting more women on boards and thinks that it needs to be forced.

Two weeks ago the Australian Institute of Company Directors issued a press release saying the opposite. The AICD was indulging in a little self-congratulation because it had been a year since it had called for more diversity and proposed a number of “concrete measures” which, it said, had contributed to “a year of real progress”.

Said the AICD: “So far in 2010, 51 women have been appointed to ASX 200 boards, compared to only 10 in 2009. A total of 27% of appointees this year have been female compared with 5% in 2009. The proportion of female board members is now 10.3%, compared to just 8.3% at the beginning of this year.”

It seems Ridout, Proust and many other women calling for quotas are just ingrates: far from satisfying them, the progress over the past year has sparked another push for quotas because it’s too slow.

There are three companies in the Australian ASX top 200 with three or more women on their boards: Pacific Brands (5), QBE (3) and Westpac (3). Pacific Brands and Westpac are two of the seven companies with female CEOs, and QBE is one of the six companies with a female chair. There are another 34 with two women on their boards. The rest have none or one.

This debate has also started up again in the UK, where the percentage of directors who are women is now 13.6%, according to a recent study by the European Professional Women’s Network. Across Europe it’s 11.7%, up from 8.5% in 2008.

A couple of months ago, the former British Trade Minister and Standard Chartered bank chief, Lord Davies, completed a government review of the lack of women in boardrooms and launched a scathing attack on the lack of progress, saying that it was “a bit like the banking crisis, where the government had to step in because there was a problem and no other solution.”

Back in Australia, I’ve been a watching, and participating in, a debate in a LinkedIn group called “Next Director” which more or less divides along gender lines: the women in favour of quotas, the men mostly (but not entirely) against, asserting that the more important issues is quality.

In my view raising the quality of boards and getting more women on them are two separate goals that are not mutually exclusive.

Many of those who oppose quotas argue that forcing the recruitment of women to boards would lower their quality, as if men are inherently better. In fact gender is completely irrelevant one way or another; if anything more women improves the “quality” of board, in my view.

There are two practical reasons, apart from basic fairness, for pushing the pace of change and forcing companies to recruit more women to their boards:

1. The number and quality of female graduates coming into companies and moving into management is now at or approaching 50%. The proportion at the top needs to catch up;

2. Women are different to men. They bring a valuable perspective to boards that can only be described as female (better at collaboration and risk assessment for a start) and one or two women is simply not enough to achieve the best result.

Forcing the pace and aiming at 40% women on boards over time would improve their quality, not weaken it. That’s why the government needs to look at a quota.

This article first appeared on Business Spectator.

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