The board’s next fear: the female quota

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# The board’s next fear: the female quota

January 6, 2010 - 1:12PM

For all the protestations, there’s been an almost audible sigh of relief in the directors’ club about the watered-down and more workable recommendations from the Productivity Commission on remuneration report votes. Besides, the whole question of obscene executive pay was effectively ducked anyway.

But the way is now cleared for various boardrooms to move on to the next big fear: that the Federal Government might impose a quota for female directors. After all, the Labor Party has done something like that to itself with a quota of 40 per cent of candidates being women, resulting in a third of Labor MHRs being female.

(In case you’re wondering, women have 27 per cent of all House of Reps seats and make up 36 per cent of the Senate.)

In a recent social setting and therefore anonymously, a prominent member of the directors’ club and chairman of major company told me his fellows were appalled at the prospect.

The usual reservations were cited: a quota means the best person for the job may not be chosen; it demeans women who are chosen as the suspicion will be that they didn’t get the job on merit.

But much more important to this chairman was that there was not a sufficient pool of female talent at the top of the executive aquatic centre from which to fish an imposed quota of directors. And once a government started mandating quotas for one group, he feared it would be liable to repeat the exercise for another. A quota for indigenous Australians, perhaps.

My suspicion is that this chairman was representative of the thinking of his peers, if not what they’re prepared to say in public. In that case, there’s a lot more to be done in the evolution of women CEOs before the boardrooms can start to mirror Federal Parliament – and it shouldn’t need to be said that there is a vast difference between what’s required to be a “successful” MP and a successful director, as the miserable boardroom careers of many retired pollies indicates.

This week’s Economist magazine cover revives the World War II image of Rosie the Riveter with the headline: “We Did It! What happens when women are over half the workforce”. It celebrates the fact that in the next few months, women will cross the 50 per cent threshold and make up the majority of the American workforce.

“Women already make up the majority of university graduates in the OECD countries and the majority of professional workers in several rich countries, including the United States. Women run many of the world’s great companies, from PepsiCo in America to Areva in France,” notes the Economist’s leader – and it could have continued “and Westpac and Harvey Norman in Australia”.

“Women’s economic empowerment is arguably the biggest social change of our times. Just a generation ago, women were largely confined to repetitive, menial jobs. They were routinely subjected to casual sexism and were expected to abandon their careers when they married and had children. Today they are running some of the organisations that once treated them as second-class citizens. Millions of women have been given more control over their own lives. And millions of brains have been put to more productive use. Societies that try to resist this trend - most notably the Arab countries, but also Japan and some southern European countries - will pay a heavy price in the form of wasted talent and frustrated citizens.”

The leader goes on to face the two major remaining issues: that women are still under-represented at the top making up only 2 per cent of the bosses of major American companies and 5 per cent of British; and that women are paid significantly less than men on average.

In keeping with the Economist’s rational and liberal credo, it argues for, mostly, letting the market do the work in fixing those problems as it’s been doing a good job of it over the past decade. When the Scandinavian experience is cited as a way of speeding up the process, the magazine answers:

“If that means massive intervention, in the shape of affirmative-action programs and across-the-board benefits for parents of all sorts, the answer is no. To begin with, promoting people on the basis of their sex is illiberal and unfair, and stigmatises its beneficiaries. And there are practical problems. Lengthy periods of paid maternity leave can put firms off hiring women, which helps explain why most Swedish women work in the public sector and Sweden has a lower proportion of women in management than America does.”

The leader argues that there are plenty of cheaper and subtler ways in which governments can make life easier for women.

“Welfare states were designed when most women stayed at home. They need to change the way they operate. German schools, for instance, close at midday. American schools shut down for two months in the summer. These things can be changed without huge cost.”

Perhaps without huge cost, but it would be a very brave minister who would take on the Teachers’ Union for a start. It would be so much easier for a federal Labor politicians to simply mandate a female quota for the nation’s boardrooms, but as the saying goes: For every large and difficult problem, you can generally find an easy solution – and it will be wrong.

Michael Pascoe is a BusinessDay contributing editor.

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