Knowledge

Malcolm Gladwell who popularised the phrase ‘The Tipping Point’ as the title of his best-selling book defined it as “the moment of critical mass, the threshold the boiling point”. Often the tipping point in significant social movements is recognised only in retrospect. However in the march to give women their rightful role in large public companies it seems that we are able to recognise that in 2015 that very milestone has arrived.

For many years the moral arguments against the glass ceiling and the economic arguments positing that companies profit when their boards are diverse made little headway.  The percentage of women on the boards of the largest public companies in the U.S.A, and the U.K remained obstinately below the 20% mark until about 2010 and in Australia it was below 10%.

Now in developed economies the U.S.A.,U.K, Australia, Europe and Canada and even surprisingly in   India and there are discernible  changes as women start occupying more seats on company boards. Incremental steps originating from a variety of quarters have begun to create momentum for change. That change is almost certainly now unstoppable.

The impetus to implement concrete changes for women in the workplace is now coming from both sides of the gender spectrum. Men are acknowledging that the system is unfair and needs to be changed.  Women are increasingly recognising that they are not powerless and are beginning to use political leverage and economic muscle to force change.

Norway in 2006 was the first country to legislate a quota of females on its boards (40%) and it was followed by France, Spain and the Netherlands. The Bombay Stock Exchange of India in 2014 mandated a minimum of one female director in every listed company.

The dramatic move by Norway signalled that at last, one country was prepared to take serious steps to redress a glaring inequity in the workplace. The consequence of this has been a significant re-think in other countries. It has injected an element of urgency and resolve to reach the goal of adequate female representation within a plausibly acceptable time-frame.

For those countries seeking alternatives to quotas other routes have been found to advance women on boards.

Firstly there are Voluntary Targets. In the UK in 2011, the government fixed the target at 25% female directors by the end of 2015.  That goal was willingly adopted and is likely to be reached with female board representation already at 23.5% by mid-year.

A second option is internal corporate programs allied with transparent reporting mandated by external regulation. In Australia for example, the ASX guidelines incorporate a ‘comply or explain’ rule with respect to the advancements of gender diversity has had rate worthy success. The percentage of women on ASX 200 boards has risen from 8.3% in 2009 to 20% in 2015 with the Australian Institute of Company Directors pushing for a 30% target by 2019.

Naturally companies which depend on female consumers or those with high proportions of female employees are more likely to be in the forefront of those by actively seeking to appoint female directors.

And of course there are laggards in all countries -those that are simply unwilling to act or believe that they are immune to the forces for change. They are almost certainly on the wrong side of history. At the beginning of July, the Australian Council of Superannuation Investors wrote to the chairpersons of 32 ASX 200 companies without any female directors asking for an explanation for this state of affairs.  Since the members of this organisation control some $1.6 trillion in investor funds, their disapproval is likely to carry some considerable weight.

The movement to achieve respectable representivity of women in Australia’s leading companies is gathering momentum at last. A corner has been turned and there will be no looking back.

This post has also been featured on the Women Lawyers Network Association of NSW website

In most countries where policy and strategy on diversity and inclusion in the sphere of employment is common practice it has been accompanied for some time by the implementation of some form of supplier diversity.

In the United States, the first Federal Government-sponsored program on supplier diversity began in 1969. Since then an increasing number of large US businesses have committed themselves to purchasing a significant proportion of their procurements from smaller suppliers owned by women, veterans, minority groups, members of the LGBT community and disabled persons. In 2001, the Billion Dollar Roundtable was created to recognise and celebrate US corporations that spent at least $1 billion with minority and women-owned suppliers.

Supplier diversity was initially positioned as an ethical form of corporate social responsibility and an expression of social solidarity, as well as a way of boosting businesses owned or controlled by previously disadvantaged groups, with little thought given to the positive business consequences for the organisation doing the purchasing.

More recently a number of Governments and large organisations in industrialised countries have recognised that substantial economic benefits will accrue through a comprehensive diverse supplier strategy which is systematic, benchmarked and quantified. Acknowledging the benefits flowing from enhancing supplier diversity has arisen in such instances from an understanding that customer-bases are now more heterogeneous, and markets are more segmented. This in turn inevitably requires that businesses wishing to secure a competitive advantage from changing customer profiles need to ensure that supply-chains must materially reflect these new realities and so these businesses have begun to direct their purchasing towards female-owned and minority-owned suppliers.

A different model has been adopted however in South Africa where previous economic inequality had been entrenched by law. Remedial legislation has been passed to implement the policy of Black Economic Empowerment (BEE) designed to kick-start the rapid integration of business owned by previously disadvantaged racial groups. This policy requires Government agencies and private organisations wishing to do business with the state to give business preference to enterprises owned or managed by members of previously disadvantaged groups.

Whilst understandable in the South African context in an effort to remedy 40 years of institutionalised exclusion of Blacks from the mainstream economy, there are inherent limitations to this type of approach. For diversity to be accepted as a fundamental norm it must be embedded in the culture of organisations and diffused through all its activities including procurement. It needs to be more than an ad hoc or specialist programme designed to bring benefits to targeted individuals groups or organisations.

Aligned with a more broad based approach to driving the diversity and inclusion agenda, progressive Australian companies have now propelled the notion of supplier diversity to a new level. In October, 2013 a select group of Australian Companies headed by CEO’s belonging to the Male Champions of Change (“MCC”) announced their ‘Supplier Multiplier initiative’. The stated objective is to ensure that principles of gender equality not be limited merely to employee composition but also be reflected in Supplier Standards and Codes of Practice.

Extending the now widely-accepted premise that diversity in employee demographics serves as a springboard to innovation and enhanced productivity these organisations are now using the self-same principles to encompass their existing and prospective suppliers.

These requirements are being spelled out explicitly by large organisations in a number of industries – nowhere more so than in the demands clients are placing upon law firms supplying them with legal services. In a Lexis Nexis White Paper published in 2009 on impending changes in the legal profession. It was noted:

“Expert advice from professionals with inherent background knowledge of a client’s language or culture is becoming a prized commodity. Ethnic groups are starting to become heavily represented in the corporate world and law firms must keep up with this trend.”

In 2011, General Counsel Gail Stephens, for Luxottica Asia Pacific Region, the world’s biggest eyewear company, stated that an important criterion in choosing a law firm is the firm’s diversity policy. Questions she puts to a new law firm are:

“How many women are in your firm? What does your firm do to promote women to leadership positions?”

And Natalie Allen, General Counsel, Mirvac echoed this sentiment when presented with a prospective law firm that had no women on the team.

“We want a team that mirrors our team”

Supplier diversity in Australia is thus currently being driven by governance AND performance requirements, fuelled by the belief that the espousal and implementation of diversity by suppliers across the board will lead to greater innovation, flexibility, sustainability and dynamism of the supply chain and will generate multiple economic benefits.

To realise the goal that women and minority groups are able to assume their rightful degree of participation at all levels of leadership, management and employment, Australia’s businesses have begun to engage a broad range of suppliers to become joint-participants in this enterprise. The ultimate business benefit of this change in mindset goes beyond simply better matching suppliers with one’s consumers and markets. The purpose of this engagement is to create a combined effort to expand business opportunities across the broad economy for women and other previously disadvantaged groups. According to the MCC the commitment, which 14 of Australia’s largest companies signed up to in November 2013, has the potential to impact 54,000 suppliers and $30 billion of procurement spend across all companies represented by their group in Australia.

This new phase in embracing supplier diversity as a fundamental way of doing business is to be welcomed as a further step in leveraging the best skills and services that all Australians have to offer.

As Mike Smith ANZ, CEO, one of the leading champions of change has said:

“I imagine if the ingenuity of all business partners across our networks could be harnessed, the pipeline will increase diversity of perspectives which will help innovation and better decision making”

We can’t escape Sandberg’s message: “Women need to break the stereotypes that keep them from excelling. They need to take a seat at the table. They need to quit leaving mentally before they’ve really left.”

“While women continue to outpace men in educational achievement, we have ceased making real progress at the top of any industry.” Women constitute 46% of the workforce and 56% of all new graduates in Australia. With women still earning, 82.5c (17.5% less) for every dollar earned by a male (77 cents in America), the struggle for equality is not over.

In the ASX 200, women’s representation in Senior Executive positions is 9.7% (less than 1 in 10); in line management positions 6% and in support positions, 22%. Less than four in every 100 CEOs in the ASX 200 and the ASX 500 are women. And women only hold 9.2% of ASX 500 directorships.

Sandberg’s philosophy Lean In: Women, Work and the Will to Lead was written by a woman with real power. In the last 40 years, I can only think of three influential feminist leaders – Betty Friedan, whose manifesto The Feminine Mystique implored women to get out of the house and into the office; Gloria Steinem, the most influential leader of the women’s liberation movement in the 70s; and now Sheryl Sandberg.

Like Friedan and Steinem, Sandberg is being attacked for being accomplished, opinionated and privileged.  The loudest reactions have been unconstructive. Her critics note that it’s easier to lean in when you have two Harvard degrees, a slew of nannies, and a fat stock portfolio at your disposal. Apparently, she has also negated the choices of women who decide not to engage in such ambitious careers.

The criticism is predictable, as it’s become a trend to rip apart powerful women in an attempt to promote the women’s movement. Solidarity of the sisterhood is a myth. It doesn’t mean it does not exist; it’s just that not all women are nurturing and supportive of one another.

Despite the increasing number of women in the workforce, the corporate environment can sometimes become hostile, especially to women. Instead of laying the foundation for the evolution of the sisterhood, women have joined men in the harassment of their own gender.

“We need to push back on the stereotypes and help women reach opportunities,” because, when women succeed, they shouldn’t be described as “aggressive,” says Sandberg. They should be celebrated the same way as men.

Sandberg’s contribution and worth has been reduced in all the ways we describe women, and not men. We know what she wears, how she styles her hair and what her spouse contributes to the relationship and in the home.

What is beneath this rage and exasperation is fear. Perhaps what alarms her critics is that Sandberg isn’t so unlike us. Sandberg cannot be radicalised or perceived as a revolutionary like Friedan, or anti-marriage like Steinem. Sandberg is married, she is a mother and she is like other university educated women of the same age. Sandberg is making women question their own potential – her claims bite because they echo the conflict within all working women.

It’s also important to understand that Sandberg is not placing all the blame on women for the very real inequalities that still exist in the workplace: “Women face real obstacles … including blatant and subtle sexism, discrimination and sexual harassment. Women have to prove themselves to a far greater extent than men do.”

However, she asserts, “We hold ourselves back in ways both big and small, by lacking self-confidence, by not raising our hands, and by pulling back when we should be leaning in. We internalize the negative messages we get throughout our lives—the messages that say it’s wrong to be outspoken, aggressive, more powerful than men. We lower our own expectations of what we can achieve.” And that is why “men still run the world.”

“A truly equal world would be one where women ran half our countries and companies and men ran half our homes.” Sandberg is not blaming women, on the contrary, she is encouraging us to aspire for more.

Despite high-profile reports about gender gaps, equal pay, and women on boards, once again the needle barely budged for women aspiring to top business leadership in Australia according to the 2012 Australian Census of Women in Leadership.

The latest census data on women in leadership reveals an improvement in the number of female board directors at ASX 200 companies, which has risen to 12.3 per cent from 8.4 per cent in 2010.

Nevertheless, the number of female board directors fell to 9.2 per cent when examining the figures for board positions in ASX 500 companies, with Australia lagging behind its overseas peers with comparable corporate governance systems.

In the US, women hold 16.6 per cent of board positions for the Fortune 500 companies, while in Canada women hold 10.3 per cent in the top 500 firms.

Helen Conway, the director of the Equal Opportunity for Women in the Workplace Agency believes that “the really bad news and the disappointment of the census is that in executive ranks we’ve seen negligible progress.”

While there are more women on boards, there are fewer women in the pipeline. The report highlights that women hold 9.7 per cent of senior executive roles in Australia’s top 200 companies.

This is just a small increase from 8 per cent in 2010. In the US, 14.3 per cent of women hold executive officer positions in the Fortune 500 firms.

“Very concerning is that almost two-thirds of ASX 500 companies have no female executives and only 12 have a female CEO and if you look internationally, Australia has the lowest percentage of female executives compared to countries with similar governance structures,” says MS Conway.

The Sex Discrimination Act was enacted in 1984 and yet today, almost 30 years later, we are still debating equal pay and access to senior positions for women. Thus, regardless of entrenched legislation, very little is changing within the environments in which women are working.

Women will continue to be absent in the upper ranks of corporate Australia unless organisations institute structural and cultural change to appoint and develop robust pipelines of female talent.

Ms Conway suggests that “it’s pretty poor . . . As we know, getting women into those executive ranks is important because it’s a pathway to positions of CEO, board director positions and then ultimately chairs on boards.”

So why are we witnessing so little traction in the advancement of women in the workplace, despite the plethora of initiatives organisations have put in place locally and globally to assist women to progress?

Many leading research organisations, including Catalyst, believe that unconscious bias explains why there are still major barriers to the advancement of diverse groups.

Unconscious bias influences our everyday patterns of behaviour in the workplace, and impacts on the quality of many of the decisions that we make – whom we appoint, promote, or allocate major projects and clients to.

Every single one of us has bias towards someone, something and some group. Research shows that by the age of six, entrenched, implicit attitudes and impressions are already formed in the mind of a child. Thus, we start internalising a conditioned response to an unconditioned stimulus from infancy.

A recent report by Finsia shows that 64.2 per cent of men in the finance industry surveyed believed that women were well represented at senior levels while 61.9 per cent of women surveyed disagreed!

The facts support the ladies’ view.  In ASX 200 companies, 34.1 of managers in financial and insurance services companies are women, while only 7.4% of CEOs are female.

The assumptions of women and men about gender equality are unmistakably at odds, providing the challenge of aligning perception with reality in the workplace and highlighting how stereotypes and bias affect our perceptions and our behaviour.

The fundamental shift in global economic and strategic influence from west to east, means that the ability of executives to impact across cultural boundaries and lead and work within multicultural teams is becoming critical to business success.

The Australia in the Asian Century White Paper, released on Sunday 31 October, thus calls for greater engagement with Asia by 2025.

The white paper says: “The Asian century is an Australian opportunity. As the global centre of gravity shifts to our region, the tyranny of distance is being replaced by the prospects of proximity.

“But Australia’s success will be based on choice, not chance. In order to succeed, we must sustain the policy settings and pathways that have served us well.

“We need to reinforce our strong social foundations, including our national institutions, our cultural diversity and our outward-looking society.”

To indicate the importance that Asia will play in the prosperity of Australia in the next 100 years, the white paper recommended that one-third of board members of the top 200 public companies in Australia must have deep experience in and knowledge of the Asian continent by 2025.

This confirms what we already know, that the economic driver to take advantage of cultural diversity becomes ever more critical in today’s global economy, in which Australian companies are progressively focusing overseas to access new markets, business opportunities and skilled staff.

The Diversity Council of Australia (DCA), in its Capitalising on Culture Report, noted that “recent events, both here and abroad, have brought into sharp relief the importance of Australian organisations effectively ‘capitalising on culture’ and adopting a culturally responsive approach to sourcing, organising and managing their human capital.”

DCA suggests that, “cultural diversity, international experience and inter-cultural capability in senior executive ranks represent invaluable assets that can generate the market insight, connections and innovation organisations need to thrive and grow in complex, local, regional and international operating environments.”

“Organisations that are successful in the Asian century will need staff who have specific knowledge of the products and markets of Asia, along with the cultural and language capabilities needed to be active in the region,” the white paper said.

Some business representatives expressed concern about the push for increased Asian representation on boards, saying it could be turned into a requirement that would impede business freedom and performance.

The Australian Institute of Company Directors argues that “any particular target can often be counterproductive”.

QBE chair Belinda Hutchinson added that she has never been in favour of quotas, and said companies should remain free to recruit directors based on the skills and expertise most relevant to each board.

It is also a bold move given that the current level of Asian engagement in Australia is very low, according to a study by an Asialink taskforce.

Asialink’s chief executive, Jenny McGregor, said the goal was too modest and not enough. ”At least half of Australia’s top board members should have this sort of experience and exposure to Asia,” she said.

A McKinsey study focused on international businesses between 2008-2010, and found that international experience and understanding of foreign markets was critical. Yet, over 60% of companies had less than 15% of their executives working in foreign markets, staffed by foreign nationals.

Companies with more diverse top teams were also top financial performers. That’s probably no coincidence. For companies ranking in the top quartile of executive-board diversity, return on equity was 53 per cent higher, on average, than they were for those in the bottom quartile. At the same time, earnings before interest and taxes at the most diverse companies were 14 per cent higher, on average, than those of the least diverse companies.

To score a company’s diversity, McKinsey focused on two groups that can be measured objectively from company data: Women and foreign nationals on senior teams (the latter being a proxy for cultural diversity). This explicit link between performance and diversity was confirmed for both gender and cultural diversity.

The study suggested that “there are many reasons companies with more diverse executive teams should outperform their peers: fielding a team of top executives with varied cultural backgrounds and life experiences can broaden a company’s strategic perspective . . . and relentless competition for the best people should reward organizations that cast their nets beyond traditional talent pools for leadership.”

Thus, companies need to be proactive in developing foreign and diverse leadership, so that boardroom discussions better reflect an understanding of individual markets and disparate customer bases. Such an approach will also help to avoid the “groupthink” that obscures other perspectives and encourage diversity of thought.

HSBC Australia’s chief executive, Paulo Maia, agreed: ”Strengthening Asia-relevant capabilities within Australia is critical. Doing so will unlock the potential opportunities at our doorstep for our people.”

Engaging with this cultural imperative will ensure that strategies and initiatives are sustainable and produce constructive outcomes for organisations, work teams and individuals.

Ostensible differences between male and female abilities – from reading maps to multitasking, from verbal skills to expressing emotion – are claimed to be based on variations in the hard-wiring of brains at birth.  This belief has become widespread, particularly in the wake of publications like Men Are from Mars, Women Are from Venus.

Whatever the supposedly ‘typical’ male or female behaviour, there seems to be no shortage of people who claim there is scientific evidence about the fundamental differences between men and women. These advocates claim that evolutionary differences separate the intellects of men and women, and it is all down to our ancient hunter-gatherer genes that program our brains.

Certain researchers have found that corporate decision-makers often stereotypically assume that women lack the personality characteristics necessary for top leadership roles. This predisposition is based on the assertion that women are naturally nurturing and cannot make tough decisions.

While the number of women entering managerial positions has steadily increased, the position of “manager” continues to be identified within masculine terms. Research reveals that because masculine characteristics are identified with managerial effectiveness, like aggressiveness and competitiveness, men are perceived as more capable, more acceptable and are preferred for management positions.

Relatively few women reach senior executive positions and those who do, often have communication styles usually associated with traditional male management paradigms, demonstrating what has been termed the “Thatcher factor.”

The traditional patterns are male patterns and as CNN news Executive Gail Evans noted: “Men know the rules of business because they wrote them.” Thus, “most cross-gender communication problems in public contexts are women’s problems, because the international rules in such situations are men’s rules’. Not only are the problems women’s, but women themselves can be constructed as ‘the problem’.”

For those who believe that such distinctions are based on delusions of gender, then Dr Cordelia Fine is your woman! Dr Fine, a psychologist and associate professor based at the University of Melbourne, asserts that there is no convincing evidence that our brains are hardwired according to gender, and no such thing as “biological destiny.”

Claims that men are naturally analytical and competitive while women are compassionate and nurturing are, according to Dr Fine, based on bad science – and, at worst, are “monstrous fictions” that are standing in the way of greater sex equality.

Termed ”neurosexism,” Dr Fine believes the deceptiveness of such sex differences is a “modern version of the tired old sexist ideas about a woman’s proper place.”

The popular focus on innate intellectual differences between the sexes is, in part, a response to psychologists’ emphasis of the environment’s importance in the development of skills and personality in the 1970s and early 1980s. This led to a reaction against nurture as the principal factor in the development of human characteristics and to an exaggeration of the influence of genes and inherited abilities. This view is also popular because it propagates the status quo.

Between the two extremes – that either men and women are completely different or that all apparent differences are artificial constructs, some take a mid-way position. Dr Helen Fisher, an anthropologist, has identified some talents that women express more regularly than men; aptitudes that stem, in part, from women’s brain architecture and hormones. Interestingly, these are skills that leadership theorists now espouse as essential to leadership effectiveness.

Men are more likely to focus their attention on one thing at a time. They tend to compartmentalize relevant material, discard what they regard as extraneous data, and analyse information in a more linear, causal path.  Dr Fisher calls this Step Thinking.

As they make decisions, women tend to weigh more variables, consider more options, and see a wider array of possible solutions to a problem. Women tend to generalize, to synthesize, to take a broader, more holistic, more contextual perspective of any issue. They tend to think in webs of factors, not straight lines, so Dr Fisher coined a term for this broad, contextual, feminine way of reasoning: Web Thinking.

With the growing complexity and sharpening pace of the global marketplace, more companies are likely to need employees who possess web thinking attributes. In this highly complex marketplace, a contextual view is a distinct asset. Women are built to employ this perspective.

What is important about gender differences is not whether they arise from social structure or from brain structure, a misleading distinction, but that they are not inevitable, and they can be changed.

Lise Eliot, of Chicago Medical School, concurs suggesting that ”we are being told there is nothing we can do to improve our potential because it is innate. That is wrong. Boys can develop powerful linguistic skills and girls can acquire deep spatial skills.

Eliot asserts that “children don’t inherit intellectual differences. They learn them. They are a result of what we expect a boy or a girl to be.”

Thus our intellects are not prisoners of our genders or our genes, and those who claim otherwise are perpetuating old-fashioned stereotypes with a facade of scientific credibility.