While the current initiatives seeking 30 per cent women on boards should be achievable within the next few years, the gap between women in the boardroom and women in executive ranks remains high, according to the fourth BlackRock gender diversity report, “The Ugly, the Bad and the Good”.
There is a growing disconnect between the proportion of women on boards and the proportion of women in senior management in Australian listed companies, which is hindering efforts at gender diversity beyond the boardroom, said Ms Pru Bennett, BlackRock’s Corporate Governance and Responsible Investment Director – Head of Asia Pacific, and author of the report.
“While the debate surrounding the issue of more women on boards is no longer focused around if, but when, 30 per cent will be achieved, women are still underrepresented at the key management personnel (KMP)[if !supportFootnotes][endif] level in ASX 200 companies.
“This is an issue that needs concentrated focus on the part of business leaders. It is a problem for several reasons.
“Effecting lasting change in values, culture and decision-making comes from senior management and trickles down the organisational hierarchy. Having women in management as role models is important, as women can’t be what they can’t see,” Ms Bennett said.
Pay equity also emerged as a problematic issue in this year’s report.
“Women continue to be paid less than men when performing the same roles. This is more likely to be addressed if there are more women in management ranks,” Ms Bennett said.
Another significant finding impacting the boardrooms of corporate Australia is that the majority of non-executive directors appointed to ASX 200 boards are drawn from the senior management level of Australian companies. In all, two thirds of director appointments came from the ranks of ASX 200 KMPs in 2014, however women only make up 13 per cent of these ASX 200 KMPs.
“The relatively small pool of women in senior management positions means there is less choice for boards seeking non-executive directors and also contributes to women being more likely to hold multiple board roles than men,” Ms Bennett said.
“A total of 18 per cent of women on ASX 200 boards hold multiple board positions, compared to only 11 per cent of men. This supports the concern that the number of individual women holding board positions isn’t actually increasing as fast as the statistics suggest – instead, the same women are taking on more board positions.”
Ms Bennett said the lack of gender diversity in the senior executive ranks of ASX 200 companies suggests poor talent management, particularly when the graduation rates of women from Australian universities are considered.
“Women continue to outnumber men as graduates from Australian universities. Data from Graduate Careers Australia[if !supportFootnotes][endif] shows that female graduates dominated in the fields of accounting, economics and law, comprising 53.2 per cent, 62.0 per cent and 60.8 per cent of graduates respectively.
“These graduate levels are not reflected in the ranks of women in senior management, and is an issue that if addressed could enable ASX 200 companies to tap into the full range of talent available in the market place.”
The good news from the report in terms of achieving improved gender diversity at board level in Australia, is that the goal of 30 per cent women on boards should be attainable within the next few years.
BlackRock’s research, which takes into account both appointments to and resignations from boards, suggests that the proportion of women on ASX20 companies should reach the target by 2017. ASX100 companies should meet the goal in 2018, and ASX101-200 companies in 2019.
“It is clear we have seen tangible rewards for the effort and focus that has been placed on gender diversity issues in the boardrooms of ASX 200 companies, but it is also clear that improvement is needed in executive ranks – particularly as these ranks provide the pipeline for future director appointments,” Ms Bennett concluded.
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Key Management Personnel (KMP) are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. Definition from AASB 124.