The number of women on boards in Australia and around the world continues to rise slowly, explains Christopher W. Thomas, commenting on a study conducted by Egon Zehnder International for the Equal Opportunity for Women in the Workplace Agency (EOWA) in Australia. Adopting a global perspective of diversity and a broad definition of the term diversity, which is often too narrowly focused on women, he looks at the challenges and opportunities created by promoting more female leaders to senior positions.

The most effective boards are those comprised of a diverse group of people. In our experience, this cannot be reduced to just men and women. Diversity in the broadest and current sense of the term denotes board members of different gender and ages, with different industrial and geographic backgrounds and functional experience who can reach great decisions and add significant value to a company. Unfortunately, however, many boards score poorly when it comes to diversity, especially as far as women directors are concerned.

In Australia the appointment of female board members seems to have progressed little in recent years. Indeed, according to the latest EOWA census, only 8% of ASX 200 seats are held by women. In other words, the percentage of women on Australian boards is now lower than Canada, South Africa, the UK, the EU, the USA and even its closest neighbour New Zealand! Although, as my colleague Laurence Monnery from London reports, progress is slow in other parts of the world too.

Yet there is a significant body of recent research linking company performance and the proportion of women in senior board and management positions. Catalyst, the U.S. think tank, has demonstrated that those companies with more women on the board or in senior management tend to perform better than do their peers. Furthermore, a recent French study focussing on the current financial crisis supports this view, noting that companies with more women in senior management have held their share prices better than those with few female executives.

To gain a more detailed overview of the current situation in Australia in the framework of the EOWA study, Egon Zehnder International interviewed almost 40 of Australia’s leading female and male directors on their experiences and opinions. Several women directors felt they were contributing to diversity not only due to their gender but also to their youth (women directors in major Australian companies tend to be seven or eight years younger than their male counterparts). Moreover, many women directors complained that their role was symbolic and reported feeling like a token female presence on otherwise exclusively male boards.

Building a pipeline to accelerate change

Compared to decades ago, the situation in terms of female top talent has changed fundamentally. While hardly any women used to embark upon management careers after university in the past, some 40% or more of today’s law and accounting students are women. So what is happening to these talented females, in view of the low board representation rate of 8%? Although convincing answers are hard to find, our research suggests that the supply of women directors is actually still the key issue holding back growth in their representation on Australian boards, not demand. Prejudices and preconceptions do admittedly continue to govern the thinking of Australian boards in some cases. Essentially, however, efforts need to be focussed on developing the pipeline of women executives, enabling them to build more relevant experience and thus become better placed to move into the boardroom after a successful executive career.

The long-term perspective

Women now form the majority of both the untapped talent pool and the consumer market. According to one economic argument in favour of giving women a better chance, reducing gender inequality will play a role in addressing the twin problems of population ageing and pension sustainability. In countries where it is relatively easy for women to work and to have children, female employment and fertility both tend to be higher. Closing the gap between male and female employment could therefore have potentially massive economic implications for the global economy.

Moving towards a more diverse future: the next step

Overall, there are a number of parallel areas for action. The first of these is the need for coordinated policy from government. Australia’s combination of maternity leave, childcare subsidy and flexible working hours is the outcome of ad hoc electioneering rather than consistent, cohesive policy initiatives. Governments should focus their efforts on women who try to combine children and a career and often drift between various work schedules and positions looking for the ideal arrangement. According to a recent UK study this group accounts for 60 percent of the working-aged female population.

From the business side, there is clearly scope for a great deal of action within corporations and professional organisations. Above all, there is a clear need for senior level commitment to change and for companies to start proactively managing difference, rather than just accepting it. In addition to empowering their women employees, businesses should also attempt to ban bias. In other words, as far as recruiting, retaining and promoting female talent goes, companies in Australia and around the world still have a long way to go.

Career strategies for top women

As for aspiring female directors, they need to network more with males, not just other women, and remember the importance of collegiality. They should also focus on developing their influencing skills, because boards are all about group decision-making. More critically, female leaders need to acquire as much experience as possible before joining the non-executive circuit and ensure that the first board they join is consistent with their personal objectives.

Women leaders in the 21st century

Despite the current financial crisis and tough business climate, there are very strong economic and equity arguments for giving women leaders greater opportunity. Many of these arguments are clearly and persuasively presented by authors Avivah Wittenberg-Cox and Alison Maitland in their book, “Why Women Mean Business.” According to the authors, giving women better opportunities in senior management will pay dividends. While the 20th century saw the rise of women and equal opportunity “at least”, write the authors, the 21st century will witness the economic, political and social consequences of this trend, they argue.

Note: For more information please consult the study Agender in the Boardroom, authored by Chris Thomas, on this website. The study was commissioned by the Australian Government body the Equal Opportunity for Women in the Workplace Agency (EOWA). The report explores women’s experiences as board members, as well as attitudes and perceptions regarding their presence and contribution in the boardroom.