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Review of the Equal Opportunity for Women in the Workplace Act 1999 – Submission

Diane Grady

One of my personal passions since leaving McKinsey in 1994 to become a full time non-executive director has been to help Australian organizations do a better job utilizing their female talent. Prior to laying out my recommendations for the Review of EOWA, I thought it might be helpful to describe why I believe I’m qualified to offer insights into the issues being considered. I do not like to ‘blow my own horn’, but thought the Review Committee might take my comments more seriously if I demonstrate some experience in this area.

I have chaired the remuneration and people committees of Woolworths, Bluescope Steel, and Wattyl, and have been a member of these committees at Lend Lease, the Sydney Opera House, and Goodman Group. When I was president of Chief Executive Women we started a talent development program for high potential women which has now involved over 120 great women in 14 major organizations. I also chaired the CEW task force which researched and published the CEO Kit-- a 100 page diagnostic guide to help organizations analyze why they lose their talented women and how to keep them. (available at www.cew.org.au ) Most recently, I’ve assisted McKinsey Director, Joanna Barsh, with a new and very different kind of leadership training program based on lessons from highly successful women leaders including 15 of Australia’s most prominent women. In January this year I received an AM in part for my work on promoting women leaders in business.

Sometimes I feel all of this work has been a Sisyphus sort of challenge—we keep pushing, but nothing happens. In the corporate world there has been virtually no change since I first did the analysis 15 years ago—and recently we’ve gone backwards. Women still make up a very small percentage of Directors, CEOs, and executives in top teams—around 10%. Half of the companies in the ASX 200 have NO female directors, and half have NO women on the top team. Accounting, consulting, and search firms are no better. Law firms and government organizations have a better record, but still are a long way from fully utilizing their female talent. This is despite women graduating from relevant faculties—commerce, economics, and law—in equal or greater numbers to men for many years now.

Clearly something needs to change for Australia to get full benefit from the female half of its talent pool. EOWA’s detailed reporting requirements and ‘pat the good guys on the back’ approach has not moved the needle. Indeed diversity is not even on the agenda for 50% of directors interviewed in a survey conducted by Deloittes in 2009. This is despite research reports (one published by Mckinsey on European companies, another by McKinsey on UK companies and a third produced by Catalyst covering American companies) which clearly demonstrates that companies with a critical mass of women leaders have significantly better business performance—not because women are more skilled than men—just that organizations that successfully promote women are better at spotting and developing leadership talent.

Other countries have done better—our track record is worse than the USA, UK, Canada, and even South Africa. Some like Norway and Spain are legislating quotas. I do not support this approach for Australia at the moment. Rather, I think we need to Shine the Spotlight on our failure to achieve gender diversity. This is what I recommend:

1) Require the Boards of all public companies to sign off and publish a Talent Report as part of their annual shareholder reporting process. (This could become a combined Talent and Remuneration Report) The Talent Report would include specified data related to gender diversity that is simple and easy to absorb. Measures I would recommend include:

There are a number of benefits that would emerge from requiring companies to make these measures public including:

  1. Boards and Executive Leadership would be forced to confront the gender reality in their organizations. In many organizations I’m familiar with the current EOWA report is primarly owned by HR, whose goal is to make the organization ‘look good’, not highlight issues. The report is often not read by senior leadership or even seen by the Board.
  2. Women in organizations will have better information with which to negotiate pay and promotions. Women outside organizations, will know which ones to avoid.
  3. Shareholders—especially funds managers, and shareholder associations--will have information to ask questions of the Board and executives related to talent management. Currently, this is not on the radar screen for most of these groups, despite research overseas showing a strong correlation between having a critical mass of women leaders with business performance.
  4. The data will assist organizations in identifying ‘hotspots’ which can be addressed—eg. levels where percentage of women suddenly drops off, differences in time to promotion, over-concentration of women in lower paying support roles.

2) Require all professional service firms (law, accounting, executive search, consulting) doing work for a governmental body to provide the gender diversity data as part of the tendering or appointment process, and to make such data public on their websites.

There would need to be specific gender diversity measures for each of these groups. For example, executive search firms should be required to report on the % of women placed in specific roles such as CEO, CFO, Divisional Head, NED etc.

If this information were public, it would allow Boards and executive teams to take the firm’s track record regarding gender diversity into account when appointing professional service firms.

3) Require all governmental organizations, and government supported not-for profit organizations to report on gender diversity annually.

Once again, information would need to be tailored to fit these groups. For example, the Boards of many high profile not-for profit organizations have very few women—this should be highlighted as well as the executive data.

4) Appoint and fund a government agency (not necessarily EOWA) to produce a national Report Card on gender diversity each year.

This report card would show percentage penetration of women in senior leadership and board roles in the top 100 and top 200 companies as well as in the top 10 professional service firms, major governmental organizations, and major not-for-profit organizations. It should also show average pay differences between men and women in key leadership roles, eg. CEO, CFO, COO, HR, and Legal. The report would ‘name and shame’ the Chair of top 100 companies with less than two women on the Board, and the CEO’s of companies with less than two women in their top teams. It would be a relatively simple report highlighting progress year on year—not a detailed analysis.

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In my experience, only when the public spotlight shines on gender diversity will a significant majority of leaders begin to take action. In many cases, organisations don’t collect or digest this information today. The good news is that doing so is likely to improve their performance because it will require more leadership focus on talent identification and development. Gender diversity is the place to start, because women make up nearly half of the workforce. Organisations that get better at recognizing female talent are likely to improve their ability to value the diverse perpectives they can receive from people of different cultural and racial backgrounds as well.

Research has shown that when women make up 20% of an organisation’s workforce in every level and function, the culture begins to change. When women make up 30%, gender diversity is no longer an issue. Australia should strive to reach the 30% target within 5 years. Shining the Spotlight on the opportunity is the way to get there.

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