Background

Interest for increasing the number of women on boards and other

key positions has increased due to calls from those who advocate
for greater gender equality. Furthermore evidence that firms whose
boards have a greater number of female directors, are more likely to
outperform those whose boards are not as gender diverse has also
increased interest in increasing female participation rates in the
board room.1 In 2010 ASX introduced changes to its Corporate
Governance Principles and Recommendations on the reporting of
diversity. These measures were aimed at increasing the number of
female board directors. These recommendations require all
companies listed on the ASX to as of 1 January 2011 to adopt and
disclose a diversity policy, establish measurable objectives for
achieving gender diversity and assess annually both the objectives
and progress towards achievement, disclose in annual reports the
measureable objectives for achieving gender diversity and progress
towards achieving them and the proportion of women employees in
the whole organisation, senior executive positions and on the board,
and the mix of skills and diversity for which the board is looking to
achieve in membership of the board.2
However subsequent reports since the implementation of the policy
began has shown a very modest increase in the number of women
directorships from 8.7% in 2010 to 10.9%. Furthermore the number
of female board directors has risen by only 0.2% between 2002 and
2010.3
1 Nilofer Merchant, Quotas for Women on Boards are Wrong, Harvard Business
Review 24 May 2013
<http://blogs.hbr.org/cs/2011/09/quotas_for_women_on_boards_are.html>
2 Deloitte, Women in the Boardroom < http://www.deloitte.com/assets/DcomTanzania/Local%20Assets/Documents/Deloitte%20Article_Women%20in%20the
%20boardroom.pdf>
3 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 15 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>
1

Policy Solution
The percentage of female representatives in the board room and
other senior line management positions which is considered an
important means of getting
(256 words)
experience for board room positions is still very low and is
increasing at a slow pace.4 As a result there have been calls for
quotas from organisations such as the Australian Human Rights
Commission which in its 2010 Gender Equality Blueprint report
recommended that a minimum target of 40 precent for each gender
should be set for all Australian government boards, senior ranks of
public service, companies providing goods and services to the
Australian government and publicly listed companies in Australia.5
This report will examine the arguments for and against such a
policy.
Analysis of the solution
Arguments against
Companies may circumvent the requirements
One argument that has been presented is that if the reason for such
low or no female representation on boards is due to bias against the
abilities of female directors, introducing quotas would not create a
real culture change. Without such a change organisations, which
have this mindset, would merely have the important discussions, in
4 Corporations and Markets Advisory Committee, Diversity of Boards of Directors
(Report, Corporations and Markets Advisory Committee, 2009) 27
<http://www.camac.gov.au/camac/camac.nsf/byHeadline/PDFFinal+R
eports+2009/$file/Board_Diversity_B5.pdf>
5 Elizabeth Broderick, Cassandra Goldie and Elena Rosenman, 2010 Gender
Equality Blueprint (2010) Australian Human Rights Commission <
http://www.humanrights.gov.au/sites/default/files/document/publication/Gender_Equa
lity_Blueprint.pdf>
2

arenas other than the boardroom where female directors who were
appointed by quota are not present such as through pre meeting
dinners, calls or golf.6 It is argued that if change is forced it will often
be rejected.7
(197 Words)
Lack of qualified female candidates
It is argued that there is a lack of qualified women to hold board
director positions in Australian and that the imposition of quotas will
mean that the industry may have to promote women who are less
qualified then their male counterparts. This argument may well hold
water as available data shows the number of women in executive
key management line roles is 4.1 precent.8 The lack of available
female candidates was also provided as an explanation for why
diversity recommendations of ASX were not by some firms.9 In
Norway which has mandatory quotas set reported a a drop in the
average age of board members dropped by 8 years and women who
were appointed after the legislation took place had less experience
than women who were appointed prior to legislation taking effect
and other male board members.10

6 Nilofer Merchant, Quotas for Women on Boards are Wrong, Harvard Business
Review 24 May 2013
<http://blogs.hbr.org/cs/2011/09/quotas_for_women_on_boards_are.html>
7 Nilofer Merchant, Quotas for Women on Boards are Wrong, Harvard Business
Review 24 May 2013
<http://blogs.hbr.org/cs/2011/09/quotas_for_women_on_boards_are.html>
8 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 15 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>
9 KPMG, ASX Corporate Governance Council Principles and Recommendations on
Diversity: Analysis of Disclosures for Financial Years ended between 21 Dec 2011
and 30 December 2012 (Australian Securities Exchange, 2013) 29.
10 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 25 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>

May lead to female board candidates facing issues of

validity
While there is no limited research available on the issue of
candidates appointed by quota there is research available for similar
types of appointments through policies such as affirmative action in
the United States. Candidates who are appointed on this basis are
often viewed as less competent and deserving and candidates who
are hired on this basis often feel marginalised, less deserving, and
perform poorly compared to women hired on a merit basis.11
(226 words)
Arguments for
Ineffective current practices
Current practices of hiring board directors does not promote gender
diversity
There are some indications that the predominant practice when
appointing new board members is to look to those who are already
board members.12 As there are few female board members this
practice has undoubtedly constrained the number of female
candidates available. It is argued that quotas will force firms to work
harder and look outside their traditional pools for candidates who
may be suitable.
Gender based discrimination
There are indications that women are still viewed as more suitable
for positions as homemakers rather than in the cutthroat
atmosphere of the boardroom. An article in Forbes magazine
11 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 5, 23 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>
12 Corporations and Markets Advisory Committee, Diversity of Boards of Directors
(Report, Corporations and Markets Advisory Committee, 2009)
7<http://www.camac.gov.au/camac/camac.nsf/byHeadline/PDFFinal+
Reports+2009/$file/Board_Diversity_B5.pdf>
4

reported that a CEO of a FTSE 100 company cautioned that women

might be chewing off more than they could chew by adding a board
appointment to an already full work family schedule.13 Comments
such as these highlight that women are still discriminated against
based on biases of female capabilities. Such attitudes are apparent
in our everyday culture as well, where the female ideal is equated
with traditional gender roles. Where such blatantly sexist attitudes
exist it may be hard to change attitudes and significantly increase
the number of women in the boardroom at a pace fast enough using
the current methods implemented by ASX. It is also important to
note that discrimination based on gender may be the result of an
unconscious bias. Studies indicate that judgements about merit may
be influenced by preconceptions about gender.14
(249 words)
Where such situations exist quotas would allow women to gain a
foothold in the boardroom and thereby challenge and show by
example that such biases, both conscious and unconscious, are
unjustified.
Evidence that Gender quotas work
Since 1995 the United Nations has had a target of 30 precent for
womens parliamentary representation.15 Various countries have
implemented this target. In countries such as Norway where the
number of female parliamentarians have been mandated the
number of female candidates and members have risen in a short
time.16 At present there is no reliable evidence that quotas have
13 Hermina Ibarra, The EUs Boardroom Quota Battle is Over, but Women Cannot
Rest Yet, Forbes, 24 May 2013 <
http://www.forbes.com/sites/insead/2012/11/19/the-eus-boardroom-quota-battle-isover-but-women-cannot-yet-rest/>
14 Cordelia Fine, Status Quota: Do Mandatory Gender Quotas Work (2012) 76 The
Monthly < http://www.themonthly.com.au/issue/2012/march/1330562640/cordeliafine/status-quota>
15 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 20 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>
5

resulted in less effective political representation due to their nonmerit basis.17

Other evidence of quotas working include Norways mandatory
quota for the percentage of female board members. The quota has
not led to a reduction in productivity as many predicted but rather a
jump by 4 places in World Competitiveness Yearbook.18
Furthermore the experience of India, which legislated a mandatory
requirement that leadership positions, be reserved for women in
randomly selected village councils has been very positive. Today
Indian women are more likely to stand and win elected potions that
were previously reserved.19 It has also improved the perception of
(195 Words)
womens leadership abilities. Parental aspirations for their daughters
have changed and education gaps narrowed. This collective
evidence of countries that have imposed mandatory gender quotas
to improve female participation has been largely positive. Evidence
that such targets work is a strong argument in their favour.
Recommendation/ Conclusion
While the evidence pointing towards the effectiveness of quotas is
numerous it is my recommendation that the policy not be
implemented at present. This is due to a number of factors such as
16 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 20 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>
17 Jennifer Whelan, and Robert Wood, Targets and Quotas for Women in Leadership:
A Global Review of Policy, Practice and Psychological Research Melbourne Business
School, 20 <http://www.mbs.edu/go/centres-of-excellence/centre-for-ethicalleadership/gender-equality-program/our-programs/targets-and-quotas>
18Ginka Toegel and Jean-Louis Barsoux, Boards of Directors Need Quotas for
Women Bloomberg Businessweek, 24 May 2013, <
http://www.businessweek.com/debateroom/archives/2011/02/boards_of_directors_nee
d_quotas_for_women_1.html>
19 Cordelia Fine, Status Quota: Do Mandatory Gender Quotas Work (2012) 76 The
Monthly < http://www.themonthly.com.au/issue/2012/march/1330562640/cordeliafine/status-quota>

the fact that the new ASX recommendations have been in place only
for a short period of time and adequate time must be given for
companies to implement these recommendations before we move
on to more drastic solutions. Quotas are likely to polarise opinion
and members who are appointed by quotas may not be seen as
legitimate, hence where there is scope for firms to bring about
increases in female participation rates in the board room through its
own initiatives such as the diversity plans developed according to
ASX recommendations these schemes should be given preference.
This is supported by the fact that the ASX report has indicated that
firms largely understand the benefits of having a more diverse
board,20 and several firms are introducing measures which will have
positive long term implications such as training more women and
increasing their levels in other senior level positions so that there
are good female candidates in the pipeline for board positions.21 It is
likely that as these pipelines mature we will see more women in the
broad room. I would recommend that the implementation of quotas
be delayed. And that discussion on this topic should be renewed
after reviewing the effectiveness of the current measures.
(284 words)

20 KPMG, ASX Corporate Governance Council Principles and Recommendations on

Diversity: Analysis of Disclosures for Financial Years ended between 21 Dec 2011
and 30 December 2012 (Australian Securities Exchange, 2013) 5.
21 KPMG, ASX Corporate Governance Council Principles and Recommendations on
Diversity: Analysis of Disclosures for Financial Years ended between 21 Dec 2011
and 30 December 2012 (Australian Securities Exchange, 2013) 22.

Bibliography

Broderick, Elizabeth, Cassandra Goldie and Elena Rosenman, 2010 Gender

Equality Blueprint (2010) Australian Human Rights Commission

Corporations and Markets Advisory Committee, Diversity of Boards of

Directors (Report, Corporations and Markets Advisory Committee, 2009)

Deloitte, Women in the Boardroom
Fine, Cordelia, Status Quota: Do Mandatory Gender Quotas Work (2012) 76

The Monthly
Ibarra, Hermina, The EUs Boardroom Quota Battle is Over, but Women

Cannot Rest Yet, Forbes, 24 May 2013

KPMG, ASX Corporate Governance Council Principles and
Recommendations on Diversity: Analysis of Disclosures for Financial Years
ended between 21 Dec 2011 and 30 December 2012 (Australian Securities

Exchange)
Merchant, Nilofer, Quotas for Women on Boards are Wrong, Harvard

Business Review
Toegel, Ginka, and Jean-Louis Barsoux, Boards of Directors Need Quotas for

Women Bloomberg Businessweek.

Whelan, Jennifer, and Robert Wood, Targets and Quotas for Women in
Leadership: A Global Review of Policy, Practice and Psychological Research
Melbourne Business School