'Boys' Club': Is this bias hurting your boardroom?

HRD talks to UniSA researcher Dr Kathy Rao about the lack of diversity on ASX 200 boards

'Boys' Club': Is this bias hurting your boardroom?

It took a four-year campaign to boost gender diversity on Australian boards.

In April 2015, when women made up 20 % of ASX 200 boards, the Australian Institute of Company Directors set a voluntary target for 30% of board seats to be filled by women by the end of 2018.

The target was reached, however there is still much more work to be done.

New research from South Australia indicates that a persistent boys’ club mentality is impairing decision-making at the top, particularly in relation to corporate social responsibility (CSR) initiatives.

Lead researcher, UniSA’s Dr Kathy Rao, told HRD that many Australian boards suffer from a lack of gender diversity and that a “male pack mentality” causes biased and unbalanced decisions.

“When we interviewed female directors, they said CSR was a great idea because it’s good for the community and good for the stakeholders,” said Rao.

“Whereas when we interviewed male directors, they said it was important because it’s good for business.”

Rao added that female interviewees indicated that they do not feel ‘comfortable’ or ‘confident’ putting forth their views due to a lack of support from their male colleagues.

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“Women bring a unique set of values, perspectives and capabilities to top-level decision-making which can help boards address CSR issues in a more effective manner,” she said.

However, she said old-school attitudes tend to hold them back, partly because they don’t have support to push new ideas over the line.
This is also because there are a “few powerful older male directors who are so focussed on profit that they disregard CSR as ‘soft’ when it is raised by female directors”, she said.

The challenge is that CSR is incredibly important for ethical and sustainable business.
Therefore, she said companies are “essentially shooting themselves in the foot” if they purposely, or inadvertently, avoid CSR strategies.

Despite an increasing focus on CSR and gender diversity in Australia and around the world, gender imbalances are compounded by ‘like-attracting-like’ recruitment practices.
“When men are selecting a board member they go for similar kinds of people,” said Dr Rao.

“Board recruitment process is an area we thought needed a lot of attention.”

This conclusion was backed up by a Conrad Liveris study which gathered the data on CEOs and chairs at Australia's largest 200 companies. The research found that there are more ‘Andrews’ leading ASX 200 organisations as CEOs, than there are women

Much of the problem comes down to unconscious bias, according to Rao’s co-researcher, and director of the UniSA Yunus Social Business Centre, professor Carol Tilt.

“Board members’ lack of awareness of their own bias is perhaps the single most damaging factor for effective leadership,” said Tilt.

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“Australian companies need to be more proactive in offering training and incentives for more women to become actively involved in firm governance – and, to achieve this without regulatory pressures or token appointments simply to meet gender targets.

“Unfortunately, when boards look for new members, they’re often reluctant to appoint female members or candidates who have different experiences to their own, defeating the capacity to recruit a diversity of views.”

Tilt said that while members may not know they’re operating in such a way, a lack of gender diversity almost guarantees this outcome.
While gender diversity on boards encourages discussion and better analyses of issues at hand, which ultimately results in better decision making, Tilt added.

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