Stale, Pale, Male & now?

With the tragic collision between a passenger jet and a helicopter in Washington DC being blamed by Trump on diversity hires, I am waiting here for the inevitable claim with an Australian twist.  With a very modest proposal being discussed for improved diversity beyond gender on listed boards in Australia we have seen the inevitable outrage and misinformation (the disclosure of personal details is not being mandated) from commentators, the Australian Financial Review and from people in the director community against any potential incursions into the elite club.

Over the past 20 or so years there has been a fight and a push for gender diversity on listed company boards which has been reasonably successful. From just 8.3% of ASX300 board seats in 2010 being occupied by women to more than 36% of board seats in 2024, this should be celebrated but has Australia’s business leaders dealt with true diversity beyond gender or do they actually want to?

It is now time to shift attention to the fact that more than 90% of ASX300 Directors are Anglo Celtic while this group represents only 54% of the population.  “We want diversity of thought!” say the Anglo Celtic directors who went to Ascham and Cranbrook.  Reflecting the old protest chant  “when do we want it – never!” Will we get real diversity of thought around the board table when we swap a director who went to Cranbrook with one who went to Ascham (and who both live in the elite bubbles)?

Where are the talented people from the culturally diverse, disability, LGBTQ+ and other communities in the elite leadership ranks of Australian business? With the culturally diverse  community in Australia at 46% of the population with less than 8% of board seats – something is essentially wrong in the way directors are recruited and selected.  These groups are under-represented in the board rooms of Australia and based on numbers alone talented people are not getting a look in.  If we don’t have regulatory incentives the situation will not change. We need to move beyond gender when looking at board composition.

Based on a wealth of research boards should be seeking diversity to thwart group think and make better decisions, and therefore better returns. This is clearly in the interests of shareholders and is aligned to director’s duties. Proposed minor changes to the reporting requirements for listed companies in Australia are being vehemently resisted by some members of the director community – the homogeneous director’s club is perceived to be under threat.  Huge pools of talented board ready people are being by-passed by this club.

It is not hard to find examples of non-diverse boards making bad decisions.  During its emissions rigging scandal Volkswagen had no women on its management board and only  four women on its twenty- person supervisory board, one of whom was the former nanny-mistress of the CEO. Closer to home, the boards of companies which have had scandals over the last few years such as Wisetech Global, Star Entertainment, Super Retail Group, Mineral Resources and ANZ Group are essentially a sea of white with perhaps one or two directors from under-represented groups beyond gender. If these boards were more diverse would these scandals have been avoided? Indeed, Joe Longo the Chairman of ASIC has stated “There’s a lot of talk these days about diversity – and one element of this needs to be a healthy diversity of experience and training,”

Research suggests that a critical mass of 30% is required to help avoid conformity on a board.  To merely have one member of an under-represented group is unlikely to be effective at stimulating different views, discussions and approaches.  Take it from me I have been “the only gay in the village” on C-suites and boards in Australia and its damn hard to even get constructive discussions going around alternative views without being seen as a trouble maker. My C-suite and board experience for major companies in both the United Kingdom and South Africa was vastly different as, unlike Australia, there was a critical mass of people with different experiences around the table.

There is already one company on the ASX200 which voluntarily reports on the make-up of its board from an LGBTQ+, First nations and cultural background perspective; Woodside Energy and they have been quietly doing this for a couple of years.  The sky has not fallen in. 

Sixty-seven companies in the ASX200 already have diversity policies which apply to both their boards and the workforce, while sixty-two only apply diversity policies to their workforce.  For these sixty-two, we seem to be seeing “do as I say rather than do as I do”, are Australian boards more like the Royal Family, very hard for diverse people to join and remain?  “You can’t be what you can’t see” – listed boards in Australia remain stubbornly white, straight, able bodied and upper middle class and do not reflect the population.

Much of the current debate in Australia has been stimulated by Trump’s anti-DEI crusade which has culminated in increasingly unhinged claims that it is the source of many evils and ultimately caused the plane crash in Washington DC. This provides great fodder for the right-wing in Australia and for those who have always had a problem with diversity. Does diversity cause bushfires or floods in Australia? Let’s see. Indeed, the implementation of many diversity initiatives in the USA bear little resemblance to practices Australia.

Beyond the Meta’s and other companies in the US - many global companies remain committed to diversity initiatives, particularly in the UK and Europe which was discussed recently at Davos.  Rather than take the lead of an unhinged and irrational despot we should look to the UK which has been successfully implementing diversity initiatives for a number of years both from a gender and culturally diverse perspective. Again, the sky has not fallen in.

We are in the middle of a cost of living crisis and some directors believe that too much time and money is being spent on diversity initiatives.  Surely if these directors had colleagues who came from lower socio-economic backgrounds and had personal lived experience of financial stress wouldn’t this be a useful contribution to the board discussion? Having been an orphan in my teenage years from a very poor family - I have often shaken my head in disbelief when I hear the views of executives and directors who have had an entire life of privilege.

Since 2010 we have had a dramatic improvement in the representation of women on boards in Australia, however we have yet to reach parity.  Other groups such as the culturally diverse, LGBTQ+, disabled and so forth are severely under-represented.  Given the small size of boards, it is impossible to have targets for each and every under-represented group but we do call for Chairs, Nominations Committees and their board search consultants to go beyond the elite bubble and search in a more extensive pool.

With John Mullens, the current Chair of Qantas saying at the AICD conference yesterday “These days, the old girls club is just as active as the old boys club and so many ASX directors come from the same background, irrespective of whether they are male or female,” Mullen said. “To me, diversity means somebody coming from a totally different background with different values, different experiences and different beliefs.”

Are Australian boards rapidly becoming Stale, Pale, Male and now Gayle?