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Feature by Lauren Croft - September 23, 2021

A ‘wider range’ of diversity is critical at board level

With diversity and inclusion becoming an increasingly important discussion among company shareholders and investors, companies need to make sure their boards are moving in the right direction.

As part of the Governance Institute National Conference 2021, a trio of senior executives spoke about the power of parity and inclusion – and what it can do for corporations and their employees alike.

The Board Diversity: Who is missing at your table? panel was hosted by Byron Loflin, global head of board engagement at Nasdaq and founder and former CEO of the Center for Board Excellence (CBE).

Over the last decade, diversity has become front and centre of the governance discussion. In fact, all ASX companies now have to have at least one woman on their board, which Mr Loflin called a “milestone achievement”.

“Investors are paying much more attention to board diversity, because the data is starting to show performance, productivity and better wrestling with boardroom issues. And how boards deliver by working with management strategy has become an important topic regarding diversity, and bringing diverse voices into the room,” he said in introduction of the topic.

“Over the last 10 years, we’ve seen significant change.”

Nicola Wakefield-Evans is a non-executive director at Macquarie Group, Lendlease, and MetLife Insurance, as well as chair of 30% Club Australia. She said that there’s been a massive shift in recent years, particularly in the Australian market.

“We have seen an enormous shift since 2015, when the 30% Club launched in Australia,” she said.

“We have several sub-committees that we work with and I would regard the group that has done a large amount of the heavy lifting is our investor working group. They’ve made it very clear that diversity is a goal that the investment community regards very highly.

“And the results we’ve seen to get from 19 per cent in 2015 to 33 per cent has been an extraordinary achievement. You have to have both men and women at the table in order to achieve wider diversity.”

“The result of getting more women into leadership roles means that the conversation about diversity and inclusion is a lot richer and action is being taken. You do need to see a much more diverse leadership at the top of our organisations,” Ms Wakefield-Evans continued.

Tanya Hosch is the executive general manager of inclusion and social policy at the AFL – and was the first-ever Indigenous person and second woman in their executive ranks in August 2016. In terms of getting more women at the table, she said that the fact that the conversation still needs to be had “seems crazy”.

“Last count, women are 51 per cent of the population and so, therefore, I don’t consider women sitting around the table as a representation of diversity as such.

“However, when you’re having to correct something that has been so lacking, which is the inclusion of women at all, and seeing women coming in very small numbers, it does worry me. But where we are now hasn’t happened organically. There has been real passion and drive behind it,” she said.

“I would imagine and hope that in the years to come, we’re not talking about the numbers of women but we’re talking about all forms of inclusion and diversity around board tables based on a whole range of measures.”

Looking to the future, Ms Hosch added that it would become more important to have LGBTQI+ and indigenous representation as well as female representation at board level – and said that this would begin with leaders recognising, fostering and developing young diverse talent in order to “build balance” at higher levels.

“To have the opportunity of increasing the number of people with diverse experiences and backgrounds at these tables, of course with all the governance credentials that you would need, sooner rather than later I think that would be an example of what women frequently do, which is really drive that change in a way that men typically have not,” she said.

“I have certainly had the experience where there’s almost an expectation that you will adopt the tone and the presence of everyone else in the room, and just look different. And if that happens, all we’re doing is changing the drapes. We’re not actually engaging in the diversity and the richness that we all claim to believe is there if we can bring more inclusion to the table.”

However, Ms Wakefield-Evans argued that the process of getting more diverse talent to the board level would be easier once more women were at the table – because having women at the table means more conversations will be had. She added that boards need to examine if they have the right people sitting at the tables having the right conversations.

“It’s not only the diversity of people, it’s diversity of thought, it’s diversity of background, it’s diversity of experience. It’s a wider range,” she said.

Ms Hosch offered a similar sentiment and said that board members should build relationships and have honest conversations as well as reinforce that “points of difference are a positive thing”.

“We can bring difference into the room and we can see women who will be happy to carry the burden of intersectionality. But in order for that to be reinforced, it’s very important for the people sitting in those seats to recognise that they can have their voice. And to enable that to happen I think it goes back to relationships,” she said.

“I think that it’s important that we connect as people and get to know each other better to enable a bit more freedom on the business end of things.”

To make it less threatening for people of diverse backgrounds, company culture is really important, as well as the people who are already in the boardroom, Ms Hosch added.

“People who hold the power need to take a greater degree of responsibility for leading, not just these conversations, but the actions that follow,” she continued.

“And for them to show a demonstrated commitment to the change we all talk about being important, that we frequently design strategies and targets around. But I think we, all too often, leave it to a small minority to carry that agenda on their own.”

Macquarie Group currently has a female CEO, Shemara Wikramanayake, which Ms Wakefield-Evans said has made a world of difference in how both the employees and the world see the company compared to when she first joined as a non-executive director.

“So, the way we look at diversity and inclusion is hugely different to what it was when I first joined the board, but that’s the right place to be.

“Are we there yet? No, we’re not. We’ve got a long way to go around this debate, but it’s [now] regarded as important. And our stakeholders are driving that too,” she said.

“We’re actually seeing change, so it must be more than ‘ticking a box’ now.”

However, the goal needs to be 50/50, as women make up 51 per cent of the population – which means boards need to keep improving, both for their sakes and for their shareholders and investors.

“From a shareholder perspective, you would expect to have your customers evenly represented around the table,” Ms Wakefield-Evans added.

“We’ve got to keep trying to increase the diversity to get better returns, better outcomes, and better performance for our corporations.”

This article originally featured in Lawyer's Weekly