To Increase Diversity We Must Not Only Target the 'Usual Suspects'

May 2010

"Current efforts to improve the access of women to positions on the boards of major companies are focussing on candidates who, although female, will do little to enhance diversity," says Julie Garland McLellan.

The current mentoring programs announced to great acclaim by Australian institutions are focused upon women who are already ready to serve on the boards of major listed companies. These are the elite cadre of women who survive and thrive in the large company environment. Although they will have a different perspective to that of their male peers, they are still very much more akin to other senior executives than they are disparate from them.

This is an issue because boards need diversity, not just to provide an illusion of fairness in their recruitment, or of lack of discrimination in the ranks of the companies from which they recruit new directors, but to provide independent and well-founded decision making that can draw upon a wider range of inputs to reach a more robust conclusion. Concentrating board recruitment from the ranks of major listed corporations results in more convergent thinking and will not provide the diversity that would result from accessing a wider range of sources.

To build true diversity, boards will need to draw upon backgrounds other than the traditional senior executive career: academia, the arts, philanthropy, entrepreneurial companies and politics are all potential sources that should be exploited. It is too easy to say "We prefer a former CEO of a listed company but, to get a female member, are willing to consider a former CFO, CIO, or other senior executive instead."

Professional qualifications in governance have been changing the recruitment practices and governance outcomes for many boards. These qualifications open the way for people, including men, from 'non-traditional' (i.e. not former C class executive of major companies) backgrounds to demonstrate that they have the capabilities required to function well in the boardroom. When aggregated to a professional background that has relevance to the recruiting board or to a community that is an important stakeholder, these qualifications can assuage suspicions that would otherwise attach to a 'non-traditional candidate' and pave the way for access to board seats.

A qualification alone is no guarantee of a board seat, especially on a major company board. No accountant would expect to get qualified and then to immediately serve as CFO of a major corporation. No graduate engineer expects to run a major project immediately. It is the combination of qualification and experience that allows for access to these achievements. Just as professional qualifications have opened the way for women and other minorities to flourish in previously male-dominated professions, so will the professional qualification of directors, when allied to an understanding of the experience required for each type of board, allow true diversity to emerge in our boardrooms.

"The battle will not be won with the appointment of a further 20 women to major listed company boards," says Garland McLellan. "It is being won by the many appointments of women and other minorities to smaller listed, unlisted, and government sector boards that are currently taking place and that have been steadily transforming the boardroom environment over the past ten years. As these diverse, qualified, and experienced candidates start to access the larger boards we will see true diversity and, with it, the enhanced decision making that underlies our motivation in seeking diverse boards."

Julie Garland McLellan is a professional company director and serves on a range of company boards including listed and unlisted commercial boards. She is the author of 'Dilemmas, Dilemmas: Practical case studies for company directors'. Julie consults to boards on performance improvement.

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