NZX and women

August 24th, 2011 at 2:00 pm by David Farrar

Ruth Laugesen at The Listener writes:

Publicly listed companies will come under new pressure to promote to boards and management under proposed new stock exchange rules.  chief executive Mark Weldon told the Listener that the stock exchange will be proposing new rules that will require all publicly listed companies to declare how many and minorities they have in senior roles and as directors.

“What we would intend to consult on and would seek feedback on is a proposal that would see companies required to report on or disclose on the gender and other diversity makeup of board and management.” The change is to be part of NZX’s biannual rules review process, and could take force from June 2012.

I’m firmly against any sort of quota system for publicly listed companies. A quota would demand existing female directors, who might then be seen as token appointments.

However transparency in reporting is another issue.

NZX’s moves follow a rule change by the Australian Stock Exchange  has led to a 50% jump in representation of women on boards in the space of just 18 months. By the beginning of August, 12.7% of Australia’s top 200 listed companies had women directors, compared to 9.3% for the top 100 listed companies here. The Australian policy recommends publicly listed companies have a gender diversity policy, and that they report progress on meeting its goals on it regularly.

The wording Weldon is proposing goes further in several ways: it is mandatory rather than voluntary; it demands direct reporting of diversity numbers; and it goes beyond gender to include diversity generally, which includes ethnic diversity.

I’ve spent around a decade on a couple of company boards. By coincidence all four board chairs I have worked with have been women, and all have been excellent directors and chairs. There are many female directors who would add value to a top 100 listed company, and there is a bit of an old boys network because directors are inevitably always recommended by existing directors, so a lot of it is down to who knows who.

So I do not have a huge problem with reporting gender diversity, but I do get concerned over the wider diversity requirement. Will boards have to report Maori, PI, and Asians? And maybe how many of a particular religion or sexuality?

Diversity is good, but boards tend to be quite small – 10 or so directors. So while one can usefully look at gender diversity, I think it should not extend beyond that. Otherwise you may end up with boards seeking a stereotypical gay catholic asian for directorships!

UPDATE: The Institute of Directors announced last week:

The Institute of Directors (IoD) has given the go ahead to a new mentoring scheme aimed at increasing the number of women on NZX-listed boards. The IoD’s Chairmen Mentoring Programme will enlist up to 30 chairmen and senior directors of major companies to work with experienced and qualified women in a year-long programme.

That’s a really good idea.

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30 Responses to “NZX and women”

  1. Bob R (1,340 comments) says:

    This kind of thing is just creepy, it reminds me of Nixon’s ‘Jew Count’ for the Deparment of Labor. Except in this case the Jews are white males.

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  2. ben (2,399 comments) says:

    Yes diversity is good, but diversity in business views and business knowledge and business skill. What does that have to do with skin colour and gender? Nobody cares about that in business. In fact Gary Becker showed it is unprofitable to take any notice of such distinctions.

    Weldon tells everyone else to f*ck off? Why is he making an exception for the socialists, racists and the feminists? What’s the quid pro quo?

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  3. Elaycee (4,304 comments) says:

    What a complete crock of shit.

    Appointments to Boards should be made on merit and take into account the attributes a Director can bring to the Boardroom – not because someone is obligated to meet a quota. ‘Disclosure’ is present already – anyone can see who is on the board by reading the directory contained in the Annual Report and they could ascertain their gender and second guess their ethnicity just by looking at the photos.

    But then Weldon suggests this ‘quota’ system of appointments could apply to senior managers as well? What a second crock of shit. So if someone has two sales manager roles and one is already female, does Weldon seriously expect that the CEO should employ a male simply to create a gender balance? What total bollocks.

    People should be appointed on merit and merit alone.

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  4. Lee01 (2,171 comments) says:

    “What a complete crock of shit.”

    Spot on.

    The fetish for “diversity” reveals how far into the gutter we have fallen as a civilisation.

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  5. dime (9,468 comments) says:

    FFS!

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  6. mikenmild (10,766 comments) says:

    It’s not a suggestion for a quota. It is interesting to see the rapid change in Australia since the rule was adopted there.

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  7. trout (902 comments) says:

    The proposed policy just leads to token representation where the token representative has nothing to offer except gender or colour difference. But he/she sits there, well paid and secure as long as they lend their visage to the Annual Report. Sort of like Maori appointments to Local Authorities.

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  8. Pongo (371 comments) says:

    A recent study, from The Economist I believe, in Norway where they have to report on such things showed the companies under performing the broader market. Not to say men are better than women etc. But personally I want my directors to run things as profitably as possible not worry about meeting diversity targets.
    Weldon should be more worried about the total lack of IPOs under his watch, Synlait, independent Liquor are two he should have nailed but he in all fairness his candle maker Ecoya made it.FFS.

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  9. lastmanstanding (1,207 comments) says:

    Having worked in the governance area for over 25years and served on a number of Boards across all sectors it all comes to the will capacity and capability of Directors identifying and selecting and mentoring the best people for the job. Sure you can go out and get diversity.

    A couple of years ago I served on a Board with 8 pale male and stales like me. We decided to change the composition of the Board.
    We conducted a skills framework review and then added in diversity to the mix. In 12 months we had a Board of 4 males of various ages and backgounds and 3 feamles of various ages and backgrounds and speaking modestly we are regarded as a good Board by our various stakeholders.

    But you cant do it be fiat as Marky is trying to do. He will get the usual 2984 excuses why it cant happen. Go talk to the Institute of Directors of whom I am a member. They are plenty ther who will trll you horror stories and war stories about how you cant get im.
    Its all about the top 2 inches. You can lead a horse to water but you cant make it drink.

    What Marky and NZX should be doing is first encouraging Boards to have a diversity policy in their Governance Programme that covers ALL area not just women age ethic etc etc.
    Over time the good will comply and the bad will be highlighted and shamed into complying.

    Carrot first then stick if necessary should be Markys MO. Not the other way.

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  10. Andrei (2,506 comments) says:

    It’s not a suggestion for a quota. It is interesting to see the rapid change in Australia since the rule was adopted there.

    Because it becomes a stick to beat companies with if they don’t conform to the Liberal agenda.

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  11. Bob R (1,340 comments) says:

    ***Over time the good will comply and the bad will be highlighted and shamed into complying.***

    No, the good will ignore racist quotas.

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  12. Gwilly (156 comments) says:

    A ridiculous proposal.

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  13. backster (2,081 comments) says:

    I agree with all the comments except Mikenmild. What the article does not make clear is by how much have the value and productivity of the top 200 Australian Companies improved since they increased female representation by 50%.
    WELDON seems to want to emulate the Public Service and have all manner of reportings and compliance that drive up costs for no benefits other than feel good.

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  14. mikenmild (10,766 comments) says:

    lastmanstanding has summed this up well. Companies that open themselves up to diversity could be expected to do better in a more diverse society.

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  15. Lee01 (2,171 comments) says:

    “lastmanstanding has summed this up well. Companies that open themselves up to diversity could be expected to do better in a more diverse society.”

    The problem with this is “could be”.

    And did anyone ask if is we wanted to live in a “diverse” nation? I do not remember anyone putting that to any kind of democratic test.

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  16. lastmanstanding (1,207 comments) says:

    BobR and others Dont know how much involvement you have had in governance but I have declared mine. Auckland and other business centres are small villages. Its not what you know but who you know that counts. I and others have spent years working to get younger people both guys and girls on Boards with mixed success. For those of us who are members of four professional bodies its easy to get gigs.
    We have been around a long long time. You may or may not be aware of Springboard a group of younger aspiring Directors set up a couple of years ago and mentored by a group of us oldies.
    It has a small but highly talented membership but struggles against the fossilised set of Directors who wont and cant let go.

    You know what the biggest barrier I get against younger Directors. “They havent served on a Board so Im not going to risk them”

    Ever heard of mentoring. Thats how I got started. Taken under the wing of an experienced Director who steered and guided me.

    As I said I dont see complusion as the way to go. It needs a change of thinking. Otherwise the current crop of Directors will die at the Board room table and then guess what. NO replacements.

    Listening to some it would like the ABs still having Pine Tree and Whineray because the selectors said the young ones hadnt played a Test yet

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  17. ben (2,399 comments) says:

    Racial and gender quotas are self defeating. For example: selected racial minorities in the US can get into US medical schools with lower grades and, I understand, can graduate with lower grades. So when a member of these minorities becomes a doctor, they are then subject to discrimination by patients, who correctly deduce (ON AVERAGE) from skin colour a weaker medical knowledge. Such equal opportunity outcome legislation has created racial stereotyping when none would otherwise exist, and members of these minorities who did not need the breaks find themselves discriminated against by people who simply and understandably want the best possible medical treatment, but who are made to care about skin colour by legislated racism. It is an extraordinarily short sighted and unfair program.

    All legislation like this is self defeating. How many times must this be established before the socialists start taking notice?

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  18. williamsheridan (63 comments) says:

    I wonder if they could make one of the minority factors to be declared “financial acumen” or perhaps “honest person”. That would certainly make a refreshing change on the boards of many listed companies.

    Or on the other side- perhaps a declaration of who has a “rapacious ego” or is a “commercial sloth” would help us in assessing investments.

    ;-)

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  19. Bob R (1,340 comments) says:

    ***Companies that open themselves up to diversity could be expected to do better in a more diverse society.***

    Companies that have fewer jews and more gentiles could be expected to do better in a majority gentile society (I’m just highlighting the ugly flipside of your thinking).

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  20. Kimble (4,383 comments) says:

    Appointments to Boards should be made on merit…

    HAHAHAHAHAAHAAA!

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  21. mikenmild (10,766 comments) says:

    Now now Kimble, don’t be mean. I’m sure some people think appointments are made on merit, bless their dear little hearts. In the long run though.we should expect appointments on merit (instead of cronyism) to produce better results. Unless the quality of board appointments doesn’t make much difference to acompany’s success…

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  22. Ed Snack (1,738 comments) says:

    I’m with Kimble, the thought that merit has anything to do with (or to be more charitable, more than a little to do with) appointments to most boards is laughable.

    I don’t see quotas or “diversity” as the right stick, but something to break up the fossilized remnants that occupy so many boards just might help shift NZ’s dreadful management culture.

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  23. Elaycee (4,304 comments) says:

    @Kimble – you left off the rest of my sentence: “Appointments to Boards should be made on merit and take into account the attributes a Director can bring to the Boardroom – not because someone is obligated to meet a quota.”

    If a quota applied, you could end up with a moron in your midst at the boardroom table who’s only claim to ‘business acumen’ would be a ‘career’ sponging off the taxpayer under the guise of working as a civil servant. Or a unionist. Or a politician. But they’d still be a moron – but when appointed to a board they have fiduciary duties.

    Remember, Weldon is talking about listed companies – and good / bad board appointments can materially affect shareholder equity either way.

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  24. Cactus Kate (545 comments) says:

    The whole mention of the issue is an absolute crock of shit. It will only benefit women who barrow push and have undeserved high profiles such as Chen, Diplock and Shipley, all of whom I would sell shares in a company than vote for as directors on a Board.

    Being a director in a PLC is the least women should be aspiring to. Speedo would contribute far more to promote women as shareholders and the power at brings than boardroom servants.

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  25. kowtow (7,645 comments) says:

    This is utter crap.

    Weldon must be trying to “improve” his CV so he can get a job at the UN or some such.

    By sheer coincidence the latest offering from inspector gadget is on same subject,This is the type of rubbish that destroyed the British police and public service.

    http://inspectorgadget.wordpress.com/2011/08/23/once-upon-a-time-in-the-west/

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  26. mattyroo (975 comments) says:

    Cactus Kate said:

    Being a director in a PLC is the least women should be aspiring to. Speedo would contribute far more to promote women as shareholders and the power at brings than boardroom servants.

    As always Cactus, you nail it oh so well and oh so succinctly.

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  27. virtualmark (1,475 comments) says:

    Andrew Harmos
    Rod Drury
    James Miller
    Chris Moller
    Neil Paviour-Smith
    Mark Weldon
    Nigel Williams

    If Mark Weldon wants more women on boards then perhaps he should start with his own board first?

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  28. V (668 comments) says:

    NZX should worry more about the number of companies actually on the NZX before worrying about this issue.

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  29. Mark (1,366 comments) says:

    I have no issue with more women on Boards of Directors and in senior management so long as they are appointed on Merit. This sort of asinine tokenism promoted by Weldon is simply absurd. The NZX should in fact be focusing on addressing its performance as an exchange which is hardly meritorious.

    One wonders if a woman was in charge of the NZX whether this sort of crap would see the light of day

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  30. KiwiGreg (3,178 comments) says:

    What is he doing to combat over-representation of left handers on corporate boards?

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