Increasing opportunities for women in the workforce

By Joanne Black In Business

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women in the workforce - increasing their employment opportunitites

Theresa Gattung: former Telecom head

In her 2010 memoir, Bird on a Wire, former Telecom head Theresa Gattung revealed that shortly after she left the company, she was approached for another chief executive’s role. She didn’t name the company but hinted it was a “very large’’ organisation in New Zealand in the banking and telecommunications field. She was keen, but the chairman of the company refused to interview her. She was told that regardless of her substance, he didn’t like her style. At the time, it felt a lot like sexism. These days, Gattung is chair of transtasman insurance giant AIA Australia, and no longer bears a grudge. But two years on, she can’t help wondering how much progress women have made in fulfilling their true career potential in New Zealand. “The fact that women can have that participation is part of the Kiwi DNA,” she says. “It’s part of our psyche that everyone, every child born here, should have a fair crack at achieving what they aspire to and everyone gets to have a go. I felt terrible as a Kiwi realising that Australia has gone ahead in leaps and bounds on this and we’re lagging. Although it’s part of our psyche that women should have equal opportunities, it’s dawned on us that that is not what’s happening.”

It’s a trend that Rebecca Thomas has also noticed. When Thomas moved from England to New Zealand eight years ago, she had expectations of her adopted homeland, but she was unprepared for the scarcity of women in senior positions in business. “I was shocked that there were so few women in financial services, because in the UK and the US over the past 25 years it’s been a hugely successful career path for women,” she says. It has certainly been successful for Thomas. At 33, she was chief executive of a company listed on the London Stock Exchange. That company was sold to new American owners five years later and Thomas became chief executive of their business in Europe before she and her husband decided that with two young children, they wanted an alternative to a central London lifestyle. As soon as she arrived in New Zealand, Thomas noticed the paucity of women in senior managerial roles in private companies. As part of researching the drivers of the New Zealand economy, she looked at OECD league tables and saw that New Zealand had one of the lowest participation rates of university-qualifi ed women in the workforce of any OECD country.

The problem was not a lack of well-educated women – there are plenty of them – “but they are not in the workforce”. Thomas thinks one reason is that a number of highly qualifi ed women have gone offshore to work, then come home to raise a family or for other lifestyle reasons and have chosen either not to work full-time or not to work at all. “People come back here from overseas and they want to sit on their bottoms and not work.” Those individuals might be living their dream but Thomas thinks it leaves a big pool of underused labour-force potential. “When I came here I thought, God, there is this completely unharnessed capability and maybe it’s politically unpalatable to say to people, ‘Actually, it’s worth your while to work and we want you back in the workforce because you’re highly qualified and skilled.’” Thomas had also intended to not work when she arrived, “but it’s not in my nature”. Within three weeks she was chief investment officer of ING, then left to set up her own company, Mint Asset Management, which has about $200 million in funds under management. She is also on the board of KiwiRail, the Financial Markets Authority and Professionelle, a company that supports professional women’s career development.

SPUR TO ACTION

Professionelle is far from alone in that work. The Ministry of Women’s Affairs has been at it for years, as have others, but moves in other countries to increase women’s representation on boards have been a spur to more action here. In particular, there has been the emergence of the 25 Percent Group – which aims to lift women’s representation on boards to 25% by 2015 – and a recent move by NZX, the company that runs New Zealand’s stock exchange, that will require listed companies to report a gender breakdown of their board and executives and how companies are measuring up against their diversity policies, if they have them. At the time the NZX announced this move, due to come into force on December 1, it said there was credible evidence that diversity – and gender diversity in particular – within boards and management teams contributed to improved company performance. Many women argue that such pro active moves are not before time. Although Human Rights Commission figures show that women’s participation on state-sector boards rose from an average of 12.1% in 1981 to 40.7% in 2010, the private sector lags well behind. In 2010, women held just 9.3% of the board roles in the top 100 companies on the New Zealand stock exchange.

As Thomas notes, women are a rarity not only on boards. In 2010, women held 21% of senior positions in our top 100 listed companies. And in companies listed on the NZX whose records are available, there are only three female chief executives or managing directors: Westpac’s Gail Kelly (who is based in Australia), Summerset’s Norah Barlow and Carmel Fisher, who runs investment companies Kingfish, Marlin Global and Barramundi. The argument that in time gender equality will eventually emerge no longer washes with women who have watched and waited in vain for it to occur. With female law graduates outnumbering males while men hold far more positions as partners in law firms, and with females outnumbering males in entry-level supermarket positions while more males are supermarket managers, the idea that change will occur organically has gone stale. A UK report released earlier this year notes that based on the current average increase in female directors on the UK’s top 100 listed companies of 5.5% over 12 years, it will take more than 80 years to achieve genderbalanced boards.

UNCONSCIOUS GENDER BIAS

Women in the workforce - Rebecca Thomas

Rebecca Thomas, photo by David White

Thomas may well be right that many women choose not to be in the workforce or to aim for more senior positions, but research shows another important reason for women’s absence from top positions is an unconscious gender bias on the part of the people making candidate selections, including those in executive recruitment firms. Even before that, those who study employment trends say some women are knocked out of contention for higher roles because in the struggle to fulfil their career obligations and parental roles, they may seriously underestimate the value of networking, which is often done at after-work events. “The receptions where networking is done and where visibility is important are often in the dreaded 5-7pm hours,” says Ministry of Women’s Affairs nominations service director Pamela Cohen. “Some female directors and senior women are doggedly working really hard at their day job but they have no profile because they don’t have time to do that and meet their family commitments and go to drinks at 6pm on a weeknight. These women tend to undervalue that informal networking and they think that doing a good job will help them rise in their company, but doing a good job [alone] will not do it.”

Professionelle director Sarah Wilshaw-Sparkes says this problem is not exclusive to New Zealand. In the UK, she says, the Cranfield Business School has a database of 2500 “board-ready women”, yet headhunters are saying they can’t find suitably skilled women to fill the jobs. “In New Zealand we have a variety of databases with women’s names on them, but there is still a disconnect with those women coming to suffi cient prominence to be seen or to be known about in the right networks.” Like Cohen, Wilshaw-Sparkes also thinks the value of networking is underestimated. “It is a fact that there are male-dominated connection and network systems but it’s also a fact that – certainly towards the middlesenior stages of women’s careers – if they also have a family then they have less discretionary time at the end of the day, or at any point in the day, to take part in that sort of networking.”

WHY WOULD MEN WANT IT ANY OTHER WAY?

But even though some women choose not to apply for senior roles, or have divided loyalties between home and work, research points to an even more fundamental reason that women are so poorly represented at the higher levels of almost all firms: when they do apply for a top job, a man is more likely to get it. And as Gattung points out, if you were a man, why would you want it any other way? “This is going to sound pretty un-PC and I don’t want it to sound anti-bloke, because I’m not, but if you only had to compete with half the population, instead of all of it, wouldn’t you try to? I don’t necessarilythink it’s a generational thing, although I do think younger men are more comfortable with women in business because it’s not an oddity to them. But are they going to bend over backwards to increase the people they are going to compete with for board positions and big jobs? Wee-eell? Not unless that is really a value that is clearly held by that society.”

The dwindling of women’s job prospects the higher they aim starts well before the interviews for a new board director – assuming the company holds interviews rather than simply shoulder-tapping someone, probably a man already known to the chairman or CEO. Research shows a number of senior appointments are made this way. Thomas thinks a major stumbling block for women being appointed to boards is that few of them have experience as chief executives, which can be a pathway to a directorship. However, that view is vigorously pooh-poohed by one of the foremost researchers on the topic of women’s board representation, Susan Vinnicombe, professor of organisational behaviour and diversity management at Cranfield University’s School of Management in the UK. “That’s a stereotype that I hear around the world and it’s rubbish,” Vinnicombe says. “We’re not quite as bad here in the UK. We all talk about ‘well, you have to have been an executive director first’, but we don’t say, ‘You have to have actually been a CEO.’ “But I’ve noticed that’s a quite classic answer in Australia and New Zealand, and that’s upping the bar for women even more. And of course, it’s not true that most of the men appointed to boards have been CEOs so I don’t know where it comes from. It is absolutely ridiculous and is patently untrue, because if you actually analyse who sits on boards in Australia and New Zealand, they certainly haven’t all been CEOs.”

“GLASS CEILINGS WITHIN GLASS CEILINGS”

Women in the workforce - Susan Vinnicombe

Susan Vinnicombe

However, one factor that is global is the scarcity of women in executive jobs. Even Norway, which by law requires women to comprise 40% of board positions, has few women in executive directorships or CEO positions, Vinnicombe says. “You get glass ceilings within glass ceilings.” Vinnicombe is a co-author of a report released earlier this year called “Gender Diversity on Boards: The Appointment Process and the Role of Executive Search Firms”, which looked at how women were appointed to the boards of Britain’s top 350 companies and led to a new voluntary code for recruitment companies, urging them to recognise the so-called “unconscious bias” that makes them prefer male candidates to females. Vinnicombe says although the research is specifically about appointments to boards, it can be extrapolated to other positions and industries.

The report cites earlier studies, including findings that although many companies have nomination committees, partially to diminish the perceived personal influence of the chairman or chief executive, “they are the least developed of the board’s committees, meeting irregularly without a clear understanding of their role in the appointment process. Further, the chairman is chair of the nomination committee and remains a dominant influence on who actually gets appointed to the board.” The report says considerable research suggests that “social fit and conformity to the norms of social interaction among top managers is a primary criterion for selection”. The report also says that although by 2010 the old boys’ network style of recruitment had been diluted and chairmen talked about a more rigorous appointment process and an increase in the quality of candidates, some things had not changed. This included that chairmen would seek out “direct and indirect contacts or connections in the corporate elite to reference candidates”.

Vinnicombe says the study found that individuals gaining their first appointment onto a board of the top 100 companies on the London Stock Exchange “had established personal reputations and built a network of connections that vouched for that reputation in the eyes of the chairman. The greater the ‘connectedness’ of a candidate in the corporate networks and the closer those connections were to the chairman, the easier it was to establish the alignment of values. Ultimately, the litmus test on the alignment of values between the chairman and candidate was the social interviewing process that concludes the appointment process.”

BETTER FINANCIAL OUTCOMES

Increasingly, research shows that companies with diverse boards have better financial outcomes than those with all-male boards, although exactly why that is has been hard to pin down. “Companies with sustained high representation of women board directors, defined as those with three or more in at least four of five years, significantly outperformed those with sustained low representation by 84% on return on sales, by 60% on return on invested capital and by 46% on return on equity,” says international women and business lobby group Catalyst. “The business case for women at the top is that research shows that although no one will claim causality, there is definitely a positive association between more women in senior management positions and on the board, and the financial performance of the company,” says Wilshaw-Sparkes.

A report released this week by Credit Suisse Research found that in testing the performance of 2360 companies globally over the past six years, it would on average have been better to have invested in corporates with women on their management boards than in those without. “We also find that companies with one or more women on the board have delivered higher average returns on equity, lower gearing, better average growth and higher price/book value multiples over the course of the last six years,” the report says. Gattung believes women’s representation is “way more fundamental than that. For a start, I definitely think it’s more enjoyable for the board participants to have gender diversity and I choose to believe that leads to better outcomes. But even if it was proved that there was no difference, I would probably still think gender diversity had value. The population is roughly half and half, so it’s the same argument for why we should have more male primary school teachers – gender segregation doesn’t seem a sensible way to utilise people’s skills and capabilities.” But old attitudes die hard, it seems. Just before he died, former Business Roundtable head Roger Kerr told the New Zealand Herald he was genuinely perplexed by the dearth of women in senior management, and agreed it was an important issue he’d like to see corporates addressing “in a more systemic fashion’’. On the other hand, he also suggested it was “ridiculous” that women should naturally fill about half such jobs, and claimed there had been cases “where women have been promoted beyond their competence in this country, and I think that’s bad all round really”.

Telecom chairman Mark Verbiest, a member of the 25 Percent Group, says the presence of women changes the nature of conversations. “They bring a greater amount of clarity more quickly, I find. If you have just a bunch of men in the room, testosterone can take over and a lot of that is avoided by having women. “Diversity is not just about gender, it’s about people’s make-up, what they’ve studied, where they’ve come from, the sort of people they are. In private-sector businesses, if you had a group of salespeople, for example, and they were all guys, I guarantee they’d be highly competitive, aggressive; it would all be about endeavouring to beat the next guy, etc. Now that’s a gross generalisation but it’s the sort of outcome you could get. “But when you consider that sales guys are selling to customers who, in Telecom’s case, are everybody, does it make sense to have just aggressive blokes making up the team that makes the decisions around what to sell, how to sell and how to deliver service when purchasing decisions in households are often made by women? The answer to that has to be no.” Verbiest hopes companies will discover the benefits of gender diversity on their own boards but concedes some might be shamed in to it. “Investors are starting to ask questions about diversity of teams and not just on gender. ‘What is the make-up of your executive, what are their backgrounds, where do they come from, etc?’ So I think the owners of shares are going to push these issues more and more – they’ve started to already in some conversations that I have with institutional investors because they know the economic outcomes are better.”

SOCIAL EQUITY

In the end, though, Gattung says the issue is more important than board performance or the career aspirations of a few women who are probably well-educated and wellpaid already. She clearly recalls the battles faced by jockey Linda Jones in the late 70s and Anne Barry becoming the first female firefighter in 1981. “Now I never had any interest in being a firefighter or a jockey, but it was still important to me as a young woman that those women who had talent and tenacity and wanted to do those things found the door was open to them and they paved the way for others. “Maybe you’d call it social equity, but I think women on boards is about more than the ambitions of a few well-educated women. It’s not just about the elite women who might make it to boards – to me the issue is shorthand for the full participation of women in New Zealand public life and the business and economic affairs of the country.”

The power of three

How many women does it take to change the corporate culture?

Margaret Wilson

If it takes just one woman to change a light bulb (and a man to ask if she could also do the washing afterwards), then how many women does it take to change a corporate board? The answer, according to research, is that three board members need to be female to change the culture. In its study of the 500 largest companies in the US, Catalyst, an international non-profit organisation dedicated to furthering women and business, found that the point where women effect change on corporate boards is three.

Sarah Wilshaw-Sparkes explains the logic of the numbers. “If you have one woman that’s okay, she’s a token; then you have two and from their point of view they can support each other and ensure that if one woman’s voice is not heard, the other woman can pick it up and re-present it to the group. But at the same time they can be looked at by the men as though ‘those two are getting together against the rest of us’. “It’s only when you get three women or more, or 30%, that you reach critical mass and this wonderful stage when, because there are enough women there relative to the men, they just look like part of the group. They stop looking like a token, they stop looking like a mini team, they just look like one of the group, not labelled by gender.”

That view is supported by world-recognised research by Stanford University professor of organisational behaviour and sociology Joanne Martin, who has found that only when women get to comprise about 30% of an organisation does its culture change. However, she also found that in organisations that are predominantly – more than 60% – female, an adverse effect is revealed and those firms and industries have lower pay and less prestige than ones dominated by men. Theresa Gattung, who in her career has often been the only woman on a board or management team, thinks women working together gives them strength. “There is definitely literature that says until you have 30% of women in a profession or situation, you’re marginalised and it’s easy to be picked off,” she says.

“I think a woman who has been underacknowledged in the history of New Zealand is Margaret Wilson. I think she was very strategic when she was president of the Labour Party back when I was in university in the way she got a cohort of women up at the same time – Helen Clark, Annette King, Fran Wilde; they all went through at the same time. There’s something about going through with a group that makes it better for the next marginal woman.” Gattung says once there are one or two women on a board or in a management team, “it becomes the new normal”. Susan Vinnicombe says all research showsthat the number of women at various levels within an organisation makes a difference. “Until you have women at the top, I don’t think we are ever going to change the culture of organisations … I’m not trying to stereotype women and say they are all the good guys within an organisation, but I think it helps tremendously when the gender demography of a company – that is, the actual numbers – changes.”

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