IN SEPTEMBER, media reports out of Europe caused a ruckus among companies and countries: Europe's listed companies would soon face legislation giving them one of two choices: either increase the number of women on boards to 40 per cent by 2020 or else.
Last night the tone had changed as The Guardian and the Financial Times reported that the European Union had backed away from mandatory quotas, having failed to get full EU member support, particularly from Britain.
The campaign for mandatory quotas was led by Viviane Reding, of Luxembourg, the European Union justice commissioner who took a lot of flak over her statements that self-regulation had failed, leaving legislation the only option.
While the binding quota proposal has been diluted, the fear that binding quotas with penalties might really happen certainly moved the dial forward on the issue of more women on boards in the EU.
As company director Carol Schwartz said, quotas were always going to be ambitious, but Reding put the issue firmly and squarely on the table. "It's no longer being ignored, and, in fact, will have to be considered in every board appointment," she said.
Women and quotas on boards has long been a source of debate. Some believe it is the only way to bring real and lasting diversity on boards, while others believe binding quotas are unworkable.
In Australia, a fairly recent decision by the ASX to introduce requirements for companies to disclose certain diversity practices and arrangements on boards and management has had an impact. While the ASX does not go as far as to name and shame companies with a poor track record of diversity, the information companies are now required to supply gives others some powerful ammunition.
To put it into perspective, since the ASX Corporate Governance Council diversity requirements were announced, the number of women on the ASX 200 boards has jumped from 8.2 per cent to 15.2 per cent.
According to the Australian Institute of Company Directors, in 2012 there were 37 female appointments to boards, and 121 male appointments, which equates to 23 per cent female appointments and 77 per cent male appointments. But there are still too many outliers. An estimated 52 companies in the ASX 200 - which represents a quarter of Australia's top 200 listed companies - still have no women on the boards.
While the statistics get better as the companies get bigger, there is still a long way to go. In the ASX 100, only eight companies in the top 100 do not have women on their boards, and one in the ASX 20 does not have one.
Schwartz says Australia's problem is a much tamer, easier issue to resolve than the EU, as it has a much more homogeneous society with a common language, and no centuries-old history and tradition of territorial wars. "Let's just get on with creating equality of opportunity for women in leadership roles in this country, and introduce quotas for meritorious, well-qualified women on boards, and watch this country spurt forward in corporate performance and economic growth," she said.
Jillian Segal, a director of the ASX, is not an advocate of compulsory quotas. She believes it has to fit in with the culture of a country otherwise it can be counterproductive. But she makes the important point that the ASX guidelines target not just women on boards, but also the pipeline of women in management positions. It is this question of management that is a big issue for Australian companies. Company director Elizabeth Proust says boards are important, but the people who influence culture are the managers.
She makes a valid point. Less than 10 per cent of senior executives are women, and less than 5 per cent of line managers. This means the push by ASX-listed companies to appoint women is depleting the pipeline of women coming through.
Prue Gilbert, of Prue Gilbert Consulting, said she supported targets for boards if backed up by targets for executives to require organisations to build their pipeline of female talent, and drive cultural change that recognises the contribution of women to the workplace and society.
It also ensures the approach will not result in a vacuum effect of promoting executive women and leaving a void.
And it makes so much sense. According to a ground-breaking productivity report released and then updated last year by Goldman Sachs chief economist Tim Toohey, raising women's workplace participation to the level of men's would lift economic growth by 13 per cent and help solve the fiscal burden of a greying population.
In dollar terms, Toohey estimates that if that gap were closed, it would increase economic activity by $180 billion. But to do this, policies and reforms would be required, including a minimum quota of two female positions per board in Australia's top 200 companies, and an audit on female representation at executive level.
A similar analysis applied to other nations gets a similar outcome. With estimates that US GDP could be boosted by as much as 10 per cent, 20 per cent in Italy, 12 per cent in Germany, 11 per cent in Britain and by 8 per cent in Sweden. It's a radical suggestion that is worthy of further investigation.