Progress for women on boards

The latest AICD Gender Diversity Report shows the proportion of women on the ASX 300 hitting a high of 35.6 per cent. 

The report showed the top 20 ASX companies have 40 per cent of board seats now filled by women. AICD managing director and CEO Mark Rigotti MAICD notes it was encouraging to see most of the momentum going in a positive direction.

“Hitting 40 per cent of female directors on the ASX 20 is a significant milestone and I’m confident that result will soon be reflected further down the index,” he says. “The successes of the past five years have been achieved through setting clear targets and I encourage those companies still under 40 per cent to consider what more they can do to increase the diversity of their board.”

Chair of the 30% Club Australia, Nicola Wakefield Evans AM FAICD, says the campaign for board parity has achieved a great deal, but is far from done. “Despite the remarkable progress we’ve made over the longer term, there are still too many companies dragging their heels. Gender balance is something that should be considered as part of a board’s readiness for listing and we will be pursuing this as something that can net major results, even for smaller listed boards.”

Investor groups have signalled a renewed and sharper focus on so-called “none and one” companies, indicating they may vote against the appointment of male directors to boards with less than 30 per cent women.

There are currently 44 companies on the ASX 300 (15 per cent) that have only one or no women on the board. While the broader trend remains positive, the quarterly data showed an increase in male-only boards on the ASX 300. This number has more than doubled since the last report in March, up from six to 11.

Fit to franchise

The effectiveness of regulation underpinning Australia’s franchise economy is again under scrutiny through a new federal government review.

AICD national board member and former ACCC Deputy Commissioner Dr Michael Schaper FAICD will chair the review, which will look at the “general fitness” of the Franchising Code — enforcement and dispute resolution mechanisms, the role of the code in regulating the automotive sector, the impact of increased penalties, and how the code interacts with the Franchise Disclosure Register.

The sector has been subject to previous scrutiny, with the most recent — the 2020 Parliamentary Joint Committee on Corporations and Financial Service’s Fairness in Franchising report — leading to tougher regulation and penalties after revealing conduct risk and other problems.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson GAICD says approximately 15 per cent of all contacts made to the ASBFEO relate to franchising matters.

The ABS reports that 4.4 per cent of Australian businesses were operated by franchisees in 2016–17, the percentage being considerably higher in the retail sector at 17.8 per cent.

All in the mind

Strategic minds are important for effective governance, a recent INSEAD study shows.

The key to successfully overseeing a company’s future and shaping its strategic direction lies in cultivating strategic minds among directors and top management teams, a recent report from INSEAD shows. Directors and CEOs need to develop specific traits to effectively navigate strategic issues and help shape the future of companies. Some of those traits include:

• Cognitive flexibility
• Non-linear thinking
• Consummate questioning
• Self-awareness
• Mindfulness
• Sense-making

According to Emeritus Professor of Strategic Management Yves Doz and senior researcher Keeley Wilson at INSEAD, strategic minds see the big picture, do not shy away from tackling hard problems and are not uncomfortable with ambiguity.

“Embracing these traits enables directors, CEOs and their teams to guide their organisations more creatively and effectively towards success in today’s rapidly evolving business landscape,” says the research.

Doz and Wilson argue that directors and CEOs need to develop specific traits to effectively navigate strategic issues and help shape the future of companies. They say CEOs often view governance merely as a regulatory requirement, delegating it to the CFO, auditors and legal experts, with only scripted meetings with the board — while boards tend to overlook strategic matters.

Doz and Wilson believe that strategy-making and governance should be strongly linked. “The growing complexity of the business environment necessitates a strategic approach to governance. But directors, especially those representing large passive investment funds, are hesitant to delve into strategy due to their fiduciary responsibility. CEOs often fail to establish a collaborative relationship with the board, maintaining a distance that gives them autonomy, but impedes strategic thought. They can overcome this divide by developing a shared strategic perspective on the future.”

The key to successfully overseeing a company’s future and shaping its strategic direction lies in cultivating strategic minds among directors and top management teams. Doz and Wilson suggest that by cultivating a strategic mind, “directors can become effective custodians of a company’s future and drivers of its strategic direction”.

This article first appeared under the headline 'Boardroom Parity’ in the October 2023 issue of Company Director magazine.