Board diversity is critical to maintaining a competitive and vibrant economy
The Institute of Directors (IoD) is calling on listed companies to set gender diversity targets to improve the concerning NZX gender statistics.
The IoD points out the NZX has reported only 17 per cent of board members were women in 2016, unchanged since 2015.
New Zealand lags internationally with UK FTSE 100 at 27 per cent up from 26 per cent in 2015, Australia’s ASX 200 at 24.5 per cent up from 21.5 per cent and the US S&P 100 at 23.3 per cent up from 22.3 per cent in 2015, it says.
Boards need to lift their game as board diversity is critical to maintaining a competitive and vibrant economy, the IoD says in a statement.
We must also create a diversity pipeline at senior management level to support development into governance roles
“The IoD has long held the view that diversity of thought and perspective in the boardroom improves business performance and innovation,” says Felicity Caird, IoD Manager Governance Leadership Centre.
“The dividend that diversity pays is bringing different perspectives and more robust decision-making, effective risk management and better company performance.”
The IoD urges listed boards to take active steps to achieve 30 to 50 per cent of women directors.
To help encourage diversity, the IoD has a number of programmes and initiatives to support boards including releasing a practical guide on Getting on board with diversity.
The report offers five practical steps to help boards ensure diversity is about attracting and retaining diverse talent in governance and highlights some of the classic challenges boards can face on the way to greater diversity.
The institute has also set up the Future Directors programme. Founded by Michael Stiassny, Des Hunt and Sir Stephen Tindall, the programme helps to develop the next generation of directors by providing them with the opportunity to gain board experience by sitting at the board table of a New Zealand company for a year.
There are 410 people currently listed on the Future Directors database, with 16 private sector companies have, had or are about to appoint a Future Director to their board. In 2016 the programme was expanded into the government sector.
The IoD also maintains New Zealand’s largest database of independent directors. This will help boards recruit the best people by matching the right skills and experience to a board.
Currently of the directors registered 29 per cent are women, and the IoD would encourage more to register, and companies to use the service.
Mentoring For Diversity was established in 2011. In its first three years, it linked 74 high-performing female directors with experienced chairman and senior directors for mentoring. In 2015, the programme expanded to reflect diversity in a wider sense including ethnicity, age, skill and experience in relation to gender. So far 111 people have been through the programme, says the IoD.
The IoD believes encouraging business to buy in to diversity is the best approach.
“We must also create a diversity pipeline at senior management level to support development into governance roles,” says Caird.
“It is not realistic to ask the question why aren’t there more women on boards without asking where the female chief executives and senior managers are being developed,” she adds.
“Nor can we pretend that without the willingness of senior board chairs we will have meaningful change.”
“We encourage companies to continue their diversity journey as we want the ultimate aim to achieve diversity of thought around the board tables of New Zealand. This means having different people working cohesively, exploring the same issues and bringing richness and variety to the board table.”
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