Revealing Australia’s current diversity index Board performance

This article is reveals Board performance across the top 300 Australian Board rooms within the 5 key diversity measures. You can download the complete 2022 Board Diversity Index here.

board performance

THIS ARTICLE’S KEY FINDINGS:

  • Diversity of culture in the Boardroom is moving in the right direction but slowly
  • Cultural diversity is stagnating: 90% of directors are from Anglo-Celtic backgrounds (same as last year)
  • The number of companies with at least 30% women directors has tripled since 2016.
  • The number of companies with zero or one female director has more than halved since 2016
  • The total number of Board seats occupied by women has increased by nearly 70% since 2016
  • An ethnically diverse Board, would potentially bring a better understanding of the global population it serves, a diversity of problem solving and thinking styles, and a better appreciation of the mind-set of key trading partners.

 

The findings of the latest Board Diversity Index are in, providing a snapshot of Australia’s top 300 Boardrooms in 2022 and their Board performance. See how much diversity Board of directors currently have, and the link between Board diversity and firm performance.

“And while some types of diversity continue to improve (more women are moving into director roles – 667 in 2022 compared to 633 last year), others are stagnating (90% of directors continue to be from an Anglo-Celtic background, despite Australia’s growing multiculturalism).”  Governance Institute of Australia

The 2022 Board Diversity Index measured the following 5 key areas. Under each heading is a quick summary of key findings:

board performance

 

Board Diversity Definition

Diversity is the practice or quality of including or involving people from a range of different social and ethnic backgrounds, as well as different genders and groups.

Board diversity is the practice of bringing together gender, age, cultures, skills and capabilities in a way that creates the ideal or optimal Board. Boards of organisations are more likely to have better individual contributions if there are a range of peoples skills, capabilities, genders, working towards common organisational goals.

This article especially explains the role that diversity plays in the global economy, where trade is made between diverse cultures and groups.

 

Typical Australian Board Director

In 2021/ 2022, he (yes, it’s still a he) is:

  • Anglo-Celtic
  • Aged 60
  • Resident in Australia
  • Degree qualified with possibly an MBA
  • Steeped in accounting/finance/banking
  • Independent of the executive team
  • In his fifth year on the board

 

1. Board Performance in Gender

In last year’s survey the reports indicated The 30% Club had achieved its goal (30% women on Boards). The inexorable march, now towards the new target of 40:40:20 (40% women, 40% men and 20% open), continues, albeit by only a small (1%) upward movement in this survey period.

A few key improvements in gender have been the following:

  • The number of companies with at least 30% women directors has tripled since 2016.
  • The number of companies with zero or one female director has more than halved since 2016
  • The total number of Board seats occupied by women has increased by nearly 70% since 2016

 

2. Board Diversity Statistics in Cultural Background

In contrast to the emphatic trends emerging from our gender analysis, change in Board composition on the measure of cultural diversity is moderate at best.

If anything, there is evidence of stagnation in this metric. Without vigorous, muscular advocacy on behalf of ethnic minorities, this situation is unlikely to change in the immediate future, despite the fact that the multicultural complexion of Australia’s population continues to evolve rapidly.

board performance

 

3. Board Performance Skills & Experience Figures & Trends

For another year, there has been very little change to the complexion of tertiary qualifications in the director community. Yet again an undergraduate degree is virtually a minimum standard with 80% of all directors qualified to this level. Moreover, MBAs and/or finance degrees are held by a sizeable number of directors. Further, as for previous years, there is a higher proportion of women directors than men with additional qualifications: PhDs, governance qualifications and masters degrees in particular.

Within a sector breakdown a few noticeable trends were:

  • The ascendancy of the resources sector continues, reflecting its importance to the Australian economy
  • The occurrence of engineering/manufacturing/construction expertise continues its decline
  • Of more surprise, a declining trend in the representation of agribusiness expertise
  • Technology expertise continues to grow in importance, with even more room to increase over time
  • Women lawyers are commonplace on Boards but continue to be significantly under-represented as property, engineering/manufacturing, education or agribusiness experts. The same metric is apparent in the general management category
  • There are significantly more women experts in consulting and HR, both of which have miniscule representation at Board level… a recurring finding

 

4. Board Performance in Age Averages & Ranges

Average Age

The average age of directors has been a remarkably steady number in the past five years, and the male director on average continues to be slightly older than his female counterpart. There is little evidence of differences in average age based on company size. There is some, relatively marginal, difference based on industry sector with technology and resources sectors demonstrating a younger profile.

Age Ranges

board performance

5. Tenure & Independence Board Diversity Statistics

Tenure

As for previous surveys, female Board tenure, both for directors and chairs, is significantly shorter on average than for males. But they are ‘catching up’, as the greater numbers of female Board members over recent years and now decades make an impact. This year for the first time there are female chairs and directors in the 15+ time frame. The total chair statistics, as presented above, are highly consistent with the breakdown being almost identical year-on-year.

Independence

There is a trend, perhaps a slight one, to increasing independence across all 300 ASX businesses in Board performance, further reinforcing that Australian publicly listed companies have a healthy independence profile. At the very most, 20.1% of directors are regarded as non-independent… one in five directors. This number falls dramatically, to about one in 15, when incumbent CEOs/managing directors (there are around 140 of them) are extracted from the non-independent category.

The greater likelihood of female independence compared to male independence is again reinforced this year. It is possible that this gap could narrow as the proportion of women at C-suite level continues to climb, so that more women will be ʻinternal’ appointments to Boards as they occupy an increased proportion of CEO/senior executive roles. This has yet to become apparent however.

 

References for Board Performance & Board Diversity Statistics

This article’s information’s is a summary and snapshot of 2022 Board Diversity Index from Watermark Search International. If you’d like to continue reading the full report. Download it here. Some of the reference of this information include:

1. Patricia Lenkov, Myths and Misconceptions About Corporate Board Diversity, www.tlnt.co, 1 October 2021

2. June D. Bell, Corporate Board Diversity: Moving Beyond Lip Service, www.shrm.org, 16 January 2021

3. Deloitte/Alliance for Board Diversity, Missing Pieces Report: The Board Diversity Census of Women and Minorities on Fortune 500 Boards, 6th edition, 2022

4. Australian Institute or Company Directors, Gender Diversity Report, 2021

 

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