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UWA Business School
Only an Accounting and Finance Professor could make an argument for rational discrimination, and that's exactly what Winthrop Professor Ray da Silva Rosa does in a new study examining the lack of women directors on Australian company boards. Just as quickly as it appears, however, the idea is dismissed.

A number of studies, explains da Silva Rosa, credibly show that having more women directors significantly improve the ability of boards of directors to discharge their oversight function and lower the risk of missteps.

Women directors improve boards' capacity to deal with diversity in the product and labour markets, enhance board independence from undue management influence, and increase the likelihood of consultative decision-making.  If these points are true, why don't companies act in their own economic interest and appoint more women to their boards?

Together with Winthrop Professor Izan Izan, also from the UWA Business School, and Winkie Wong, a former Honours student, da Silva Rosa conducted an analysis of the 288 ASX-listed companies that had at least one female director during 2003.

The study had mixed results. It found that women directors have higher levels of formal qualifications than their male counterparts, are younger, and sit on more committees, including the key audit and remuneration committees.

Certain companies are beginning to embrace female directors. In particular, companies with large market capitalisation values  - and by inference those that have a wider range of employees and face the greatest media scrutiny - have more female directors. Further, half of utilities companies had at least one female director, although the materials and energy sectors sat far lower at only 10%.

The study drew on previous research in an attempt to discover the barriers that women directors face. The ‘glass ceiling' is a familiar concept, and includes, as da Silva Rosa's study reiterates, unflattering stereotypes of women's incompetence, as well as the ‘old boys'' network that has historically (and deliberately, depending on who you believe) excluded women.

Surveys of Australian female directors have found that 48% believe that companies are afraid to take on women who are not already serving on boards, while 46% thought that companies simply did not know where to look for qualified women.

Da Silva Rosa sits on the UWA Equity and Diversity Committee, where he sees firsthand the lack of women in leadership positions. ‘There aren't many female professors,' he says. ‘Cultural factors and workplace arrangements that systematically ignore the reality that women bear the brunt of childcare responsibilities mean that it's much more costly for women to put in the hours, whereas it's easier or more acceptable for men to put in the commitment and sacrifices required to succeed professionally.

‘I believe we should address the institutional arrangements that make it very difficult for both women and men to have a career and bring up children. At present, people are virtually forced into a choice and it is typically the case that women choose to give raising children a higher priority.  Sweden provides many well-tested examples of the changes that could be made.'

When questioned on mandatory quotas to address the underrepresentation of women on boards he winces, and there is a long silence while he ponders his position. Eventually, he comes out against quotas. ‘It's a close call but I think having quotas would undermine the authority of those women who are appointed, and having your peers' confidence is crucial when contributing in boardroom discussions.'

Ultimately, he decides, it's a supply and demand problem. By making qualified female candidates more visible, the supply problem is addressed. And if public pressure is placed on companies, demand will increase. Then, the balance of supply and demand will create the conditions for greater market efficiency - or, in plain English, strong boards that reap the benefits of both male and female directors.