Hon Lianne Dalziel
Minister of Commerce, Minister for Small Business,
Minister of Women’s Affairs, MP for Christchurch East

12 July 2007 Speech Notes
Hobson Leavy Luncheon for Senior Business Women
"Getting Women on Board"
Shortland Chambers
Auckland
12:00 pm

Thank you to Hobson Leavy for hosting today's luncheon. I always enjoy having the opportunity to talk with women in business, not only because the issues you are interested in are also of great interest to me, but also because it involves a coming-together of my three portfolios: Women’s Affairs; Commerce; and Small Business.

Women in enterprise and women in leadership are important areas of work for the Ministry of Women’s Affairs. These were the themes for an address I gave last month at the APEC Women Leaders’ Network meeting in Australia and some of the thoughts I shared with that audience I would like to share with you today.

We had been asked to address the challenges of women’s leadership from the perspective of our individual economies. I said that one of the challenges New Zealand women face is the perception that we no longer have any challenges, because for a magic moment in time, women held all the top constitutional positions in New Zealand and our largest listed company had a woman at the helm.

In recent years therefore, it has became relatively common for people to talk about ‘women running the country’ and to assume that women in New Zealand faced few, if any, barriers to achieving positions of leadership.

Women’s representation is very much an integral part of New Zealand’s identity as a nation.

Leading the world with the right to vote in 1893, it was probably surprising that it took us until 1933 to have our first woman MP, until 1947 to have our first woman in Cabinet, until1998 to have our first woman Prime Minister and until 1999 to have our first elected woman Prime Minister.

Women still hold the positions of Chief Justice and Parliament’s speaker; but the Governor-General is now a man, as is the new head of our largest listed company.

Unfortunately what has happened is that the success of a relatively small number of outstanding women has tended to obscure the reality; that, as someone else has said in the context of equal opportunities for women, although we may have broken through the glass ceiling, the floor remains very sticky.

Women in New Zealand do have more and better opportunities than women in many countries, but it would be easy to overstate the case and therefore retreat from the vigilance that is required to ensure that we are always going forward, improving opportunities for women. One of this country's challenges is to ensure that the next generation does not take hard won gains for granted and thereby risk losing the gains that have already been made.

The Human Rights Commission has a Commissioner with specific responsibility for Equal Employment Opportunities, Judy McGregor, and as a result they now publish a 5-yearly census on women’s participation in New Zealand. The most recent report published last year showed that even though only about a third of Members of Parliament and only about a quarter of Cabinet Ministers are women, in much of the private sector, the situation is even worse. For example, at the time of the census, women made up only:

- 7 percent of directors of NZX's Top 100 listed companies

- 17 percent of partners in top legal firms

- 17 percent of university professors and associate professors

At 7 percent, the proportion of women on boards is not only low in absolute terms, but we also lag behind many of the countries with which New Zealand tends to compare itself – including Australia. The rates are United States (13.6 percent), the United Kingdom (10.5 percent), and Australia (8.6 percent).

What has been good though is to have these figures in the public domain, which has enabled the beginnings of a public debate about why there are so few women on New Zealand company boards and what that might mean in terms of lost opportunity. As a government we are focussing our attention on the need for our companies to be globally competitive, so what might this mean when we are not fully utilising this huge pool of talented women?

The initial response to the question of why there are so few women directors was the familiar ‘unfortunately there are not enough women with suitable skills’ argument. The real problem in my view is that business is just not looking in all the right places.

I am not a conspiracy theorist; otherwise I would write for Investigate magazine. I don't think that men sit behind closed boardroom doors determined to keep women out. Shoulder tapping is how we bring people together to undertake any task. Private sector board appointments are no different. A significant number of New Zealand boards have no women on them at all. So if such a board is discussing who is going to replace Henry when he retires, the board members are going to suggest the other people they have worked with or served on boards with and that is going to lead them to consider other men.

So the real challenge is not that the women are not there, they just are not on the radar screen. And that is the challenge we need to address. And it is here that the experience of the state sector is relevant. The Ministry of Women’s Affairs’ Nominations Service has just undertaken its third whole-of-government stock-take of membership of state sector boards and committees and found that women now represent 42 percent of the total government-appointed membership of those boards – up one percent from last year. That’s still not equal membership, but it’s significantly better than 7 percent, and it is steadily improving.
But this isn’t the real point of comparison with the top 100 listed companies – that is with the State Owned Enterprises which operate on commercial lines – and even there we have achieved participation rates of just over 30 percent, more than four times that of NZX’s top 100.

So what makes the state sector different in this regard? Well the first thing is that the government has set itself a target of 50 percent participation rates of women on state sector boards and committees by 2010.

This doesn’t mean quotas, or 50 percent on every board – it just means that across all the boards there should be reasonably equivalent numbers of men and women if we are making the best use of all the available talent.

The second thing it has done is to establish an effective mechanism to find women with suitable skills and background and then put those women forward to the wide range of agencies that make the appointments. Those women still have to compete with all the other candidates, based on what they bring to the position, but at least they are on the radar – and because there really are women out there with the skills to serve on boards, many of them are appointed.

The process that finds many of those suitable women is the Nominations Service of the Ministry of Women’s Affairs. There’s no rocket science here – the Nominations Service maintains a database of women with relevant skills and backgrounds, and it works closely with appointing agencies to understand their needs. It then uses its database to find women who have the attributes needed for the job, and puts them forward. The key is only nominating strong candidates – if the Service cannot find a women with the skills needed, then it doesn’t nominate.

I, of course, do not make the case for tokenism – I make a business case for diversity. Although correlation is more difficult to prove, the high association found in a number of studies cannot be ignored; and that is that companies with more women on their boards tend to perform better.
And it makes sense – if everyone sitting around the boardroom table has the same background, then they are not going to see the full range of risks and opportunities for their company.

So the government has taken the ‘lead by example’ approach and by encouraging public debate, I hope that the private sector will see the extent of the missed opportunity their dismal women’s participation rates represent.

The government’s success has already spurred three private sector initiatives that are setting themselves up in order to make talented business women more easily available to companies looking for directors. One of these is called FindDirectors.com and was set up earlier this year. The Nominations Service is helping it ‘populate’ its database by providing everyone registered on the Nominations Service’s own database with information about how to join FindDirectors.

Having said all of that, I would now like to flag an issue that arose at a question and answer session following an address I gave in March to another women-in-business networking function. I readily confessed that I had not heard of the ‘glass cliff’ but I now know its meaning and the risks it can pose.

A report was released in the UK in March this year by the Chartered Institute of Personnel and Development following a study they conducted on why some British companies apparently seemed to worsen performance following the appointment of women to their boards .

The study found that company performance leading up to the appointment of a director differed depending on the gender of the appointee. For companies that appointed men to their boards of directors, share price performance was relatively stable both before and after the appointment.

However, companies that appointed a woman were more likely to have experienced consistently poor performance in the months preceding the appointment. This became known as the ‘glass cliff’ phenomenon, where women’s leadership positions are relatively risky or precarious since they are more likely to involve management of organisational units in crisis.

The study further showed that, when provided with details of two equally qualified candidates for a leadership position – one a man and one a woman – respondents overwhelmingly favour the female candidate if the opening is described as difficult and involving a high risk of failure. The explanation put forward was that interviewees believed that women possess particular abilities that are especially valuable in times of crisis. One woman told the researchers that the glass cliff concept reminded her of a quote from Eleanor Roosevelt: ‘Women are like teabags: you don’t know how strong they are until you put them in hot water’. But I suspect the respondents are not being entirely upfront, because I think they think that women have less to lose.

So, while a directorship is a challenging step and a great opportunity, it is critical to ensure that the position is the opportunity it is made out to be. Food for thought.

Finally, I hope that diversity in board membership becomes an area where we will begin to see more shareholder interest and advocacy, just as we have in other areas of corporate responsibility such as commitment to the environment and to workplace standards.

As one study said about diversity: - it is not just the right thing, it is the bright thing. The more business realise the significant impact diversity in management and governance has on the bottom line, they will be actively seeking out this untapped talent and we will be ready.

You may have heard of an Australian organisation, Chief Executive Women (CEW). This is an organisation of 134 women leaders from corporate Australia, the professions, academia, and the public and not-for-profit sectors. It was established in 1985 as a small active network of women executives.
CEW is a professional organisation with an executive director and it states its purpose as ‘….to promote the development and effective use of Australia’s leadership talent. We believe the whole community benefits if the talents of women are fully utilised’.

I couldn’t agree more. As far as I know, no similar organisation exists here. It seems to me a New Zealand equivalent for senior business women would be of enormous benefit to women such as yourselves and those coming up behind you.

So I hope that gives us a starting point for some dialogue on how we can leverage off the experience in the public sector in order to reinforce the case for increasing women's participation in the private sector. I am convinced that New Zealand's economic transformation agenda cannot achieve its full potential unless we have women on board!

ENDS

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