Corporate Governance And Gender Diversity In The Workplace

Discussion

The corporate governance is an important issue in the business organization as it provides a framework of practices, rules and processes that determine the way in which an organization is being controlled and directed. The corporate governance of an organization assumes an integral role in determining the extent to which the organization is successful. This is primarily because it is the corporate governance of the organization that determines how the company controls its different spheres of management, right from internal controls and performance management till issues of corporate disclosure (Starbuck 2014). Since it is the corporate governance of a country that determines the extent to which a company is able to attain reliability and integrity before the shareholders, most of the companies try to demonstrate good corporate citizenship instead of merely running after profit.

In this context, the issue of workplace gender diversity deserves special attention.  In the governance policies of the corporate institutions, gender diversity should be taken care of. Usually men have been appointed in the higher managerial designations, and yet some companies have been able to exhibit effective governance policies which introduce reservations for the suitable female candidates. The women can bring in unique skill set, as well as offer unique strengths to the organization that largely helps in ensuring organizational success. However, despite the indispensible importance of gender equality at workplace, the corporate governance policies of many organizations fail to promote the rights and needs of women. Consequently, the women are usually working in lower positions, despite possessing the skills and expertise, are paid much lesser than men, and needless to state here that their access to the leadership position is being constrained by multiple factors (Tricker and Tricker 2014). Hence, it is important to discuss and critically evaluate the corporate governance policies of different organizations in respect to the gender diversity issue at workplace.

Although most of the organizations claim that they do endorse the idea of gender diversity at workplace, research studies have shown clear evidence that the total percentage of women holding corporate board seats is much lesser than the men. In fact, it is indeed a shocking fact that although the women in the US constitute half of the US workforce, a mere 92% of the total number of corporate directors in the Fortune 500 were women (Abdullah et al. 2014). The disproportionate gender ratio of the directors is indeed a debatable issue in today’s world that merit special attention.

As one of the largest retail organizations of Australia, Woolworths is one of the very few companies of Australia that ensures equality for women, both in terms of employment opportunities as well as pay scale. The company has recently set its new objective according to which the company aims to ensure that at least 40% of the executive and senior managers’ positions are being held by the female employees (Roberts 2015). According to the company reports, Woolworths also maintains a very transparent recruitment policy as a result of which approximately 50% of its workforce consists of women. The management authority of the organization firmly believes that it is the responsibility of the organization to build a pipeline of strong female talent, and hence it adopts impressive strategies to improve female representation in the management roles. It is important to mention here that the company has also partnered with Macquarie Graduate School of Management hat helps the organization sponsor and fund different Master Degree Management degrees for the selected women employees, so that they can gain all the skills, expertise and experience needed for undertaking administrative roles. It is mention worthy in this context that over the last seven years, Woolworths has been able to increase its female leadership from 16% to as much as 28%. Further, the organization intends to reserve 33% of the leadership seats for the women by the year of 2025 (Gaze and Smith 2016). In order to manage growth as well as success over the coming years, the company does recognize the importance of investing in female talent. The organization has realized that merely 16% of the workforces, who are women, are working for the executive pool of Woolworths (Triegaardt 2014). Hence, the organization has introduced a variety of CEO mentoring programs that are meant to teach and train women how to put themselves forward and proactively manage their careers. The organization also maintains gender equality metrics that helps it to stay aware of the extent to which it is able to harness the talent available within the company, regardless of the gender. It is equally important to mention here that the then CEO of Woolworths Kit, in the year of 2005, had introduced the system of measuring the commitment and performance level of each female employee, while also monitoring the time the organization has taken in promoting each female employee. Owing to the effective gender equality programs in the company, 29% of the women working in the executive role at Woolworths are women (Jele 2015). Further, with greater number of women serving the company, the female executive turnover rate has also remarkably reduced, leading to the organizational success of a company.

Gender Equality in Respect of Corporate Governance at Woolworths

Although Woolworths has been successfully able to incorporate a gender diversity policy in the administration of its organization, most of the organizations in Australia such as Wesfarmers, Coles and Target PTY have witnessed the underrepresentation of women in the managerial positions. The women are at a serious problem when they are trying to climb up the management ladder. The number of female senior managers is remarkably less, and although in the first layer of management, approximately 39.8% of the workforce is women, only 31.7% of the female employees belong to the senior management level (Kogut et al. 2014). Further, as far as the women working in the executive and general manager designation are concerned, a mere 27.8% of the female workforce of Australian companies is working (Terjesen et al. 2015). It is important to understand the major reason behind this under-representation of women. Research studies and careful analysis of the scenario has shed light on the structural and cultural barriers as the two chief reasons behind the underrepresentation of women in the corporate boards of Australian companies. The major cultural barrier is the gender bias in most of the Australian organizations. As the female employees join the office after the completion of their maternity leaves, they are being deemed to be incompetent in performing career advancing jobs. Women, in most of the cases, are being held inferior due to their biological differences, and even some of the female employees have not been promoted considering the idea that they would always prioritize their family concerns over their professional commitments. Further, often the female employees are being denied their rights to move up the management ladder, as it is believed that they would always opt for flexible work schedules. Instead of promoting the female employees to the higher designations, and allowing them flexible work schedules, most of the companies believe in offering flexible, low-salary jobs to the competent female employees. However, the female participation is an important issue in the management of any organization, as greater diversify at workplace would imply improvement in the innovation, decision making process as well as the organizational performance of the company. It has been seen that merely one in every ten organizations has set the target to lift the total number of women working over the boardroom table. According to the research reports published by the Workplace Gender Equality Agency, approximately 31.3 % of the organizations in Australia do not have any female executive or general manager (Adriaanse and Claringbould 2016). Further, the research has also suggested that most of the companies usually follow a male-dominated management level, whereby most of the employees working in the senior management levels are males. Further, the underrepresentation of the female workforce in the Australian companies can also be explained with the help of the three important findings of the research report:

1. Only 1 in every 4 Directors in the Australian companies is female
2. Only 8.8% of the employers of Australian organizations have a gender composition target in their governing body
3. 12% of the chairs are only female (Ali et al.2014).

Only 17.3 of the CEOs working in the Australian companies are women (Leipziger 2015). Although the management authority of the organizations does acknowledge the merit, qualification and expertise of the women employees, they offer a different argument in justifying the underrepresentation of the women in the management positions. According to the management authorities of the organizations, unlike 83 men, merely 17 women agree to sacrifice their family priorities for the purpose of progressing up the corporate ladder (Benschop et al. 2014). This prejudiced attitude is at the core of the fact that most of the companies are incapable of merit-based selection and promotion.

Female Representation in the Corporate Boards of Most of the Australian Companies

The gender diversity at workplace largely helps an organization achieve growth in profitability, by improving the overall productivity and performance of the employees. However, despite all the qualification and expertise attained by the female employees, a large number of female employees encounter sexual discrimination at workplace. However, it is important to mention here that according to 1984 Sexual Discrimination Act of Australia, it is a matter of human right obligation to deny an individual the right to enjoy gender equality. While women comprise roughly 46 per cent of all employees in Australia, they take home on average $283.20 less than men each week, and hence it has become mandatory for all the Australian organizations to ensure workplace gender equality. It is equally important to refer to the The Workplace Gender Equality Act 2012 (Act), which has been introduced with the purpose of promoting the productivity and competitiveness of Australian business through the advancement of gender equality in employment and in the workplace (Cardillo et al. 2013). As per the rules and legislator policies of the aforementioned act, the employers of the organizations operating in Australia are needed to report to the government stating the details of the overall gender composition of the workplace as well as the gender composition of the governing bodies of the relevant employers. According to the Clause 2 of the The Workplace Gender Equality Act 2012 (Act), each employer of the Australian organizations have to provide the government with the information regarding the gender profile of the governing body (Charlesworth and Macdonald 2015).

Despite the unquestionable importance of the ensuring gender-diversity at workplace, especially in the corporate boards, a huge number of Australian organizations usually do not abide by the norms of gender diversity at workplace. Hence, it has become important to offer effective recommendations that can help in solving the problem. First of all, it is advised that the companies not following the workplace diversity norms should introduce a diversity policy as well as introduce penalties for violating the same. Further, in order to ensure the supervision of the workplace diversity policies, the company should also set up a diversity council. Further, it is baseless to expect the management authority to stick to the gender diversity policies at workplace, unless the diversity policies are backed up by the appropriate numerical targets. The organizations should set up and try to achieve that target, such as a target percentile, within a stipulated period of time. The organization, for example, may set and try to accomplish the target to increase the female participation in the managerial roles by 5%, within the year of 2022 (Ali and Kulik 2014). A gender diversity council should be set up, as mentioned before, that will be responsible for monitoring as well as supervising the gender policies of the organization. The organization will need to report periodically its gender diversity policy to the council, as it will help in creating a sense of accountability as well as clear transparency within the organization. Further, at least one woman should be placed on the recruitment panel to ensure that no unconscious bias occurs on part of the company in the recruitment process. Above all, the CEO of the organization must realize and acknowledge the importance of female contribution in the decision making process, and should communicate the idea of gender diversity as the core organizational strategy of the company. The employees must be able to see meaningful actions, rather than hearing inspiring words. The merit based selection of employees and appointment of employees to higher designations should take place within the organization. At the primary stage of changes, the organization can also consider the idea of keeping quotas and reservations, for the female employees. Besides, while introducing the workplace diversity program at the organization, the company should keep on communicating its proposed changes, diversity policies, aims and benefits of the same, to the respective employees via a variety of channels such as emails, group meetings and social events. Last but not the least, the progress of the workplace diversity policy should be communicated to the employees as well (Razavi 2014). The employees, customers as well as the investors should be informed about the improvement of the proposed changes as a result of the new policies. Above all, the active involvement of the senior managers, the introduction of the unconscious bias programs within the organization, and the presence of a bias free review system can help in increasing the female participation at workplaces.

Conclusion:

The board diversity is an important factor that makes or mars the future prospects of an organization. It should be remembered that the companies which encourage workplace diversity are able to enjoy a variety of ideas as well as unique skills. In fact, research evidence suggests that the organizations which hire more women in the senior managerial and executive positions, are able to achieve better financial performance than the companies which do not. The presence of diversity of board members allow an organization gain access to a  huge talent pool of varied skills and expertise, that in turn assists in better decision-making process. Research conducted on the Australian companies suggest that 90 percent of companies had at least one women director, but less than 20 percent had three or more women serving together. Apart from the financial benefits of the company, an organization is also able to achieve success by ensuring gender diversity in corporate governance. The very reason behind this is that it helps in promoting the corporate brand image of the company, as it unites the organization with the shareholders, customers as well as the employees. As per the research reports submitted by Catalyst Fortune 500, the organizations which enjoy the highest percentage of female board members have been found to outperform their rivals  by as much as 53%.

Reference List:

Abdullah, S.N., Ismail, K., Izah, K.N. and Nachum, L., 2014. Does having women on boards create value? The impact of societal perceptions and corporate governance in emerging markets. Strategic Management Journal.

Adriaanse, J.A. and Claringbould, I., 2016. Gender equality in sport leadership: From the Brighton Declaration to the Sydney Scoreboard. International Review for the Sociology of Sport, 51(5), pp.547-566.

Ali, M., Ng, Y.L. and Kulik, C.T., 2014. Board age and gender diversity: A test of competing linear and curvilinear predictions. Journal of Business Ethics, 125(3), pp.497-512.

Ali, M., Ng, Y.L. and Kulik, C.T., 2014. Board age and gender diversity: A test of competing linear and curvilinear predictions. Journal of Business Ethics, 125(3), pp.497-512.

Benschop, Y. and van den Brink, M., 2014. Power and resistance in gender equality strategies: comparing quotas and small wins. The Oxford handbook of gender in organizations, pp.332-352.

Cardillo, T., 2013. New obligations on employers imposed by the Workplace Gender Equality Act. Keeping Good Companies, 65(4), p.236.

Charlesworth, S. and Macdonald, F., 2015. Australia’s gender pay equity legislation: how new, how different, what prospects?. Cambridge Journal of Economics, 39(2), pp.421-440.

Gaze, B. and Smith, B., 2016. Equality and Discrimination Law in Australia: An Introduction. Cambridge University Press.

Jele, N.M., 2015. Women in law and society: news. De Rebus, 2015(557), pp.12-15.

Jones, R.J., Reilly, T.M., Cox, M.Z. and Cole, B.M., 2017. Gender makes a difference: Investigating consumer purchasing behavior and attitudes toward corporate social responsibility policies. Corporate Social Responsibility and Environmental Management, 24(2), pp.133-144.

Kogut, B., Colomer, J. and Belinky, M., 2014. Structural equality at the top of the corporation: Mandated quotas for women directors. Strategic Management Journal, 35(6), pp.891-902.

Leipziger, D., 2015. The corporate responsibility code book. Greenleaf Publishing.

Razavi, S., 2014. The OECD’s Closing the Gender Gap: Act Now, 2012. Global Social Policy, 14(1), pp.141-144.

Roberts, A., 2015. The Political Economy of “Transnational Business Feminism” problematizing the corporate-led gender equality agenda. International Feminist Journal of Politics, 17(2), pp.209-231.

Starbuck, W.H., 2014. Why corporate governance deserves serious and creative thought. The Academy of Management Perspectives, 28(1), pp.15-21.

Terjesen, S., Aguilera, R.V. and Lorenz, R., 2015. Legislating a woman’s seat on the board: Institutional factors driving gender quotas for boards of directors. Journal of Business Ethics, 128(2), pp.233-251.

Tricker, R.B. and Tricker, R.I., 2015. Corporate governance: Principles, policies, and practices. Oxford University Press, USA.

Triegaardt, J., 2014. Pursuing a social development agenda in the context of globalisation: a South African perspective. Social Work/Maatskaplike Werk, 45(1).