Corporate Governance For Board Gender Diversity: Importance, Benefits And Recommendations

Corporate Governance : Board Gender Diversity

Gender Diversity

Describe about the Corporate Governance for Board Gender Diversity.

The aim of this report is to develop the understanding of requirement of the gender diversity in the coroporate governance of the listed organizations in the Australian stock exchange (ASX) and the estimation of the women ratio in the ASX 200 board members. At the same time, this report focuses on the gender diversity issues to meet out the women criteria in the board organization. Along with this, this report also focuses on providing the different evidence to enhance the business performance in the context of the gender diversity. On the other hand, this report identifies the business areas through gender diversity. Finally, this report provides some recommendation to initiate the gender diversity policy for the organization’s board. 

Gender diversity means the company demonstrates the men and women are in equal or good percentage. In the other words, generally gender diversity in the board represents both the male and female members in the organization (Nanda, 2014). Gender diversity increases the awareness in the context of the different genders.

Gender diversity is a major issue for the top level management organizations as they are many organisations whose board members have mostly comprises of men only. At the same time, some of few Australian firms give priority to the women at top level management board such as Harvey Norman, ingeus, and Carman’s Fine Foods (Kumar and Zattoni, 2016). But, in currently, 95% top level persons in Australian firms are men.Currently, 23.4% women are working in the top level management in the ASX 200. However, still, no woman is representing in the ASX 200 top 20 boards. As a result, it can be said that Australia ASX 200 boards are not able to meet the 30% criteria of women in the top board. In addition, in ASX 200, 93% (185 companies) companies have a policy of gender diversity for women on board.

Above diagram indicates the women directorships in the Australian stock exchange ASX 200, therefore, there are 23.4% women’s are working in the board organization.

There are different benefits of gender diversity in the organization such as gender diversity enhances the reputation of the firm that will impact the organization performance. Along with this, gender diversity is effective for a listed ASX organization because gender diversity develops and help in bringing innovation in the new technology through knowledge and skills of different genders, which is quite helpful to increase the productivity of the firm.  On the other hand, on the basis of gender diversity, different viewpoints of men and women are available to solve the organization problems. Simultaneously, on the basis of gender diversity company can easily increase their customer base size.

Issues in Gender Diversity

Furthermore, the large scale of female participation in the organization would increase the share price of the firm. Consequently, more investors would be attracted towards the firm, which increases the confidence of the firm (Richard, et al., 2013). At the same time, female directorship can increase the effectiveness of the corporate governance of the firm because of female employee more aware the social dynamics and human issues. Simultaneously, a female director is helpful for the organization because it enhances the strategic pools of the organization and improving intra-Australian board communication.

Telstra Telecomm Australian Company has adopted a gender diversity strategy of 50% males and females in the board organization, which is helpful to enhance the company performance. Telstra is the largest telecom company in the Australia and won the women business award in 2015.  On the other hand, Facebook also adopted a little bit gender diversity policy because company appoints the Sheryl sandberg in the board because she was the successful female entrepreneur, while she joined the Facebook board the user base of the Facebook increased 10 times and she improved the technology sector of the company. Consequently, the company has valued $100 billion which is half GDP of the Nigeria (Hoogendoorn, et al., 2013). Besides this, Google is also adopted the gender diversity policy consequently, company appoints the Susan Wojcicki as a CEO of the YouTube in Google and her decision is effective for the company growth. Along with this, she provides the effective profitable ideas to the Google, which is quite helpful to enhance the feasibility of the firm. Simultaneously, she is powerful in advertising sector and her efforts increase the Google advertising revenue i.e. $43 billion (Marinova, et al., 2015).

In addition, Reynolds American water also adopted the gender diversity policy. Consequently, company is selected the Susan M. Cameron. She takes the effective strategic decision towards the company that was quite helpful to increase the reputation of the firm in the tobacco sector. This firm appreciates the gender diversity and provides the financial rewards on the basis of her effective performance. While the Susan M. Cameron improves the competitive advantage of the company and her efforts in the company strategic decision to accomplish the objectives.

Apart from this, many of the firms have inequality gender diversity because companies may think women are not capable of doing work at top level management. Such originations may face the problem of communication barriers, cultural resistance, discrimination, which has impact upon the company performance. Moreover, without gender diversity policy in the firm decreases the share prices of the firm and their investor due to gender discrimination.

Benefits of Gender Diversity

Although this topic is being selected for this report because in the current environment, gender diversity has positive impacts on the company performance and it corporate governance (Hoogendoorn, et al., 2013).  Along with this, gender diversity increases the feasibility of the firm.

Corporate governance council (CGC) of Australia has issued the various recommendations for all the listed entities in the Australian stock exchange in the context to the gender diversity. The Australian Institute of Company Directors has issued the guidelines to all the Organizations who have listed in the ASX should disclose the men and women proportion ratio in the board organization. Along with this, company should enclose how it identifies the senior executive positions in the board as to know and encourage the gender diversity.  Besides this, ASX recommends that every organization should disclose their corporate governance report in the Australian stock exchange to know the gender diversity objectives and to know the role of women employees in the board of the organization (Vafaei, et al., 2015). In spite of this, The Australian Institute of Company Directors (AICD) should recommend to all the organizations to make a policy related to gender diversity as including measurable aim which is helpful to establish the effective relationship with investors. As a consequence, AICD aims to provide the transparency in the organizations as to encourage the organizations to increase women participation in the senior roles. 

Conclusion

From the above report, it can be summarized that every organization needs to develop the policy of gender diversity ratio of men and women in the top level management, which is helpful to raise the business productivity among the shareholders in the market. Meanwhile, ASX 200 can achieve the target of 30% women in the board at the end of 2018 due to effective gender diversity policy (Richard, et al., 2013). At the same time, this report examines the organization can raise their investor’s relations and feasibility on the basis of gender diversity policy.

Introduction

Whistleblowers policy is the essential part of corporate governance that is made by the company.

This report discusses the best-practice contemporary standards for whistleblower policies which, are suggested by the federal and state government. This report also presents the legislation that is made for whistleblowers in the Australia. This report also discusses the objectives, requirements and eligibility criteria for public sector and private sector’s whistleblowers. In the last, this report presents the recommendation for listed companies on the Australia stock exchange.    

Business Performance Evidence of the Gender Diversity

Whistleblower

Whistleblower is a person who represents any kind of business information and activity that is deemed illegal, unethical, and wrong within an organization. They could be both in private or public sectors. The Business information that is suspected wrong generally includes infringement of business policy and rules, law, regulation, and risk to public interest and national protection (ASIC, 2016). Other unlawful activities are fraud and corruption. Whistleblowers select the sources to get information and represent it either internally or externally. Internally, the whistleblower can pass their accusation to those people who work within the accused organization. On the other side, externally, the whistleblower may bring an accusation to the third parties who are outside of the accused organization.     

The Public Sector

In 2002, the Australian government had committed to provide the best-practice legislation to persuade and protect public interest disclosure within the administration. These Australian whistleblower protection rules are moderately wide-ranging for the public sector. Further, federal and state legislation covers all jurisdictions with the intention to ensure reliability and responsibility in the public sector (Harris, et al., 2015). Following are several acts that are constituted by the Federal and State government to protect the Whistleblowers public interest:

Whistleblowers Protection Act 1993, (South Australia), Whistleblowers Protection Act 1994, (Queensland), Public Interest Disclosures Act 1994, (New South Wales), Public Interest Disclosure Act 2012, (Australian Capital Territory), Public Interest Disclosure Act 2013, (Commonwealth), Protected Disclosure Act 2012, (Victoria), Public Interest Disclosures Act 2002, (Tasmania), Public Interest Disclosure Act 2003, (Western Australia), Public Interest Disclosure Act 2008, (Northern Territory) (ASIC, 2016).

Objectives

The main objective to make the laws is to provide the security to the whistleblower. Security indicates that report on unlawful activity. Another objective is to provide appropriate protection for those people who make these kinds of reports. Further, these laws are effective to provide the structure that correctly deals with the reported matters (Weimer and Vining, 2015). These laws are beneficial to provide protection to whistleblowers such as, to protect against the unfair treatment and to suffer any detriment.

Shortcomings

 The reportable illegal behavior is unclear and differs among the jurisdictions. Furthermore, unidentified grievances are not always protected by the jurisdictions. In addition to this, it is not clear, which government will protect to whistleblower and what ways will be used to provide protection. The responsibility on the agencies differs and is also unclear (Shukla and Limbasiya, 2015). In addition to this, the nonexistence of supervision agency creates difficulty in protecting the whistleblower.

Recommendation of the Australian Stock Exchange

The Private Sector

For the private sector, legislative protection is significantly weaker. Because the primary provisions are contained in the federal corporation act 2004 that only cover the whistleblower reporting breaches of the Corporation Act and the ASIC Act. According to the part 9.4AAA Section 1317 AA-AE, a person is protected as the whistleblower if they have a distinct position like an officer of the company, workforces of the company, a contractor and human resources who have contracted to supply goods and services to the firm (Whistleblowing Solution, 2016). The Corporations Act prohibits retaliation against the whistleblower and grants them a civil rights such as looking for replacement of employment. 

Eligibility for the whistleblower

The person who has a sound track record and do not involve in any civil and criminal proceedings in past. In addition to this, any contractual liabilities and remedies should not be imposed on the whistleblower (Ion, et al., 2015). It means that secrecy provisions in any employment contracts will not disqualify the process of whistleblowing.      

 Note: The Corporations Act unable to present that the person is not involved in civil or criminal subject matter, and is also unable to determine the behavior of a person that is exposed by the disclosure.

Position of whistleblower’s

Whistleblowers provide the protection so; they must be in a top level position within the organization. They must be part of ASIC or the auditor of the company or the staff member of the audit team that conducts the audit of the company. In addition to this, the whistleblower must be appointed as the director, secretary and senior manager of the company (Taiwo, 2015). Further, they must be authorized by the company to receive disclosure.

Requirements for whistleblower

To prompt the provisions of the Corporations Act, the discloser must act in good faith. They must give their name before representing the whistleblowing activities. Whistleblowers have reasonable justification to suspect that the information that they will represent is related with company or an officer or workers (Brough, et al., 2015). Further, they cannot breach the provision of the Corporations legislation such as Corporations Act and the ASIC Act. The Whistleblower Program (AS 8004-2003) is executed in the private sector to provide the key requirements for the whistleblowing framework (Yeoh, 2015). Further, Confidentiality, secrecy, and protection are also included in this program.

Conclusion

From the above interpretation, it is concluded that whistleblower is the person that represents any kind of business information with insider and outsider of the organization. It is also summarized that they engage in two sectors that are private and public sectors. Further, there are different best-practices contemporary standards for whistleblower policies that made by the federal and state government to protect the whistleblowers. It is also concluded that whistleblower appointed in top level position within the company and they have right to disclose the unlawful activities and code of conduct internally and externally.

Conclusion

In 2003, corporate governance council of the Australian Stock Exchange (ASX) has issued the principle of corporate governance and best practice recommendation. Companies that are listed on the Australian Stock Exchange (ASX) should establish the code of conduct for directors and senior executives so that they can trade fairly (Zadek, er al., 2013). In addition to this, the company should foster and encourage the whistleblowing by the employees so that any misleading activity can be identified.

In 2007, the Corporate Governance Council of ASX has undertaken the extensive review where it suggested that company should identify the actions that are followed by the management to encourage the reporting of unlawful or unethical behavior. In addition to this, the company should actively promote the ethical behavior within the organization for more transparency. Moreover, the company should protect the whistleblowers that report against the violation in the good faith (Parsons, 2016). The company should also protect its procedures that deal with these types of subject matters.

References

ASIC (2016) Whistleblowers-company officeholder obligations. [Online]. Available at: https://asic.gov.au/for-business/running-a-company/company-officeholder-duties/whistleblowers-company-officeholder-obligations/ (Assessed: 10 September 2016).

Brough, P., Brown, J. M., and Biggs, A. (2015) Improving criminal justice workplaces: Translating theory and research into evidence-based practice(Vol. 32). UK: Routledge.

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Ion, R., Smith, K., Nimmo, S., Rice, A. M., and McMillan, L. (2015) ‘Factors influencing student nurse decisions to report poor practice witnessed while on placement’, Nurse education today, 35(7), pp. 900-905.

Parsons, P. J. (2016) Ethics in public relations: A guide to best practice. UK: Kogan Page Publishers.

Shukla, H., and Limbasiya, N. (2015) ‘Board EffEctivEnEss: an Evaluation BasEd on corporatE GovErnancE scorE’, International Journal of Business Ethics in Developing Economies, 4(1) pp. 40-48.

Taiwo, S. F. (2015) ‘Effects of Whistle Blowing Practices on Organizational Performance in the Nigerian Public Sector: Empirical Facts from selected Local Government in Lagos and Ogun State’, Journal of Marketing and Management, 6(1), p. 41.

Weimer, D. L., and Vining, A. R. (2015) Policy analysis: Concepts and practice. UK: Routledge.

Whistleblowing Solution (2016) Australian Whistleblower Legislation. [Online]. Available at: https://www.whistleblowing.com.au/learn/whistleblowing/whistleblowing-legislation/  (Assessed: 10 September 2016).

Yeoh, P. (2015) ‘Whistleblowing laws: Before and after Sarbanes–Oxley’, International Journal of Disclosure and Governance, 12(3), pp. 254-273.

Zadek, S., Evans, R., and Pruzan, P. (2013) Building corporate accountability: Emerging practice in social and ethical accounting and auditing. UK: Routledge.

Hoogendoorn, S., Oosterbeek, H. and Van Praag, M. (2013) The impact of gender diversity on the performance of business teams: Evidence from a field experiment, Management Science, 59(7), pp. 1514-1528.

Kumar, P. and Zattoni, A. (2016) Corporate Governance, Board Gender Diversity and Firm Performance. Corporate Governance: An International Review, 24(4), pp. 388-389.

Marinova, J., Plantenga, J. and Remery, C. (2015) Gender diversity and firm performance: Evidence from Dutch and Danish boardrooms, The International Journal of Human Resource Management, pp. 1-14.

Nanda, S. (2014) Gender diversity: Crosscultural variations. USA: Waveland Press.

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Vafaei, A., Ahmed, K. and Mather, P. (2015) Board Diversity and Financial Performance in the Top 500 Australian Firms. Australian Accounting Review, 25(4), pp. 413-427.