Over the years, I have spoken with many CEOs, and more than once they mentioned their boards are not as useful as they would like.
They often felt they did not get the array of different views and opinions to help make decisions they would like. That could be put down by the fact then when people select others to join a group they usually pick people who are similar to them to ensure that they get along. When the chairman is a 50-65 year old white male he will have an unconscious bias to pick 50 to 65-year-old males to be on his board, which can result in the CEO pretty much only has one relationship with the chairman (as all the other board members usually agree with his thoughts) and misses out on the value and array of opinions that a board is meant to provide.
I was originally going to write this about the gender diversity problems in Australian business, but thinking about it I decided there’s a much bigger problem, and it’s this:
There is clear inequality at the top in Australia. Old white men between 50 and 65 years of age make up less than 10% of the population but take up most of the senior positions in Australia.
This ultimately means that they are making most of the decisions which determine the direction that our country is moving forward.
I want people to realise that this means we are constantly discriminating against women, against Gen Y and Gen X, and also people from Asian backgrounds, even those these demographic groups make up the majority of Australia.
We are discriminating against everything besides 50 -65 year old white males!
Let me provide some supporting evidence:
Approximately 70% of ASX companies board positions are held by males over the age of 50, with the average age being 60.
Across Australia, women continue to be significantly under-represented in parliament and executive government, comprising less than one-third of all parliamentarians and one-fifth of all ministers. A report from DCA highlighted.
In ASX 200 companies, only 1.9% of executives have Asian cultural origins, compared to 9.6% of the Australian community. If you happen to be a female from an Asian cultural origin there is little hope for you at the moment getting a board position.
If there was ever a reason to highlight that we have a problem, it would be right now where we have clear lack of leadership and smart decision-making capability in a lot of companies, political parties and organisations.
I believe this can be attributed to everyone being focused on protecting their own positions, and not willing to go out on a limb to suggest we need to make some radical changes on how we are forming the leadership positions of Australia.
At the Q&A panel in Melbourne for the B Corporation, one of the panelists was Carol Schwartz. Carol is a leader that I have utmost respect for and she brought up the topic of gender diversity on boards and how the only person who ever brings it up as a problem is the female on the board.
Unfortunately this can often come across that the “token” female is just complaining. What is even worse is that on most boards where there are no women at all, the issue of gender diversity doesn’t get brought up at all because it either is not in the 60 year old males’ thoughts, or if it is, they are too scared to bring it up in case they get criticised by their fellow board members.
The unfortunate by product of this is that we often not getting the full potential out of these minorities because when a person feels intimidated, their brain’s threat response is activated which inhibits their performance.
By way of disclosure I am member of some organisations that are male-only. I believe it is fine for these to occur as it is just like being part of any group of people with similar interests. (My wife, Sarah Riegelhuth, also does things with only her gender at certain times.) The key difference is that these groups are not making the key decisions for our country’s future. I am aware that these can contribute to women getting neglected from certain conversations, but I find that in the younger members of these organisations this is not a problem because we have been brought up with diversity and understand the importance of it.
So what needs to happen? Rather than each of the minority groups focusing on fighting their own fight, they all need to come together in one unified voice and highlight the major imbalance of the diversity in leadership positions and demand Australia fixes this inequality. It is also time that the Men in Australia who also share similar views need to start standing up for what is right and leading the charge.
If you need some inspiration just listen to the recent speech by Emma Watson or read Sheryl Sandberg’s book “Lean In.”
Why should anything change?
Financial incentives can often stimulate change. According to the DCA report, publicly traded companies in the top quartile of executive and board diversity have returns on equity that are, on average, 53 per cent higher than companies in the bottom quartile.
A recent project conducted by researches from MIT, Carnegie Mellon, and Union College discovered that the higher proportion of women in a group the smarter that group became. Sometimes you need to experience something to believe it and I have now seen this first hand in my company Wealth Enhancers.
We have always had a high percentage of women in the team until the start of this year where for the first time we actually had more males than females. I saw our performance drop, our culture change and surprisingly our “gossiping & bitchiness increase.” I am glad to say that we are now 80% women again and we have just finished an amazing team planning retreat and I have never felt more confident about our team.
By writing this, I know I am setting myself up to a lot of criticism from the “old white male” demographic, a lot of these who are clients, mentors and fellow members in organisations that I am involved with. I want to make it clear though that the outcome I want from this article is not to offend these people rather make them aware that there is a problem and to start taking action.
It is interesting that most of these “old white men”, who I respect and have had conversations with about this topic, actually agree that there is a problem and have no problem with it changing, however, unfortunately change is not occurring quickly enough.
To the others, I apologise in advance if I have offended you but I think it is time to start looking at the demographics of the country, the amazing achievements of people who are young or a female or from diverse ethnic backgrounds and realise that things need to change.
I know that one day that I am going to be one of these “old white males” and I want to ensure that by the time this occurs we have changed the culture and eliminated any unconscious bias.
* Finn Kelly is the CEO and co-founder of award-winning Gen Y financial advisory firm, Wealth Enhancers, along with the parent company, premier private wealth management firm, WE Private.
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