A new study by researchers from UTS and the University of Alberta finds that while the number of women on ASX 200 company boards has increased, their power and influence has not yet improved relative to male board directors.
Examining the social structures of corporate board membership allowed the researchers to see how power is distributed within the network. Photo: AdobeStock
More women on boards should mean a greater diversity of skills, experiences, opinions and strategies, and therefore better governance of Australia’s top companies.
However, it’s also important to ensure they have the necessary power and influence to make a difference, said research co-author Professor Deb Verhoeven, Canada 150 research chair in gender and cultural informatics at the University of Alberta.
“It seems obvious to propose that when there are so few women and gender minorities, then the simplest solution is to just add more. As a one-size fits all strategy this is an elegant solution to inequality in any number of industries.
“But we wanted to know whether this really is the best measure of progress. Especially when change has been so incremental and slow. What if ‘just add women and stir’ is a misguided strategy, perhaps even a form of ‘fig-leaf feminism’ designed to cover up an underlying attachment to ‘business as usual’?”
The study, recently published in the journal Applied Network Science, used social network analysis to examine professional networks of more than 2,300 directors with seats on ASX 200 company boards.
UTS Professor Katarzyna Musial, a co-author of the study and an expert in network science, said: “Complex network analysis focuses on relationships between entities and is a very powerful tool that enables to understand position, role and importance of nodes by examining not only characteristics of the nodes but also level and character of their connections. This is why this approach is applicable in the scenario of network of board members.”
What if ‘just add women and stir’ is a misguided strategy, perhaps even a form of ‘fig-leaf feminism’ designed to cover up an attachment to business as usual?
Professor Deb Verhoeven
UTS senior lecturer in finance Dr Gerhard Hambusch, also a co-author, said that by examining the social structures of corporate board membership, they could see how complex networks of relationships function and how power is distributed within the network at different scales.
“We analysed the ASX 200 director networks by looking at the levels of local and global power of each director. In other words, we determined how central directors are in their local networks consisting of immediate board connections and in the global network consisting of all ASX 200 company directors. This showed that while the number of men on boards decreased during the period 2015-2018, they held relatively greater power,” Dr Hambusch said.
The findings explain the small number of women Chairs and CEOs on ASX 200 boards. For example, no women CEOs were appointed to ASX 200 companies in 2021.
The growing number of board seats held by women is also not currently matched by a parallel increase in the number of women appointed to ASX 200 boards.
“What this means is that a select group of women has membership on multiple boards, inflating the perception of the scale of women’s presence in board networks. For example, 93 out of 298 women were on two or more ASX 200 boards in 2018,” Dr Hambusch said.
Reaching a numerical target is only one of many steps towards meaningful and substantive equity, diversity and inclusion for all women. Co-author and UTS senior lecturer in Accounting Dr Samir Ghannam said it is essential for directors to have a certain level of authority to perform their two main functions, which are monitoring and advising management. Therefore, women's representation without agency and power is ultimately not a successful outcome.
We analysed the ASX 200 director networks by looking at the levels of local and global power of each director … while the number of men on boards decreased during the period 2015-2018, they held relatively greater power.
Dr Gerhard Hambusch
The researchers said current appointment practices require rethinking the existing leadership pipeline to better recognise women’s career trajectories.
In 2020, 96 per cent of CEO appointments came from line roles, of which women held only 12 per cent, with no change over the preceding two years.
“Setting statistical targets as the only measure of equality is not enough,” said Professor Verhoeven.
“Are we arguing against quotas? Not at all. We are suggesting reform is needed at various levels. The appointment of women and gender minorities to boards needs to occur in ways that ensure they hold substantive positions and are not just statistical tokens. And then, we need to hold firms accountable to their gender equity, diversity and inclusion claims, by measuring changes to the overall influence of men in these corporate board networks and not just adding up the total numbers of women and gender minorities.”
The study Net effects: examining strategies for women’s inclusion and influence in ASX200 company boards is published by Applied Network Science.