Boardrooms still a risky business for most women

December 14, 2011

West Australian, Page: 19
By Shane Wright
Monday, 12 December 2011


year the nine-member board will for the first time be one-third female. While in some areas there is rejoicing that one-third of the Reserve’s board is to be female, the gender difference is still very wide.

First, a few facts.

Last I checked women make up just a tad over 50 per cent of the population.

When Australian Industry Group chief executive Heather Ridout takes up her post on the board of the Reserve Bank next year she will join an exclusive club.

Just 61 people have sat on the board of the nation’s central bank since its inception in its current shape in 1960.

But Ms Ridout will join an even more exclusive club as just the fourth woman on the Reserve board.

The first was Janet Holmes a Court who received a five-year posting from treasurer John Dawkins in 1992.

In 1998 Peter Costello appointed Jillian Broadbent while more recently Wayne Swan has appointed Catherine Tanna and now Mrs Ridout to the banking inner sanctum.

When Ms Ridout takes up her post, ostensibly replacing BlueScope Steel chairman Graeme Kraehe, in February next

According to the latest Equal Opportunity for Women in the Workplace Agency study, women make up about 45 per cent of the workforce.

However, just 2.5 per cent of the chair positions of S&P-ASX 200 listed companies are filled by women, just 3 per cent of those companies have female chief executives, while 8 per cent of key management positions are filled by women.

Staggeringly, 54 per cent of ASX 200 companies don’t have one woman on their board.

There is a huge range of reasons for this absence of women from the nation’s businesses.

And I am in no way advocating forcing companies to put women into positions as some sort of quota (I’ll leave that to the Emily’s List crowd with the ALP).

Ultimately, ability and merit should be the driving forces for who sits in the boardrooms of Australia.

It is very difficult to argue with a straight face that if almost 50 per cent of the workforce is female but just 2.5 of every 100 of them make it all the way to the boardroom that it is solely a merit issue.

So how as a society do we think about making the best use of the potential business people out there? There is an increasing body of work in this field in a bid to pick up the reasons why women are so poorly represented in the business world.

Last month, three Australian and British academics released a paper on whether single-sex environments affect risk aversion between men and women.

Risk aversion is a key issue in the business world. and on that count men are much more prepared to take a risk than women.

The ability to take on risk is richly rewarded in business (although, given the events of recent years, perhaps a little less risk would have been better for all of us).

According to the three academics, much of the current academic research suggests innate differences between men and women account for their different attitude towards risk aversion, competition and feedback (be it from people or pay cheques).

"If women are more risk-averse than men, and if much of the remuneration in high-paying jobs consists of bonuses linked to a company’s performance, relatively fewer women will choose high-paying jobs because of the uncertainty," they said.

What Alison Booth, Lina Cardona Sosa and Patrick Nolen found, then, is quite interesting.

They used as their guinea pigs a group of first-year economics students attending the University of Essex in Britain.

Students were randomly assigned to three distinct classes; all female, all male and a co-educational group.

At the start of the year each student was put through what was termed as a "real-stake lottery".

People were offered a variety of increasingly risky ways to get 20.

If a person was prepared to take the risk level up to 50:50 then they had a chance of winning much more. And also of losing more.

It’s a common way of testing risk aversion, especially with the addition of real money to ensure there is chance of people being materially better or relatively worse off In this case, the three classes were given the test at the start of their year and then eight weeks later.

The work did confirm one key point: at all levels women are significantly less likely to take risks for a high reward than men.

But the study did find that women in the all-female class increased their propensity to take risks.

After just eight weeks of sitting with their female friends, these women were more likely to take a risk that could deliver them slightly more cash than their female friends in the co-education economics class.

Professor Booth, from the Australian National University, said there were serious issues at play from the study "They show that risk-taking behaviour is not necessarily innate it can be affected by the environment in which the individual is placed," she said.

"Given that risk attitudes can be shaped by the environment, changing the educational or training context could help address under-representation of women in certain areas." Professor Booth argued even women who do well in the world of business might benefit from an upbringing with more females around them.

"Women, even those endowed with an intrinsic propensity to make riskier choices, may be discouraged from doing so because they are inhibited by culturally-driven norms and beliefs about the appropriate mode of female behaviour-avoiding risk," she said.

"But once they are placed in an all-female environment, this inhibition is reduced." There has been a great deal of research into the benefits or otherwise of girls learning in single-sex schools.

But changed behaviour for success in the business world is another thing.

It’s an issue that business operators themselves need to spend more time thinking about, otherwise they will continue to deny themselves the insights that would come from a large proportion of their workforces.

We are still a long way from the day when a female Reserve Bank governor has to deal with an all-female board and then ring the female treasurer about their latest interest rate decision.