The report ‘Diversity on boards of directors’ – released today by the Corporations and Markets Advisory Committee (CAMAC) – offers considered and sensible analysis of the questions posed by former Minister for Superannuation and Corporate Law, Senator Nick Sherry, according to the organisation that is dedicated to making a difference in the quality of governance and directorship.
The Australian Institute of Company Directors (AICD) endorses CAMAC’s recommendation that boards should “take a more open approach to board selection” and regularly review their composition as part of a formal process of evaluating the effectiveness of the board.
Responding to the report, AICD said it shared a similar view on board diversity to CAMAC. In particular, AICD notes the following important points in CAMAC’s conclusion on page 35 of the report:
- “what counts is a studied approach to the constitution of a governing board”;
- “it is not a case of diversity at all costs; there need to be some common purpose and ability to work together”;
- the “mix of directors is a matter for consideration by each company in the context of its own business and needs”;
- the composition of company boards “is a matter for the constituent members or shareholders of that body”;
- the use of a gender model of diversity (i.e. quotas) is problematic, as it unlikely to advance the goal of good governance and corporate success.
John Colvin FAICD, Chief Executive Officer of AICD, said all boards should seek to appoint the best possible directors so as to achieve the best possible performance and that this necessitated identifying a diverse range of candidates.
“Listed company boards seek directors who are proven performers, able to add value to the collective skill-set and contribute to effective board governance,” Mr Colvin said.
“One of the challenges in introducing new non-executive directors to top listed company boards is the need for candidates to demonstrate that they have required competencies.
“It is very difficult for directors to serve an ‘apprenticeship’ on a listed company board given the expectations of shareholders and the legal responsibilities and liabilities that come with the role,” he said.
Skills development
AICD believes that there is more work to be done to ensure women have the necessary experience to attain top management roles in listed companies and to develop board experience in the public sector or unlisted companies such as not-for-profits.
In line with CAMAC’s recommendations, AICD encourages boards to drive generational change by shaping an organisational culture within their companies that supports ongoing career development for women.
Dr Ken Moss AM FAICD, Chairman of Boral and Centennial Coal, said he supported the concept of diversity in board appointments and had seen programs effectively develop the skills necessary for executive leadership.
“Such programs help enormously in creating a stream of appropriately qualified women, who are well equipped with the skills and experience needed for the complex decisions made around the board tables of publicly listed companies,” Dr Moss said.
ASX Corporate Governance Principles recommendation
AICD supports CAMAC’s recommendation for further consideration of potential refinements to the ASX Corporate Governance Council’s Corporate Governance Principles, “Structure of the board to add value”, as one method to encourage boards to more closely consider diversity, including gender, backgrounds, skills, experience and perspectives.
AICD also welcomes the opportunity to work constructively with the Federal and State Governments, as well as a range of other organisations, to identify additional options for improving diversity in board appointments.
Personal liability of directors
The CAMAC report also recognises the message from the survey released by Senator Nick Sherry in December 2008 regarding the impact of the personal liability of directors on board recruitment. AICD welcomes CAMAC’s reiteration of the importance of removing undue burden on directors.
Initiatives supporting aspiring female directors
AICD is a sponsor of the upcoming 2nd Diversity on Boards Conference, and John Colvin will participate in the program. It has also been involved in range of initiatives, directly and with other organisations, to support aspiring female directors including scholarships, sponsorships, briefings and publication of articles within Company Director.
To download and print the PDF, click here
Media Contacts:
Steve Burrell, General Manager Communications and Public Affairs
(02) 8248 6627 or 0407 708 485
Juliet Chandler, Communications Advisor
(02) 8248 6624 or 0412 580 402
Australian Institute of Company Directors (AICD) provides education, information and advocacy for company directors Australia-wide, with offices in each state to cater for over 24,000 members. AICD members work in diverse corporations such as small-to-medium enterprises, the ASX Top 200 corporations, public sector organisations, not-for-profit companies, large private companies and smaller private family concerns.