Genter is right: Old white men should step aside

McKinsey research finds companies with more diverse boards make more money.

With regard to the recent comments made by Women’s Minister Julie Anne Genter that “old white men need to move on” from company boards to help close the gender pay gap:

I am one of those older white men and, while I could feign offence and label her comments as ageist, racist and sexist, I actually find myself agreeing with the minister.

I also believe encouraging greater diversity on company boards would bring with it additional benefits that are less susceptible to emotionally and politically charged debate than the matter of closing the gender pay gap.

Diversity = more profit
McKinsey cites many years of research that show companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their respective national industry medians.

Of course, there are exceptions and it is not as simple as enforcing diversity quotas and expecting leaps in performance.

But at a macro level, the numbers are convincing.

With technology changing so fast and disrupting even “traditional” industries like retail and energy generation and storage, it is hard to argue that a board almost entirely composed of ageing lawyers and accountants is best placed to navigate the future on behalf of shareholders.

While there will always be a need for wise counsel from experienced legal and financial minds, much vital knowledge and experience will come from younger people with backgrounds in computer science, engineering, biotech and other yet-to-be-invented fields.

Add to the mix the fact the world is becoming smaller, New Zealand is increasingly ethnically diverse and, back to Minister Genter’s sphere of interest, women are increasingly visible and influential players in all spheres of economic endeavor, and it is difficult to make the case that the status quo in terms of the composition of New Zealand boardrooms is an optimal state of affairs.

Over-representation of lawyers, accountants
A recent article in the NZ Herald by Brian Gaynor highlighted how a significant proportion of the large companies that dominated the New Zealand economy 25 years ago have disappeared. I can’t help but feel an over-representation of lawyers, auditors, and accountants on these companies’ boards has been one of the contributing factors. Many of these directors haven’t actually run a business or even led a function outside the finance or legal department and I would hate to see this state of affairs continue.

So what I am doing about it, apart from surprising a few people who know me by voicing my support for Julie Anne Genter’s somewhat controversially expressed point of view? Despite my lack of traditional credentials, no university degree, let alone one in accounting or law, I was fortunate enough to have a successful and satisfying career at management and board level.

My decades in the corporate world convinced me of the importance of having a breadth of experiences and skills to draw on, particularly at the most senior levels.

However, my experience also showed me how rarely this occurs in a genuine manner at board level. The result so often is a focus on compliance while CEO’s strategies are essentially rubber-stamped.

The Future Directors program
It is for this reason I was motivated to work with Sir Stephen Tindall and Michael Stiassny to create the Future Directors program in 2013.

The explicit aim of this programme is to strengthen New Zealand’s director pool by delivering board diversity, new talent and fresh perspectives. Comments to date from leading companies like Auckland Airport and Fisher & Paykel Healthcare strongly support the notion that appointees who are yet to become “old white men” or may in fact never do so due to their gender or ethnicity, can be a valuable asset on boards.

Of course, just as Ms Genter sees much work to be done on closing the gender pay gap, our work increasing the diversity of boards to improve company and public sector performance is only just beginning.

Only when we see large numbers of our future directors and others of their less-traditional ilk being appointed to full board roles will I feel satisfied. It’s not that I have anything against my fellow “old white men” per se, I just think it’s time a few more of them moved on to free up space around New Zealand’s board tables.

Des Hunt co-launched the Future Directors programme, and is part of the NZ Shareholders Association.

This is supplied content and not commissioned or paid for by NBR.

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