Leave quotas out of women's boardroom path

ON International Women's Day each year, the normal suspects issue their press releases, noting the disadvantages that women face in the workforce, the lack of any real progress and the need for urgent action.

It is invariably a case of the glass being half empty: the fact that most female workers record high levels of satisfaction with their working lives seems to be quite irrelevant to the argument.

A number of indicators of this supposed discrimination against women are listed, including the persistent earnings gap between men and women and the low representation of women in senior executive positions and at the board level.

This year our Governor-General has got in on the act, arguing publicly for quotas for women on company boards.

She has said: "One of the things that is being discussed in Australia now is whether or not there should be quotas for the representation of women on boards, and there are women who support that and there are others who don't. I believe in certain circumstances quotas are a valid measure."

She went on to note that quotas may "sound like a very radical notion, but it's not".

Perhaps realising that she had overstepped the mark by giving such specific policy advice the government must intervene to ensure a given quota of women on company boards she backtracked somewhat by saying she was really only talking about affirmative action measures and the need to set targets.

But of course some things, once said, cannot be unsaid. In any case, the Governor-General is not alone in her advocacy of quotas for women on boards.

Even shadow treasurer Joe Hockey has declared his support for a 30 per cent quota in the absence of sufficient progress by corporate Australia. And this from a member of a party that ostensibly believes in free enterprise.

The key question in this debate is the role of the government in promulgating corporate regulation that goes beyond ensuring that actual and potential investors in listed companies are properly and equally informed.

All company directors agree that some regulations are needed to enable the secondary trade in company shares to operate efficiently and fairly.

But the notion that the government should be telling companies how many females should sit on their boards extends way beyond any sensible boundary of corporate regulation.

But females make better directors, it is said. And companies with more female directors perform better than those with few or none. Surely these propositions add weight to the case for quotas?

The truth is that careful research is unable to establish the truth of these assertions and there is every possibility that the causation runs the other way.

It is high-performing companies that feel they can afford to appoint more female directors, perhaps some relatively inexperienced, rather than more females leading to superior performance.

While there is doubtless some support for quotas among some female directors, many others object to the confusion that would arise should their appointments be seen as filling a quota rather than being made on the basis of merit.

Their argument is that feminism is about the equal treatment of men and women, not the elimination of merit-based appointments. I fit into this camp.

There is also a strange fixation in this debate about representation at the board level. After all, it's the managers who actually run companies. If power and influence are the real concerns, then the low representation of women in senior management positions is much more significant than in board positions.

My assessment is that the impediments to women taking on senior executive positions are much greater than is the case for directorships.

Many of these senior roles are inevitably 24/7 and are simply incompatible with rearing small children.

Some women look through that glass ceiling and conclude that it is not for them.

Of course, management structures in most companies are pyramidal and there are relatively few senior executive jobs.

So only a relatively few ambitious women are needed to improve the representation of women at the top.

Companies are well-advised to identify and remove any unnecessary barriers to female participation in senior roles.

But they don't need the government either to tell them to do so or, worse, to regulate outcomes.

Judith Sloan is an economist and company director.