Old School Networks Alive and Well
We like to think that we don’t have a class system in Australia and that we don’t have an elite group of people running the country and our largest most powerful companies, but nothing could be further from the truth.
Its been a while since a major study has been commissioned but about a decade ago a group of researchers analysed Who’s Who in Australia data and started to look closely at senior executives from private school backgrounds, analyzing who was ending up in CEO and Board Director positions. The vast majority of Chief Executives and Board Directors in Australia are from private school backgrounds and to be a little more specific, there are about 10 private boys schools that dominate the leaders board. Quite amazing really when you realise how small and lacking in diversity this private school “talent” pool really is.
Recently, I was mentoring a very high profile IT executives working for a major bank and he was describing his boss in quite unflattering terms and outlined a range of major errors that had occurred in a short period of time resulting in major bank security issues and outages. I jokingly asked how did his boss keep his job, and the response was deadpan. “Kylie, he went to school with the CEO, their kids go to the same schools, their wives are best friends and hence he can do no wrong in his eyes”. School ties are powerful, and you can be easily blindsided in the workplace by not recognizing these deep, significant school and often family connections that exist in every layer of business and in our society.
In the boardroom, the old school network is alive and well; I believe that it is the number one reason holding back women from entering the boardroom in this country. In the UK, the Equality and Human Rights Commission (EHRC) has just released findings acknowledging that old school business networks are at play and are preventing women from securing board appointments in FTSE 100 and FTSE 200 companies. The largest companies in the UK are using personal networks to appoint new board members and the board director roles are for the majority of instances going unadvertised. It is board jobs for the old boys – its a small private elite club and you are naive to think otherwise.
In the UK they are not meeting voluntary targets to achieve gender diversity in the boardrooms and there are clearly major issues here in Australia, with the Australian Institute of Company Directors recently acknowledging that 2018 gender targets will not be met if we continue to track the way that we are.
The EHRC has made recommendations that personal networks should no longer be leveraged when searching for new board members and an independent executive or board search firm should be appointed to handle the search, to bring new talent to the table and address gender diversity issues. This recommendation is a step in the right direction if adopted by FTSE company’s but in Australia this approach alone would not address the issues at play. I have for a long time been highly critical of the limited number of search firms who are engaged to perform ASX200 board search assignments in Australia and we know that the talent pool in Australia has not been proactively refreshed for decades.
The ASX is an unsung hero for aspiring female board directors, the ASX has done more for gender diversity than any other body in Australia and there is strong evidence that their diversity guidelines and reporting measures are starting to kick into effect. I believe the next step is to follow similar recommendations to the EHRC and put into play guidelines for how the board search process is conducted in Australia’s largest companies both private and ASX-listed.
Board appointments should be widely advertised and handled by an independent executive or board search firm; ASX listed companies should have a regularly refreshed panel of at least 3 board search firms and the Principal’s from the board search firms themselves have to play an important role in helping companies to create realistic search criteria to enable female candidates to be considered. Unfortunately what often happens behind the scenes is the criteria is being set to effectively exclude female candidates and there is a ‘wink wink you nod’ approach going on here, where from the get-go there are zero female candidates able to meet the unrealistic criteria.
Why is this happening? Simple answer, board roles are lucrative and powerful appointments and power is difficult to give up.
I have not lost hope, the winds of change are upon us, if we clean up the board search process, start to advertise board positions and break down the old school appointments at least in the ASX200, we are on the way towards better boards, better run companies and diversity of thought, diversity of skills, diversity of culture and diversity of gender. Its time for the next generation of board directors to step up, the baton needs to change hands.
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