Diversity in the Boardroom | FTI Consulting

Diversity in the Boardroom

Corporate Finance & Restructuring

September 24, 2018


It seems we can’t pick up a paper today without at least one article talking about diversity on boards, whether it be challenging the lack of diversity or the push to achieve certain targets for better gender representation.

But diversity is so much more than just gender diversity. Australia is the most ethnically diverse country in the world with over 26% of Australians being born overseas and at least 49% of Australians having at least one parent born overseas.

In addition to this 73.1% of Australians are under the age of 54. So why then are so many boards comprised of white males over the age of 55? A quick profile of ASX 200 boards shows:

  • 27% of ASX200 board members are female;
  • 80% of all male board members are over the age of 60; and
  • Only 4% of ASX200 boards had Asian representation according to the 2013 Diversity Council of Australia study.

Boards of directors are there to represent the stakeholders and guide strategy. They should therefore be representative of the constituents/stakeholders.

The argument has been put forward more recently that Australia just does not have suitably qualified diverse candidates for board roles. The lack of qualified female director’s argument was put forward by many commentators with regards to the AMP board after the stepping down of the female directors including the chairman. I find this argument naïve in the extreme and very unhelpful. Any board should look to have a diverse range of experience to deal with the complexities in today’s world. With change and development taking place at such a rapid rate it is more important than ever that boards avoid the “group think” mentality.

Therefore, having a boardroom full of people with the same background and experiences is less likely to deliver diversity of thought.

So why have a diverse board, what does it add to an organisation?

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