Beyond the Pale: Cultural Diversity on ASX 100 Listed Boards

Australia’s population is culturally diverse. The Australian Human Rights Commission (AHRC) recently estimated that:

• 58% of the Australian population has an Anglo-Celtic background
• 18% has a European background
• 21% has a non-European background
• 3% has an Aboriginal or Torres Strait Islander background

The AHRC commented that “according to these estimates, Australia’s cultural diversity has increased over time.”¹

With this breadth of cultural diversity in the workforce and population, it is both troubling and curious that this diversity is not reflected in Australian corporate leadership. Research by the AHRC reveals that men with Anglo-Celtic heritage overwhelmingly dominate the senior executive level of large private sector organisations.²

Specifically, the AHRC’s Blueprint on Cultural Diversity in Leadership (2016) reported that in ASX 200 companies, more than 75% of CEOs are of Anglo-Celtic heritage, 18% have European heritage, 5% are from a non-European background and no CEOs whatsoever have Aboriginal or Torres Strait Islander heritage.³

Similar findings were reflected in the public sector, federal and state parliaments, government ministries, and in the leadership of our universities. The AHRC’s follow-up report Leading for Change (2018) noted that up to 97% of the nearly 2500 executives surveyed had Anglo-Celtic and European backgrounds. In contrast, the report notes that although those with an Indigenous and non-European background account for 24% of the population, these groups comprise only 5% of the senior leadership suite.

Despite almost five decades of Australia’s multicultural policy and a country with one of the most culturally and linguistically diverse populations,⁴ these figures suggest there are factors which inhibit the progression of culturally diverse men and women into senior leadership positions.

In a collaboration between the University of Sydney Business School, the Australian Human Rights Commission and the Australian Institute of Corporate Directors, we sought to uncover three things:

• the barriers surrounding cultural diversity on Australian ASX 100 listed company boards
• the conversations surrounding diversity; generally and specifically cultural diversity on boards
• the experience of culturally diverse board members.

In response to interviews with 18 non-executive directors and chairs of boards and nine representatives from premier executive search firms, we constructed a suite of seven strategies to progress the conversation on cultural diversity on Australian boards.

Strategy 1: Activate supply by developing culturally diverse leaders in the executive team

Senior executive team experience is the training ground for access to boards. There is a serious under-representation of culturally diverse individuals in this strata of Australian business which impacts available supply of board members.

• Build a clear career trajectory for culturally diverse talent.
• Monitor critical drop-off points in the career trajectory and intervene to avoid exit points.
• Build a culturally diverse executive team and pipeline to the executive level.

Strategy 2: Break the ‘closed circuit’ pathway

Pathways to board membership remain difficult to navigate without the right information, networks, mentors and know-how. This results in an ‘in group’ mentality to board accession and a process of putting known and trusted names in the mix when recruitment decisions are being made.

• Create transparent pathways to board positions.
• Avoid recirculating names through the same networks.
• Use executive search firms to grow board diversity and ensure transparency.

Strategy 3: Challenge the assimilationist approach to board 'cultural fit'

Cultural diversity on boards has become framed as an impediment to ideal type of leadership.

• Avoid homogenising the diversity of leadership styles that culturally diverse leaders bring to the table.
• Disrupt the pre-existing structure of 'exclusive' leadership and open up a process of change, diversity and inclusion of varied opinions and contribution. 
• Listen to and include diverse opinions and make this a point of board differentiation. 

Strategy 4: Build trust and visibility through genuinely inclusive networks

Current network arrangements in corporate Australia remain the almost exclusive preserve of white, (predominantly) male privilege and as such reinforce and reproduce exclusionary barriers.

• Dismantle barriers at the level of networks through promotion of events and activities.
• Call on network members to broaden invitations to a varied range of participants to generate visibility for a broader group of potential board members while also exposing a broader group to pre-existing networks.
• Build the all-important notion of trust between a diverse group of members.

Strategy 5: Design campaigns which champion change through leader-led ambassadors

Successful change campaigns provide crucial insights to systemic and perceptual transformation.

• Gain lessons from campaigns on gender diversity on executive teams and boards. For instance, the Chair of Executive Women, the Male Champions of Change campaign and the 30 percent club have successfully highlighted the importance of gender diversity on boards and the executive team and driven transformative change in leadership positions.
• Design campaigns around cultural diversity in leadership.
• Go beyond verbalism and facilitate a culturally diverse board by setting targets and reporting mechanisms to ensure accountability and transparency.

Strategy 6: Make cultural background and cultural diversity part of the narrative

There is a tendency to discuss a ‘global mindset’, ‘cultural awareness’ and ‘cultural diversity’ as being the same thing and use these terms interchangeably as evidence of cultural diversity on boards.

• Clarify key definitions and measures around cultural diversity.
• Ensure board members, chairs and key stakeholders clearly understand the differences between global mindset, cultural awareness and cultural diversity.
• Make cultural diversity part of the discussion when recruiting directors and chairs.

Strategy 7: Measure, report and act on cultural diversity

There are currently no reporting mechanisms for cultural diversity on boards. A lack of measuring, tracking and reporting on cultural diversity negatively impacts good governance practices.

• Establish clear, simple and effective measures for cultural diversity in Australian executive teams and Australian boards.
• Set targets to drive change in the profile of cultural diversity on Australian boards.
• Report outcomes to drive change in the profile of cultural diversity on Australian boards.

This is the start of a conversation which we hope will drive change as the findings from our discussions reveal there is a need to:

• grow and develop the ‘supply’ of culturally diverse leaders in the pathway to board positions
• develop transparent pathways to board membership
• broaden the reach of network arrangements which create exclusionary gates to board access
• learn from other diversity campaigns
• clarify definitions around cultural diversity
• measure, set targets and report on cultural diversity on Australian boards, in order to drive change.

For more information, download the Beyond the Pale: Cultural Diversity on ASX 100 Boards report (pdf, 2.4MB).

Written by Associate Professor Dimitria Groutis, Professor Rae Cooper and Professor Greg Whitwell.

^1. The Australian Human Rights Commission (AHRC, 2016: 75–76) uses four broad classifications for cultural background. See page 4 of the Beyond the Pale: Cultural diversity on ASX 100 listed boards for definitions.
^2. Australian Human Rights Commission, 2016 and 2018
^3. AHRC, Leading for Change: A blueprint for cultural diversity and inclusive leadership, 2016
^4. Australian Bureau of Statistics, 2017