Few have not been shocked by the revelations of financial impropriety emerging from the solemnly but descriptively named Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, being led by Justice Kenneth Hanes AC.
In terms of the dollar amounts involved in the mistreatment and misleading of customers, AMP has been a minor player compared to other institutions. But it remains in the glare of press attention and public approbation for its efforts to cover up its misdeeds in reports to ASIC. All this has led to the forced resignations of the AMP Chair, Catherine Brenner, the CEO Craig Meller and the Chief Legal Counsel Brian Salter. Following Catherine Brenner’s departure, the three-remaining female AMP board directors have also chosen to resign rather face re-election at the stockholders Annual General Meeting. All this is to be expected in reaction to the revelations emerging from the Royal Commission.
What is disappointing is the level of attention and analysis focused on the fact that Catherine Brenner is a woman and claims that her appointment as AMP Chair was a result of diversity management. This landslide of negativity regarding the quality of women on boards, has dwarfed attention placed on CEO Craig Meller’s simultaneous resignation or the departure of Chief Counsel Brian Salter, with absolutely no blame attributed to the fact that both are men. Though most, if not nearly all corporate failures have occurred under the leadership of men, gender does not get a mention in their autopsies.
Affinity bias is likely at play, i.e. hiring and promoting in one’s own image. When we rely on unconscious knowledge, as we don’t always do so, our predispositions basically are our unconscious biases. We may prefer to associate with people who are like us in appearance, background, preferences and values among other attributes, i.e. people who make us feel comfortable. We may prefer them to people who are not like us, who potentially, in the shadows of our unconscious minds, make us feel uncomfortable.
An AMP shareholder at last week’s AGM, asked “In terms of future board appointments, which consideration will take priority - gender or ability?” Has that question ever been asked when a male board member has been forced to resign?
Symptomatic of the debate of the past month, this question mirrors the reactions to the stream of resignations by ALL of AMP’s female board members. A selective gender lens is being applied to Brenner’s hiring in the rationalizations offered for her departure. The claim that she only has some senior corporate experience, neglects the fact that many of her male counterparts on poorly performing boards have had none. Successful women like Brenner cannot take a trick. If they are not being criticized for the failure of the teams they lead, they are criticized for failure as parents. Dinner party gossip that her children rarely see her, (reported in national newspapers no less) only adds to her betrayal of the female stereotype and feeds her mockery. Has a male board member or executive ever been questioned in the press about his lack of attention to family or children?
Brenner’s experience is also a painful example of the glass cliff effect, where women, who despite all odds have made it to such positions, have a precarious hold on their leadership positions. Research shows that female executives are more likely to be thrown under the bus when things go wrong and, ironically, selected as CEOs and Chairs when the company is failing. Who is surprised that the remaining female members of the AMP Board would rather resign than face the embarrassment of a protest vote from shareholders who question why women are selected to boards.
The inclusion of women on boards is not the financial hazard that has been perpetuated in the backlash to the AMP failures. The research evidence from studies by McKinsey, PwC and other consultants hired by the same board members that now are piling criticism on Catherine Brenner, is that such appointments improve board performance. Companies with diverse leadership such as Mirvac, Fortescue Metals Group, Medibank Private, with more women on executive teams and boards have stable growth, and on average, outperform other ASX200 companies with predominantly male leadership. The economic argument for diversity is loud and clear, with diverse voices at the table contributing to innovation, better risk management and increased profit margins. Sore losers who are missing out to ‘unqualified women’ in board appointments need to accept that for boards to make bad hires, even for diversity’s sake, would be a breach of fiduciary duty.
In response to the above shareholder question, Mike Wilkins, acting chairman stood by AMP’s diversity strategy, and didn’t join in on the under-bus throwing of women, "The good news is I think you can have both. We want the best contributors we can get; however, I think that gender fits with that. It is important to recognise gender diversity also promotes that difference of thinking as well."
AMP had set targets or quotas, a methodology born out of necessity in the context of generations of closed male ranks that failed to accept the talent, merit and value of women, consciously or unconsciously. Contrary to the argument that quotas will lead to the selection of less qualified people, there is no evidence that they make any difference to performance. Goals or quotas can motivate strategic imagination, which can include search strategies that go beyond the usual suspects. This is a problem with board selections, when all male members instinctively draw on their predominantly male networks in response to the question of who would be a good replacement for a departing board member.
Quotas however cannot stand alone, they need to be integrated and implemented within a broad plan that supports equitable recruitment, active sponsorship of talented women into leadership pipelines while providing flexible work arrangements and parental leave for employees of all genders. AMP had talked the talk on this, and the company was just recently named an Employer of Choice for Gender Equality by the Workplace Gender Equality Agency. Sadly AMP’s 40:40:20 target (40% women, 40% men and 20% women or men) has slid back to 0:100 with the mass exit last week.
Considering Brenner’s resignation, women and quotas have been blamed, and doubt cast upon their merit and validity. An individual case, which may or may not be accurately portrayed, is being used to question the role of women in corporate leadership roles. What about Ian Narev, the CEO of Commonwealth Bank forced to resign because of similar improprieties by staff on his watch? Has anyone commented on the fact that he is male? Women in corporate leadership and quotas are not one and same yet have fallen together, but only momentarily. There is too much to gain from diversity in management, and besides, that train has already left the station.