Women in Law

Tena Koutou Katoa, Good Evening.

It is a pleasure to be here to speak to you tonight.  My thanks to the Wellington branch of the New Zealand Law Society, Women in Law Committee for the invitation.

And thank you also to tonight's host and sponsor, Russell McVeagh.

Ruth informed me that the recent ‘So you want to be a Director' seminar attracted well over 90 attendees - that should put to rest the popular myth that women do not want to be directors. This myth is not confined to New Zealand only.  This and other myths about women in leadership roles exist overseas as well.

In 2006, Norway took the legislative step for a forty percent quota for women on boards.  Three years later, Kate Sweetman, a former editor of the Harvard Business Review, went there to interview board members about the impacts of the quota system.

She reported that many board members had been resistant to the change.   They gave the usual reasons, such as saying business is about meritocracy not diversity, and if qualified women existed, companies would already have them on boards and women do not want to be board members anyway.

But after the change came into effect, all of those reasons disappeared.  There was no negative feedback.  Every person interviewed said that Norway's boards were measurably improved by the addition of women.  Of the quota, one board member said: "looking back on it, no company regrets it."

Norway is not the only country to have introduced a quota.  France too has recently introduced a quota system for women on boards.

Maybe these countries took on board the results of international research more readily than here. The business case for women on boards is clear.  Time and time again, international research has shown that women directors add a competitive advantage to companies and boost performance.

For example, the Catalyst Report looked at the performance of Fortune 500 companies in 2007, ranking them by the number of women board members; comparing the performance of the twenty five percent with the most women in the boardroom with the twenty five percent with the least.

Companies in the top twenty five percent showed a fifty three percent higher return on equity, a forty two percent higher return on sales and a sixty six percent higher return on invested capital against those companies in the bottom twenty five percent.

Recent research conducted by Leeds University looked at the link between board composition and company failure.  After studying seventeen thousand companies, they found that businesses with at least one woman on their board were twenty percent less likely to go bankrupt.

Other international studies, such as the McKinsey and Company 2007 report, Women Matter, found that "companies where women are most strongly represented at board or top management level are also the companies that perform best, on both organisational and financial performance."

Despite the compelling international research results and the fact that women now make up almost half of the workforce, we remain under-represented in leadership and governance positions.

Women's representation tends to be greater in fields where they have traditionally predominated, such as education and health.  Women make up 51.9 percent of school boards of trustees and 43.4 percent of district health boards.

Yet in New Zealand's top 100 listed companies, just 8.6 percent of directors are women.  This is not a fair representation of the place of women in our business world or our society.  This must change.

Australia, our neighbouring country is not currently doing better than us in the number of women directors in the top company boards. On the latest available figures we both have just under 9 percent.

The good news is both countries are putting up signs that read "Wanted - Women Directors".

My Ministry of Women's Affairs worked alongside the Institute of Directors in New Zealand and Business New Zealand on the Women on Boards initiative.  Launched by Prime Minister Hon John Key in May last year, The Women on Boards initiative, for the first time, brought government together with these two organisations to actively push for change in our boardrooms.

The initiative promotes the international evidence and both Business New Zealand and the Institute of Directors are promoting the competitive advantage gained when boards have greater numbers of women directors.

The Institute of Directors recognises that companies could access a greater range of skills and insights if they had more diversity on their boards.  Their Chief Executive, Dr Nicki Crauford has said "Women's skill sets might generally differ somewhat from men's, and that is a source of competitive advantage.  Companies stand to benefit from women's commercial insights and abilities."

Since the launch of the Women on Boards initiative last year, I have met many chairs of many of New Zealand's top companies.  There is willingness to promote more women directors but the chairs always raise the perceived risk, the need to convince fellow directors and lack of suitable women candidates as barriers to bringing women into the boardroom. 

Accompanied by some leading women directors, I visited recruitment agencies throughout the country that work in the governance area.  They have confirmed that they have access to women who are board-ready.  What is necessary now is to influence changes in boardroom attitude and appointment process.

We are also promoting the adoption of transparent processes of appointment. New Zealand Management magazine reported in their May issue that the number of directors who have heard of board vacancies from insiders, such as management and directors, has risen sharply to 83 percent over the past few years.  This is alarming.  It suggests that most directorships are filled by candidates who are known, rather than those who might have the same or even better skill sets, but are not personally known to the Board or Management.

While this in itself doesn't necessarily preclude women from board appointments, women are not prominent in the established networks that many companies use to make board appointments.

The benefits of transparent recruitment processes are clear.  Boards that use more transparent recruitment processes are likely to have access to a wider range of candidates.

Addressing the lack of women on boards will also have a positive impact on gender inequality further down the line.  International research has shown that having women on boards leads to the employment of more women in senior management. 

Women in corporate leadership provide positive role models for other women entering the workforce, giving them a goal to aspire to.

The national benefit is also easy to see.  Clearly, it does not make sense for any country not to make full use of the talents of all its citizens.

As a nation of just 4.3 million, we must use the skills of all our people.  If women miss out, then we are wasting the talent of fifty one percent of our population.  Potentially, this could limit our competitiveness and economic growth.

In the mean time I heard that our neighbour Australia has stolen a march on us in promoting more women directors.  The Australian Institute of Company Directors' held their annual conference in Christchurch recently and I secured a meeting with their Chairman, Richard Lee, and CEO, John Colvin.  They generously gave me an hour of their time for an update on the two significant initiatives promoted by their Institute to ensure women are appointed to boards.

The initiatives being promoted by the Australian Institute of Company Directors are close to home and exciting for us.

The first is the Australian Securities Exchange's requirement for listed companies to include in their annual reports details of the proportion of women on the board and in senior executive positions, along with an ‘if not, why not' requirement for the establishment of measurable objectives. 

The second initiative they support is a mentoring programme involving fifty six chairs and senior directors of major companies, such as Fairfax Media Ltd, who will work with sixty three experienced and skilled women, selected from over two hundred applicants, who were identified as ASX 200 board-ready.  All of the chair and directors who were approached accepted the invitation to become mentors. 

While it is too early for the mentoring programme to have measurable results, the initial impact from the increased attention to women on boards is encouraging. There have been 14 appointments of women to ASX 200 boards so far this year, more than the whole of 2009.   The Australian Institute of Company Directors has offered to help with any similar initiatives that may be put in place here.

Suffice to say, I was not very impressed when they reminded me that, while New Zealand had led the world one hundred and seventeen years ago when it became the first nation to give women the vote, we were now slipping behind other countries when it came to getting women appointed to listed companies' boards.

These two Australian initiatives have happened without government direction.  There is nothing to stop businesses, shareholders, directors and boards in New Zealand from pushing for similar changes themselves.

Rest assured that the New Zealand Government has taken notice of the international evidence.  We are committed to opening doors and changing attitudes.

The news gets better for women lawyers, your opportunities are not confined to boardrooms. The Attorney-General Hon Christopher Finlayson, has been proactive in addressing diversity in New Zealand's judiciary.  In recent days, another two women, Alayne Catherine Wills and Christina Inglis, have been sworn in as District Court Judges.  And in September last year,  Hon Chris Finlayson announced the appointment of Hon Justice Helen Winkelmann as the Chief High Court Judge, only the second woman to be given this appointment as, of course, Chief Justice Dame Sian Elias was the first to hold that post.

My Ministry of Women's Affairs has worked very hard to increase the pool of talented women available to government through their Nomination Service's database.  Recently, of nine new appointments to state-owned enterprises, five were women.  Each of them will bring valuable skills to the boardroom. During my visits to the recruitment agencies, some of them have raised the possibilities of opening up the Ministry's database for access by companies and agencies. It is a compliment to the quality of the Ministry's database.

However, inequalities between men and women start a long time before the board appointment process. When you graduated, I am sure you would have expected your law degree to be worth the same in the marketplace as a male lawyer's.

According to recent research conducted by the Ministry of Women's Affairs, this is not necessarily the case.

The Analysis of Graduate Income Data study examined differences in income between male and female graduates one and five years after entering employment following completion of a bachelor's degree or higher qualification.

The findings establish a clear difference in income between men and women who graduate within the same fields of study after five years. This difference in income varies with just one percent for graduates in the creative arts, and an alarming twenty percent for graduates in management and commerce.

While the income gap varies between different fields of study, no matter what area of study is pursued, an income gap emerges between men and women not long after graduation, and it is quite a significant gap.

Women continue to graduate in increasing numbers and sixty two percent of all bachelors' graduates in 2006 were women.  While women remained dominant in the fields of teaching and nursing, they also outnumbered men in business and management, sales and marketing, and law - some of the top fields of graduation for men in 2006.

The gender pay gap issue is a complex one, but research shows that it is the result of a wide range of factors, including career choices, work experience, time out of the workforce, and other, unexplained factors, such as discrimination.

In some fields, the reasons for the pay gap seem evident.  The income gap for males and females with a health qualification averaged more than twenty percent within a year.  This is likely to be partly explained by the high level of occupational segregation in the sector.  Lower paid nursing jobs are dominated by women, while the highest paid jobs, such as surgeons, are dominated by men.

However, when it comes to a field such as law, the reasons for the pay gap are less clear.

The Ministry of Women's Affairs recently hosted Professor Marjorie Corman Aaron, who teaches negotiation and mediation to law students at Cincinnati University College of Law.

Professor Corman Aaron says that studies of law school negotiation students show that there isn't any statistically significant correlation between gender and negotiation performance.  In other words, women are just as good at negotiating as men.  Though I'm sure you all knew that already!

However, where gender does become a factor, is the difference in the way men and women experience the situation.  Men on average tend to be more confident, whereas women are more likely to express doubt.  Men may ask to do more and new things.  Women, on average, may not. 

But, and here's where unconscious bias creeps in, hiring executives and managers, both male and female, are more likely to prefer an assertive man, and therefore hire him,  than an assertive woman.  Because that is how we are socially conditioned.  It's subtle, but women need to be aware that these unconscious biases do exist.

Here's an example of a gap opening up on day one.  A study of graduates from Carnegie Mellon University showed that when it came to being offered a starting salary, only seven percent of female students negotiated, while fifty seven percent of male graduates asked for more money. 

I don't know what happened to those graduates over time, but my prediction is that those who negotiated didn't just get more money, they probably also got more interesting work, promotions, and so on.  They probably made it into senior roles faster.  Why?  Because they asked!

Researchers and human resources experts can invest a lot of time and effort into working out how to tackle unconscious bias on the part of employers.  And so they should.  On the other hand we, as professional women, also need to be aware and try to deal with any gender-related disadvantage.

I want to see women such as yourselves able to choose to get to the top of your profession.  Competent, positive and well informed women with belief in your own abilities backing yourselves all the way.

If you're not already there, I want to see you all aspiring to partnership.

It's a challenge walking a balance between gendered social expectations and professional aspiration and advancement, but you have many strong role models. 

Women like Cathy Quinn, chair of Minter Ellison Rudd Watts, and Pip Greenwood, chair of Russell McVeagh, have shown that it is possible for women to get to the top in your profession.

In my own professional and political life I too have strived to reach the goals I have set for myself.  In 1996 I became New Zealand's first list MP of Asian ethnicity.  But I wasn't prepared to stop there.  I wanted to prove that an Asian woman can win a seat because ours is a country where everyone can have a fair go.

In 2002 I moved from Christchurch to Auckland to have a go at the Auckland Central electorate seat.  It was seen as a safe Labour seat and I knew that I would have to prove that I was committed and could make an impact.  So I jumped off the Sky Tower from the height of 192 metres!  While I didn't win the seat in that year, it did turn into a marginal seat.  And it definitely helped me to secure the nomination for Botany in 2008. After knocking on 10,000 doors with my campaign team, we won the seat by over 10,000 votes. That made me the first MP of Asian ethnicity to win a seat and New Zealand's first cabinet Minister of Asian ethnicity.

It hasn't been easy.  But through determination and hard work, it is possible to overcome the barriers, and get to where we want to be.

I want women to have real choices, to engage fully in the economy, and for their skills to be recognised, valued equally, and used in ways that support a better future for New Zealand.

With your help, I am determined to be the catalyst for change.  I will leave no stone unturned to open those boardroom doors of opportunities for women - to benefit our women, our business and our economy.

While the Government and I are committed to change, and will continue to lead by example, we cannot achieve success on our own.  There is much that you need to do to help us bring about this change.

If you are a shareholder of a company, demand change.  Call for more women to be appointed to the company's board.  By the way, I met with the Shareholders' Association recently and they are on board for better governance.

Talented and experienced women need to put themselves forward for selection. Contact recruitment agencies and organisations like the Institute of Directors and the Ministry of Women's Affairs Nominations Service.

Aspiring directors should seek out governance experience on not-for-profit organisations, for example professional bodies, charities, local and national sports organisations and school trustee boards. All these provide experience and will add to a CV. Taking on roles of responsibility will demonstrate a commitment to governance.

I look forward to the day when it is rare to find a company that does not have women in its boardroom or few female partners.  And I hope that some of you here today will help lead that change.

Thank you.