My co-authors (the fabulous Associate Professor Corinne Cortese, Dr Abdullah Al-Mamun and Dr Searat Ali) and I were delighted to be nominated for best paper at the 2022 Academy of Management conference in Seattle, Washington. The paper explores rhetorical decoupling (difference between disclosure and action) between ethnic and gender diversity disclosure and the leadership appointment practices of large Australian companies. Emerald Publishing recently invited us to contribute to their blog, see here, which I have included below. We discuss the disconnect between public commitment to diversity and the appointment of non-white corporate leaders, with a lack of regulation for diversity reporting contributing to this imbalance.
Did you know that in 2019 less than 10% of executives on Australia’s top corporate boards were from non-white ethnic backgrounds? The corporate elite has done well to increase gender diversity, however in spite of almost half of Australia’s population being born overseas or having at least one parent born overseas, corporate boards in Australia remain decidedly ‘white’. In fact, in 2021, though 35% of Australia’s top 100 board seats were held by women, only 7% were held by ethnic and cultural minorities. None were held by Aboriginal and Torres Strait Islander peoples of Australia. This raises an important question: Why has gender diversity progressed while ethnic diversity has been left behind among the corporate elite of Australia?
Diversity in corporate leadership is an important issue. The UN Sustainable Development Goals urges countries to ’empower […] all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status’ (United Nations, n.d.). Diversity in leadership has been empirically and compellingly argued to improve monitoring and decision-making, enhance organisational efficiency, and strengthen governance, reputation and performance (Cox, 1993, Kiel and Nicholson, 2006, Upadhyay and Zeng, 2014, Van der Walt and Ingley, 2003, Dadanlar and Abebe, 2020, Ospina and Foldy, 2009). The appointment of women to board positions since the 1990s, once described as occurring at a ‘glacial’ pace (Wright, 2021), has increased rapidly over the past decade from 11% in 2007, to over a third of all seats in 2021. A suite of public, industry and regulative pressures have been important for improving the place of women in corporate leadership in Australia, including shareholder activism, public sector inquiries, recommendations from professional bodies, and advocacy from prominent male directors (Du Plessis et al., 2014).
However, there are far worse outcomes for cultural and ethnic diversity in corporate leadership and governance. There are notable career path inequalities for those from non-white backgrounds in Australia with, for example, people of Asian descent entering relevant professions at similar rates as Anglo-Caucasian people, and yet are promoted far less often than their white counterparts (Colic-Peisker and Tilbury, 2007, James and Otsuka, 2009, Loosemore and Chau, 2002). This influences the pipeline and supply of experienced personnel available to be appointed as executives and directors. Groutsis et al. (2018) clearly identified pipeline inequalities as key barriers to ethnic and cultural diversity on Australian company boards. Indigenous Australians face even greater barriers to education, training, employment and promotion, particularly in the private sector jobs that are often the prerequisites to executive and director roles (Altman and Biddle, 2015, Biddle et al., 2013).
At the same time as the corporate labour market stagnates in this status quo, our study reveals that Australian companies have been under very little obligation to address cultural and ethnic diversity in leadership. Exceptions are often specific to a particular industry or activity, reflecting micro-institutional pressures that have little bearing on the top 100 companies listed on the Australian Securities Exchange (ASX100). An example is Star Entertainment Group, one of Australia’s biggest integrated resort and leisure groups with significant interests in gaming, food, beverage, hospitality, tourism and entertainment. The Group’s 2020 diversity and inclusion strategy disclosed ‘multicultural diversity’ as one of its key pillars, setting a target of ‘20% Asian representation of leaders […] by 2023’ (The Star, 2021). However, this reflects their business strategy of integrating with the Asian gaming and tourism market (Chanticleer, 2017). Australian mining company Oil Search had the most ethnically diverse leadership team we studied, with 9 (41%) non-white executives and directors in 2020. This high level of diversity is the result of the firm’s operations, which are largely located in Papua New Guinea, and institutional pressures to engage with local communities.
Our research highlights strategies that have been effective and meaningful for aligning corporate disclosure and practices for women in corporate leadership i.e., public, industry and regulatory pressures as well as shareholder activism, public sector inquests, advocacy by professional bodies and influential male directors. Our study however shows that there is still a lot of work to be done on Australian corporate boards with regard to cultural and ethnic diversity. Looking to the future, we recommend that more stringent public, industry and governmental pressures are placed on Australian companies to compel them towards adopting a broader view of diversity beyond gender in their corporate leadership and governance. Such view of diversity would include culture, race, ethnicity, age, experience, sexuality and disability. Hopefully, this can be achieved within the current decade to demonstrate Australia’s strong commitment and progress in reducing inequalities as required under UN SDG 10.2.