March 26, 2019

Corporate Australia needs better directors, according to Graeme Samuel

Corporate Australia needs better directors, according to Graeme Samuel

Graeme Samuel, former competition watchdog chairman, has raised concerns about the quality of directors in corporate Australia. According to him, current directors lack the capacity and courage to challenge management and there is an “impenetrable” club of women who sit on company boards.

Samuel told the Australian Financial Review’s banking and wealth summit: “There’s the club of male directors—it’s got a wall around it, it’s got to be broken down. Worse still, there … needs [to be] a nuclear bomb to smash down the impenetrable wall around the female club of directors.”

IZA World of Labor author Ulf Rinne has looked at the benefits of implementing anonymous job applications (or blind recruitment procedures) across different countries. To an extent, this method can combat hiring discrimination even at higher levels. In his article, Rinne concludes that: “anonymous job applications have the potential to level the recruitment playing field.” However, he warns: “… even where discrimination may be present, anonymous job applications have their limits. They are clearly not a universal remedy to combat any form of discrimination.”

According to Graeme Samuel, the club of female directors on company boards in Australia hampers a push for diversity on boards. "There are so many wonderful female individuals out there that have got extraordinary expertise and the courage to challenge. But they’re not allowed in. You know why? They’re not a name," he said.

In her article Gender quotas on boards of directors, IZA World of Labor author Nina Smith looks at the relationship between female shares on boards and firm performance effects. According to her: “From an economic efficiency perspective, ensuring that there are good female candidates for board positions requires widening the pipeline of women progressing to senior management and top executive positions.”

Qualities like commitment, conscientiousness and the courage to challenge shouldn’t be overlooked and compromised on in the quest to focus on directors' skills and diversity, says Samuel.

Read more articles on behavioral and personnel economics.