Two Italians walk into a bar and the bartender asks ….
No this is not the start of an inappropriate joke, worthy of referral to Tim Soutphommasane.
Earlier this morning, fellow Cat-Contributor Lucius Quinctius Cincinnatus wrote about company board diversity. Having been given privileged with the keys to the executive Catallaxy wash room by DoomLord, Spartacus will take advantage of his ability to make comments in a post rather than in the comments section.
But I do agree that boards do need diversity of opinion. Sadly that is the one thing that is not diverse – groupthink is a common feature in Australia’s boards. And that’s because they are selected by the club network. You get a board position not because of your skills, experience or quality of thinking. No, you get a board position because you’re a member of the club or you know David Gonski and that you hold similar views to other club members.
There are so many more capable people that could sit on boards but are denied because of the club mentality. A mentality that has condemned Australian boards to consist mainly of superficial clones with no diversity of opinion. And a system that has rewarded the insiders by making it seem their numbers are small and thus bidding up their remuneration. Our boards have been captured by the mediocre. Where are the eccentrics? Where are the philosophers? The geniuses? Certainly not on any Australian corporate or government board.
Dear Spartacus has been on and around boards for a while and offers the following observations.
Firstly, boards don’t need cultural or gender diversity. They need cognitive diversity. Sometimes cognitive diversity is achieve through cultural and gender diversity. Sometimes it is not. It depends on the company and the circumstance.
A female investment banker does not really add to diversity if a board is already stacked with investment bankers. Ditto a female lawyer on a board full of lawyers.
This is why externally dictated board quotas (from governments, from industry groups, from corporate governance councils) are not only idiotic, but destructive. It is up to the shareholders/members of the company to construct a board that is optimal for the company and not for the cultural commentariat.
Secondly, to Lucius’ questions of Where are the eccentrics? Where are the philosophers? The geniuses? Well. Believe it or not, there are some pretty talented and intelligent people on the boards of the large Australian companies. You don’t get to run a large organisation by being a monkey in a barrel. Yes there are some duds, but eventually, they are found out and retired.
But as to the eccentrics, philosophers and geniuses, quite often, they don’t want to be on public boards. Being on a board is not as easy a job a people seem to think it is. According to the Corporations Act, it is the board that is responsible for the management of the company, but for practical reasons, they delegate management to a management team. But they are still responsible and accountable.
Yes mistakes are made. Yes people are imperfect. But what is the alternative? Government ownership and management?
A bit of perspective please.
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