Governance, Organisation

BOARD DIVERSITY FOR SPORT’S SAKE – THE IMPACT ON RISK MANAGEMENT

Gender diversity on boards has been a much discussed issue both in and out of sport for many years. Recent high profile events at national and international levels have reinforced the importance of good governance and risk management practices. In recent weeks have seen the Australian Sports Commission release its first Sports Tally, a measurement of progress towards attaining the aims of Australia’s Winning Edge 2012–2022. The Winning Edge is a national strategy outlining ambitious international performance targets for Australia over the next decade[1]. The report also highlighted National Sport Organisation (NSO) progress towards the Mandatory Sports Governance Principle 2.6 Gender Balance on Boards. The principle states that each NSO should seek to achieve a target of 40 per cent female representation by 2015. [2] The report identified:

• 11 of the 37 NSOs highlighted in the report (or 29%) have less than 20% representation of women on their board.
• 2 NSOs have no women on their board.
• Hockey Australia was the standout with 55% representation.[3]

This report led me to review the data Vicsport collated in December 2013, outlining the gender split of Victorian State Sport Association (SSA) boards. Our research found the following:

• 27% of SSAs we reviewed had less than 20% women on their board.
• 7 SSAs had no women on their board.
• 17 SSAs (or 20%) had more than 50% of women on their boards.

Many people will read these statistics and say “So what? Some boards have lots of women, some have none...it’s just how it is.” The research however is indicating that boards who continue to operate with a composition of members who are homogenous, do so at their own risk. Let’s consider the links between board gender diversity and issues of risk management & corporate governance. Studies have shown the following:

• Gender diverse boards allocate more effort to monitoring practices, indicating companies with women in key board committee roles (such as risk and audit) perform better[4]
• A study found that boards in Canada with three or more female directors took more responsibility for their approach to governance issues, verifying the integrity of audit information and ensuring conflict of interest guidelines, amongst other measures, were met. [5]
• Expanding the pool of directors also alleviates other corporate governance problems such as directors serving on too many boards, having overly long tenure, and interlocking relationships/conflicts of interest. [6]
• Companies with at least one woman on their boards may reduce their risk of bankruptcy.[7]

If improved risk management and governance practices are associated with boards that have higher levels of diversity (including gender), surely that’s a good thing for Victorian SSAs? It’s not a case of “women for women’s sake” but “diversity for sports sake”. That’s what we should be focusing on, because at the end of the day we all want sport to develop. This is one way to achieve it.   Fiona Jones - Sports Consultant This article is part of a series that will be released over the coming months as Vicsport highlights the business case for gender diversity on boards.

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  [1] http://www.ausport.gov.au/ais/australias_winning_edge/sports_tally_2014 [2] http://www.ausport.gov.au/ais/australias_winning_edge/mandatory_sports_governance_principles/board_composition_and_operation [3] http://www.smh.com.au/sport/sports-boards-failing-on-female-representation-20140403-zqq6z.html [4] Adams, R., & Ferreira, D., ‘Women in the boardroom and their impact on governance and performance’, Journal of Financial Economics, 2009 [5] ‘Women on Boards: Not just the right thing... But the bright thing’, Conference Board of Canada, 2002 [6] ‘The Diversity Scorecard: Measuring board composition in Asia Pacific’, The Korn/Ferry Institute,  2012 [7] 'Higher heels, lower risk: why women on the board help a company through recession', The Times, 19 March 2009

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