Diversity has been the substitute policy for affirmative action once affirmative action became constitutionally suspect. While occasionally well-intentioned, seeking to balance historical wrongs, it still comes down to deliberately discriminating based on race, gender, orientation, and occasionally religion. It is the very thing it decries.
It has been coopted by the good-governance movement, yet another well-intentioned effort which has been more effective at appearing to be good than actually being good. One of the good governance ideological beliefs is that corporate boards must look like their community without regard to competence and capability.
They of course deny that competence and capability are sacrificed but everyone who has been involved in these discussions know that that is window dressing and verbal sleight of hand. You can either seek the best board you think is capable or you can choose any other objective such as All Male, or Looks Like the Community, or only Ivy League, or Politically Connected, or Knows the Business, etc. A board requirements are broad, variable, and always changing. Putting arbitrary constraints such as they above perforce sacrifice the objective of capability to the other goal or goals.
Since board performance is measured in years and decades, it is only in hindsight that we can truly judge whether a board was truly effective and capable much less how and why they were effective. Year-to-year results are just noise unless they are consistently exceptional.
There is a vast global infrastructure of consultants and regulators trying to make corporations more effective through governance strictures. The evidence for effectiveness is at best uneven. We are paying high costs for indeterminate results at best. Some of the most spectacular corporate collapses are those very corporations who were focused on getting high diversity scores or corporate governance scores.
Companies fail all the time for all sorts of reasons. I am not saying that good governance and diversity caused the failures. I am merely saying that those movements have material costs and they are not delivering on their promise of better performance.
But none of this is politically correct to say. But Australia is a culture of straight talk. The seeds of political correctness have been heavily sown in government, academia and media there as elsewhere, but it Australian culture is a hard dry ground that doesn't allow PC to flourish.
From Gerry Harvey says Myer and DJs score top marks for boardroom diversity but ‘we beat the sh*t out of them’ by Frank Chung.
Harvey Norman is one of Australia's big retail businesses along with David Jones and Myer. There is a hot debate about reality going on. Some (David Jones and Myer) argue that there is a retail recession going on which explains their poor financial performance. Others, including Norman, say nonsense, and argue that retail is always hard and fast-evolving and that Myer and David Jones are just not very good at what they do. We won't know for some years what the long-term reality is, but it makes for boisterous short term arguments.
Norman has a more focused argument - that by focusing on the nuts-and-bolts of retail, merchandising and managing their business, companies can be successful whereas if they get caught up in being diversity stars and good governance lickspittles, they will fail. More succinctly - Get woke, go broke.
The evidence this year in Australia supports the latter argument.
Gerry Harvey has unloaded on the politically correct obsession with boardroom gender quotas, saying struggling department store rivals Myer and David Jones score top marks for corporate governance “but we beat the sh*t out of them”.
The billionaire founder of Harvey Norman, which on Friday reported a 7.2 per cent lift in full-year profit to $402.3 million despite falling Australian franchisee sales, said the market was “very flat” but David Jones’ South African owners were “wrong” to controversially declare the country was in a “retail recession”.
The comments earlier this month by Woolworths Holdings were met with scorn from JB Hi-Fi boss Richard Murray, who countered that department stores were “struggling for relevance” — and now Mr Harvey has weighed in with his own assessment.
He argued David Jones would today be a “great retailer” if had he purchased the company 20 years ago for his wife and current Harvey Norman boss Katie Page, and its woes were a result of decades of revolving-door CEOs and board members most of whom “have never sold a sock”.
“Myer and David Jones are two big department stores that are getting smaller and smaller every year,” Mr Harvey said. “Then you look at what’s happened to department stores in some other countries that are trading quite well. Look at the ownership and management of those companies — why are they doing well and the Australian ones don’t?”
Mr Harvey, who owns 55 per cent of the company’s shares, hit out at activists “pushing an agenda” like the Australian Shareholders Association. The ASA led a first strike against the Harvey Norman board at last year’s annual meeting after questioning the company’s strategy and diversity of its board members, setting up a potential spill at this year’s meeting.
“We’re criticised for not having enough women on the board, not having enough independent directors,” he said. “There are lots of things they criticise us for, but the reality is over the years, the (companies) we’re talking about got much better marks for corporate governance and all those sorts of things — they’re regarded as very good, we’re regarded as very bad, but then we beat the sh*t out of them.”
Board members at David Jones and Myer “in most cases are not retailers at all”, Mr Harvey said. “Three women, five blokes, most independent, only one that’s not (is) the CEO and he gets the sack,” Mr Harvey said. “Holy sh*t, and that’s a good model? For someone like me looking at that, being told that’s the model I should follow, are these people mad?”
He said there was “absolutely no sense” in it but “they’re out there as a collective mob pushing this agenda that’s wrong”. “I’m constantly getting letters from superannuation funds, proxy advisers, the Australian Shareholders Association, all sorts of people all the time telling me I’ve got a problem,” he said.
“They’ve (the other retailers) got the problem, not me. Why are they pushing this line? What is this motive? They don’t give up, keep pushing the line, it’s obviously all bulls**t. We’re punished, they’re not. They’re regarded by the super funds as the place to invest because they tick the boxes.”
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