Hosted at the brand-new Terrace on the Domain a few weeks ago, the AESC APAC Conference 2019 provided an insightful perspective on many of the key agendas impacting organisations today. As proud members of the AESC, we wanted to take the opportunity to share some of the thought-provoking topics discussed on the day.
- Due to a growing level of distrust in government and media, employees look to their employers as a trustworthy source more than ever before
- The subtleties behind leadership are scientific and quantifiable. Those that understand how to best utilise this are those that will see the most success
- Due to the efforts of the 30% Club, Australia has now surpassed the UK, USA and Canada in achieving board gender diversity
- Publicly listed companies with board gender diversity display a significantly higher ROE (53% higher) than those without
- Business leaders believe ‘Actualising Digital Transformation’ (26%) is the most critical issue concerning businesses today, while ‘Developing Next-Gen Talent’ (23%) will be the most crucial in five years’ time
- ‘Employer Value Proposition/Brand’ holds the most influence in attracting top executive talent
- ‘Growth/Development’ is by far and away the most important factor in retaining top executive talent
Francesca Boase, Managing Director of Edelman Trust introduced us to the Edelman Trust Barometer, the largest global survey pertaining to the level of trust within leading businesses, government, media and NGOs. Nearing its 20th year, the Trust Barometer surveys more than 33,000 people in over 25 countries. The participants were made up of three subsections: The general online population (ages 18+), the informed public and the overall mass population.
Although Australia remained a nation in distrust as a whole, we saw the second largest positive change, moving up 8 points in accordance with the trust index.
Most Australians view the government system as broken, pessimistic and fearful of what the future holds. This growing cynicism and an overall lack of confidence as well as trust of the government & social institutions has led to a change in expectations for employers and leaders.
- 54% of employees look to their employer as a trustworthy source of information regarding social issues on which there is no general agreement
- CEOs are expected to lead the fight for change, with 79% of individuals wanting CEOs to drive change rather than waiting for the government to impose it
- 72% of employees expect prospective employers to join them in tackling societal issues
- 71% of employees believe it to be critical for their employers to respond and tackle challenging times and sensitive topics
Following on from this, of the four groups mentioned (businesses, government, media and NGOs), an individual’s employer represented the most trusted relationship by far, scoring 77 points on the index compared to an average of 47.5.
Due to the growing dissonance and distrust of other groups, the level of expectation placed on the employer is much greater than before. The onus is on the employer to be engaged on the issues that matter most to their employees; in doing so, it creates a positive work environment and helps exponentially in the attraction and retention of employees.
Pascal Molenberghs, Professor at the University of Melbourne, translated research on the neuroscience of empathy, morality and intergroup relations providing practical applications around the psychology of strong leadership. This centred around understanding the importance of three things; group membership, fairness and understanding biases.
“Group Membership” refers to the notion that influencing and operating as a cohesive unit will result in more effective leadership and more engaged followers – this can be achieved through both subtle and extreme speech and actions, such as using “we” and “us” as opposed to “I” and “me”.
Effective leaders make salient the role of followers in future success, sacrifice themselves for the group and unify the team through the use of speech. Non-effective leaders, by comparison, focus more on themselves, are driven by self-interest and use nouns such as “I” and “me”.
A staggering fact that was mentioned was that Australian Prime Ministerial candidates that used “we” or “us” rather than “I” and “me” won 80% of the time. (Steffens and Haslam, 2013)
Pascal continued on to speak about the idea of “Fairness” in the workplace, more specifically referring to remuneration, work expectation and reward. Understanding the difference between “fairness” and “equality”, people will not tolerate unequal distributions that are not deemed fair. It is critical for leaders to create a transparent system in which remuneration is based on what is deemed “fair” in order to best motivate and inspire employees.
As his final point, he spoke of “Underlying Biases” and the need to be cautious and aware of their presence. He used the prospect theory as an example – this is a theory where there is a larger psychological value of losses over gains; people dislike losing much more than they enjoy winning.
A number of other biases will influence the psyche of a leader, often leading to irresponsible or ill-considered decisions. However, effective leaders understand what underlying biases come into play in different situations, and those that are able to best navigate through them are likely to find the most success.
Board Gender Diversity
We then met with a panel to discuss gender diversity on executive boards today and what the 30% Club as well as executive search firms play in promoting gender diversity.
Launching in May 2015, the primary objective of the 30% club has been to campaign for 30% women on ASX 200 boards by the end of 2018. They have since gone up from 20% in 2015 to just under 30% in 2019. Although there is still a long way to go, the progress of the 30% Club is clear to see, with Australia having now surpassed the UK, US and Canada in achieving board gender diversity.
Research performed by McKinsey & Company has shown that diverse teams lead to overall better business performance and decision making. Their analysis of 180 publicly traded companies found that ROEs were 53% higher for companies ranking in the top quartile of executive board diversity in comparison to those in the bottom quartile.
In Australia specifically, the Reibey Institute presented similar and consistent findings; ASX 500 companies with women on their boards consistently delivered a significantly higher ROE than those without. A critical mass of three or more women allowed for fundamental change in the boardroom, leading to an overall enhanced corporate governance.
In March 2019, the 30% Club announced a new objective of 30% women on ASX 300 boards by the end of 2021. Properly educating firms on the reasons behind the importance of board diversity will assist the positive trends continue.