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HOLDING THE CEO'S FEET TO THE FIRE: Should Chief Execs Be Penalized for Failing to Appoint Women to Senior Positions?
Friday, Nov. 8, 2013
“Chief executives should be challenged for explanations and even have their pay cut if they fail to appoint women to senior positions,” said the Business Council of Australia in a letter this week to its members. The BCA, the representative body of the chief executives of Australia’s 100 largest companies, is urging its members to adopt a “checklist of reforms” aimed at addressing the underrepresentation of women in senior positions, and to consider docking CEO pay if they do not implement the reforms. In Australia, women have been outpacing men in earning college degrees since 1985 and make up 46% of the workforce, but hold only 16% of board positions and 3.5% of chief executive roles. The BCA aims to double the number of women in senior positions in the next 10 years, and claims this isn’t just an equality issue, but also an economic issue: “We risk not getting the best talent for the job.” Even if we take for granted that equal opportunity for women in senior positions is a laudable goal, is tying executive compensation to the promotion of women ethically problematic? (Here in Silicon Valley, the Silicon Valley Business Journal reports that only 4% of executive positions and 9% of board positions in Silicon Valley are held by women.)
Kirk: Unfortunately, progress in cracking the glass ceiling, in Australia or in Silicon Valley, has been glacial without an effective "stick" to prod it along - be it regulation or board-imposed pay cuts. The Australian business council needs the cooperation of corporate boards - but of course there are so few women on those boards the issue may be ignored. Reluctantly, I have to conclude that only government regulation and requirements, in some form, can bring about the needed change. In the interim, certainly corporate boards should set specific goals for their CEOs - and for themselves. The CEOs pay should be cut if he or she does not make progress; the boards themselves should admit they are failing if they don't make progress.
Patrick: People respond to incentives. Whether they are social, ethical, or in this case, economic, incentives bring about change. We’d like to think that this is a problem that figures itself out over time, but it’s clear that there are biases in play that prevent this from happening. Tying executive pay to fair hiring practices will ensure that this problem is addressed, despite making it an issue of compliance instead of conscience. Hopefully measures like this are only needed for a period of time, like a ladder you throw away after you have climbed up it.
A Framework for Thinking Ethically (Markkula Center for Applied Ethics)