Do we need quotas to improve gender equality in the workplace?
The number of women in leadership positions in Australia remains low. Overseas, targets have helped improve gender equality in the workplace. Would they work here?
By Jane Gilmore
A recent McKinsey Report found that women in the US are still struggling to find equal ground in the corporate world.
While entry level positions are close to parity (46 percent women) the pipeline narrowed so much that at the C-Suite, only 19 percent of positions are held by women.
The explanation for this was readily apparent in the body of the report. 90 percent of CEO appointments are made from line roles, and only 20 percent of those positions are currently held by women. 130 men are promoted to manager for every 100 women. Women who negotiate for promotion and pay rises are far more likely than men to be labelled “bossy”, “too aggressive” and “intimidating”, but without negotiation, they are far less likely to be asked to provide input to important decisions or take on challenging assignments.
Similar results have been found in Australia. The Australian Institute of Company Directors (AICD) has been monitoring gender diversity in the ASX 200 since 2011. Their most recent report shows that the number of female CEOs, a tiny 5 percent, has not changed in the last 5 years. The number of female CFOs has decreased from 8 percent to 6 percent, and the number of CFOs/Deputy CEOs has remained unchanged at 10 percent. The only significant area of growth was in the traditional female area, Human Resources, which increased from 58 percent to 64 percent.
“The number of female CEOs, a tiny 5 percent, has not changed in the last 5 years.”
Women on boards
The interesting offset of this is the significant change in the number of women at board level since 2011, when the AICD set a target of 30 per cent female directors by the end of 2018. As of June 2016, they were at 23 per cent, and 42 per cent of appointees so far this year have been women. While 20 of the 200 ASX companies still have no women at all on their boards, and we are still far from equity, the number of women on boards has been steadily increasing since the target was set.
So where the targets were set (at board level) opportunities for women increase, whereas at the C-Suite level, where no targets or quotas existed, there was almost no change. This is pretty much irrefutable evidence that change only happens when it is enforced and the people in charge held accountable for its implementation.
Quotas, which require a specific level of change and impose penalties for failing to achieve them, have proven effective on the international stage. French companies are appointing women at an unprecedented rate as they race to meet their quota of 40 per cent by 2017. Norway imposed a 40 per cent quota in 2006, it was met in 2008 and has resulted in a wide range of benefits to organizations across the country. An article published last year in the The Conversation described the knock on effect of the Norwegian quotas on companies not included in the requirement:
"…the focus on improved selection processes and nominating more women, has led to increased diversity across all companies. This is the case in both private and public, and both commercial and non-profit sectors."
“The critical factor for increasing women’s representation in leadership is strengthening the pipeline of women through the management ranks and into senior roles .”
Additionally, a recent investigation by the Workplace Gender Equality Agency showed promising results: gender pay gaps reduced by between 2 and 7 percent when boards achieve true gender balance.
Libby Lyons, Director of the WGEA, says “there has been progress, but it is too slow”.
“The critical factor for increasing women’s representation in leadership is strengthening the pipeline of women through the management ranks and into the kind of senior roles that are a stepping stone to the C-suite and directorships.
“Both quotas and targets have been used in different countries and in different circumstances and have seen improved outcomes”.
The overwhelming force of history and cultural bias that still weighs heavily on the corporate world is unlikely to change without forceful incentives. Targets, and their stronger ally, quotas, have proven effective in making this change. The benefits, not just to women, but to the overall economy, are undeniable. Increased employment participation and wider diversity in leadership and innovation are necessary for any organization hoping to succeed in the digital age. Australian companies should welcome the tools that will assist them to harness these opportunities.
The Australian Institute of Management is hosting the AIM International Women’s Day Great Debate in Brisbane, Melbourne and Sydney.
MCs Gretel Killeen (Sydney), Erin Molan (Brisbane) and Jane Caro (Melbourne) will host the annual AIM International Women's Day Great Debate, a long lunch with lots of laughs and networking. This year the topic is 'Australia in 2017 is still a man’s world'. Book tickets to the AIM International Women's Day Great Debate today.