TARGETS AND QUOTAS

I'm a believer in quotas. The way I see it, there's been a de facto quota for men which is more or less in most prestigious institutions, and has been 100% for men.

Why do we need to consider targets and quotas?

 

Across the world, women are under-represented at senior levels across all sectors. This is not only inequitable for women, but can be detrimental to organisations - to their reputation and performance. These consequences have led to pressure for some organisations to increase their diversity. For example, in the private sector, large institutional investors are encouraging organisations to improve female representation at senior organisational levels by linking gender diversity to investment decisions [1]. Likewise, the Australian Institute of Company Directors is calling for a 30 percent target for female board representation in ASX200 organisations [2].

 

Advocacy has also been a crucial component of changing the gender of leadership. Groups such as Champions of Change [3] and other groups, such as Women on Boards [4], are making sure that the topic of gender diversity at senior levels remains highly visible. Government and regulatory organisations, such as the Workplace Gender Equality Agency and the Australian Securities Exchange, are also putting pressure on organisations through reporting requirements. The Australian Securities Exchange Corporate Governance Council now requires listed organisations to set measurable and objective gender diversity targets. Organisations must report on their progress in their annual report, with a need to explain any lack of progress [5]. 

Organisations ignore gender disparity at their own peril! 

But, given the disparity between male and female representation at senior organisational levels, and in particular fields such as STEM, what can organisations do? Many argue that we can wait for women to “catch up”. However, according to Davidson [6], this is likely to take until 2095! Clearly, waiting isn’t a solution.  

Many organisations have policies that aim to increase female representation at senior levels (e.g. targets, flexible work arrangements, maternity leave). However, despite these policies, there remains a disparity at senior levels between female and male representation. 

This fact has led some organisations and institutions to establish demand-side strategies to improve gender representation, including targets (goals for an expected percentage or number of women to occupy or be nominated for a role) and quotas (mandated representation with clear enforcement mechanisms) [7]. 

The reasoning behind targets and quotas is that women are not making it to senior positions, or being represented in some professions, because of bias and other such factors that are nothing to do with women's capabilities or competence. Targets and quotas intend to level the playing field for women. 

Quotas and targets around the world

 

The disparity between men and women at senior organisational levels is recognized around the world. Governments and regulatory authorities have taken action to address this imbalance. The types of actions include legislation, regulation, and voluntary efforts [8].  

  • Legislation, or “hard law,” is defined as rules that are passed by a government body of elected officials. Some governments have implemented legislated quotas (e.g. Norway and Spain) to address the gender inequality on organisational boards. 

  • Regulation, or “soft law,” is defined as rules that are passed by an administrative body that either oversees how laws will be enacted and enforced or oversees recommended conduct for companies. For example, the Australian Securities Exchange Corporate Governance Council has introduced recommendations that require listed organisations to set gender diversity targets, including at board and executive levels, and to report on progress in their annual report [5]. Organisations that don’t comply can be 'named and shamed'. Similarly, departments within the Australian Public Service are required to set measurable and objective gender diversity at senior levels and to report on progress towards achieving these targets [9].

  • Voluntary efforts are defined as pledges or targets signed by organizations that are not legally binding but signal a public commitment to board diversity. Voluntary targets are used in countries such as Canada and the US.

Gender diversity quotas and targets can work 

 

  • 40% Target: Norway has exceeded the 40% target set under legislation [10]. 

  • Female board representation: Between 2009 (just before the Australian Securities Exchange Corporate Governance Council requirements were first announced) and 2015, female board representation has risen in the largest 200 Australian listed organisations from 8.3% to 28.5% [11].  

  • Senior roles: Women hold 41% of senior roles in the Australian public service [12]. 

  • Directorships: In the US, women hold 19% of directorships in the S&P500. 

Australian universities are governed by similar gender equality principles. Initiatives such as Athena Swan and SAGE (Science in Australia Gender Equity) have entered this space with a view to improving gender equity in STEMM (science, technology, engineering, mathematics and medicine) [15]. Universities support these initiatives through their membership, along with medical research institutes and publicly funded research organisations. The Athena Swan charter lists 10 principles that members adopt as policies and practices, in order to help create gender inclusive workplaces [16]. 

Benefits and risks of targets and quotas

 

Increasing the number of women at the top of an organisation can motivate future female leaders to pursue advancement. In other words, increasing female representation through targets or quotas can have benefits for women more generally, beyond those allocated to the leadership positions. 

 

Gould, Kulik and Sardeshmukh [19][20] investigated whether increasing female representation at a senior level led to a trickle-down effect; that is, whether female representation at the level immediately below the senior level increased as well. Using a large database of organisations listed on the Australian Securities Exchange, they found a positive relationship between female representation at board level and female representation at Executive Level 1 at both two and five years later. They found a similar positive relationship in the public sector between executive and executive feeder levels [20]. In other words, the act of appointing women to senior roles, (e.g. board or executive level), leads to increases in the level immediately below (e.g. executive or executive feeder level).

Although many organisations focus on improving women’s advancement, this research suggests organisations can also take advantage of the trickle-down effect of appointing women to senior levels and seeing similar increases of female representation at lower levels. Such an effect can complement other strategies in place to help women progress upwards in organisations (such as flexible work arrangements). 

On the flipside, there have been concerns voiced that targets and quotas are unfair. For example, there were concerns over Norway’s introduction of quotas in 2003 that required listed companies to have a minimum of 40% female board representation, which was paired with strong penalties for non-compliance. However, although there was initial backlash, there is now evidence that women appointed to board positions after the quota was announced are legitimising their roles [21]. In other words, initial backlash effects seem to dissipate over time. The argument comes back to the concept of merit (ideal worker) that favours men.

Quotas help to even the playing field. The research in Norway reports that quotas have resulted in mediocre men being “squeezed out” by talented women [21], suggesting that -  rather than being unfair -  quotas have instead ensured that merit is actually driving board appointments.    

Setting gender targets – strategies for organisations

The Workplace Gender Equality Agency provides a useful toolkit for setting gender targets [22]. The toolkit suggests the following principles: 

  • Make sure targets are clear, including timelines so that progress can be monitored.

  • Take small steps. This allows momentum to build. It is also important to celebrate small wins. 

  • Make sure managers are actually in control of the targets they have been set. 

  • Targets must be realistic and achievable. Make sure there aren’t any barriers to success, and deal with any issues immediately. 

  • Managers should be accountable for achieving targets. Just like any metric, managers should be rewarded for good performance and supported when targets haven’t been met. 

Suggested videos and podcasts

Joy Damousi's Podcast - Interview by Sharon Parker
00:00 / 00:00