TARGETS AND QUOTAS

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].  

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• 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. 

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• 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].

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• 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.

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Gender diversity quotas and targets can work 

 

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

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• 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].  

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

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

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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]. 

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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).

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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). 

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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.

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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.    

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Setting gender targets – strategies for organisations

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

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

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

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

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

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• 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.

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