Diversity: Do Quotas Work?

Recently we discussed the importance of diversity within organisations and reviewed research by IBM which appears to confirm that higher female share in leadership primes better innovation.

In that article we posed this question; what must leaders do to encourage stronger diversity within their organisation? We concluded that constructing a leadership team which features a variety of high performing individuals should not be approached as a matter of compliance but as a matter of choice.

Most reputable companies, being aware of the host of benefits that accompany diverse practices, strive to be inclusive and encouraging of everyone; they want to be known as bodies which are welcoming to all candidates. But, what happens if each time they have a vacancy to fill, only one type of candidate comes out on top? If the best person for the job is to be appointed each time, then what do organisations have to do to really take control of their own diversity?

Quota, Un-quota

The results from the research we reviewed, told us that for organisations to achieve better innovation, females must make up more than 20% of their leadership teams. This then would seem straightforward, to be more innovative you must simply achieve that figure. So, organisations should act, set a quota, and more females should be inducted.

Is it that simple?

A decade ago, and not without strong objection, Norway introduced a controversial method of dealing with the dearth of women in positions of leadership; they imposed compulsory quotas which required stock-market listed companies to allocate a minimum of 40% of board seats to females. Since then, Belgium, Germany and France have followed suit, imposing quotas to increase female share in leadership and it seems to be effective as now, 30-40% of Board Directors in listed companies in these countries are women. Even in Britain, pension funds are lobbying to encourage listed companies to give women 30% of all boardroom and senior executives jobs.

We have our solution then! Well, not quite…

The Quota Myth

In conflict with our 20% statistic which seems to suggest that a quota might be effective, we know that studies of companies’ performance, decision making, and stock market returns, from over six countries, have failed to confirm that quotas alone make a difference. Does this mean that the companies with over 20% female share who are seeing an impact, achieved that number without the use of quotas? Did they organically develop by investing in their existing workforce or did they make their leadership positions more accessible to a wider pool of talent?

While imposing a quota evidently leads to statistics which paint a positive picture, the fact that companies who have quotas in place and aren’t seeing an impact as a result of them being filled, reminds us that the workplace is more complex than quotas can account for.

The Bigger Picture

Of course, diversity is multifaceted and there’s far more to contemplate than organisational operations when it comes to addressing the matter.

It should be noted that there’s a larger societal issue that must be addressed in order to banish gender roles and achieve optimum opportunity for all for, but when it comes to commercial operations, what we are considering now is most poignant.

Effective Diversity

So, what’s the answer to our original question? What do leaders have to do to achieve stronger diversity within their organisations? The answer is not, set quotas.

To achieve effective diversity, organisations need to deploy inclusive training programmes to nurture and encourage all staff to rise through the ranks and to remove any conscious or unconscious bias in their hiring selections. Likewise, they could consider more flexible working hours and healthier share of parental leave to alleviate pressure which can discourage women from advancing to roles with more responsibility.

Of course, leadership teams should be configured with the best candidates for each position and not by appointing members based on gender, ethnicity or physicality. The evolution of a truly powerful and effective diverse workforce cannot be encouraged if diversity is approached as a process, rather it must be addressed by educating, encouraging and accommodating existing staff at the same time as being open and accessible for all types of candidates.

Miramar Global

We work with organisations across the globe to help them build their best leadership teams. If you would like to work with us then please get in touch, we have offices in London and Philadelphia 

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