Diversity in business: Why is ‘quota’ still a ‘four-letter’ word?

Politicians often say Australia is one of the world’s best examples of a strong, multicultural country. And by a lot of measures, we are very diverse. More than one third of Australians were born overseas, 45% have at least one parent born elsewhere and collectively, we speak more than 200 languages.

Unfortunately, we still see very little of this diversity* reflected in the halls of economic and political power. A 2018 report by the Australian Human Rights Commission found that 95% of senior leaders in Australia have an Anglo-Celtic or European background. Those with non-European and Indigenous backgrounds account for only 5% of senior leaders, despite making up an estimated 24% of the Australian population.

I am a strong advocate for “inclusive” initiatives to build boards to better represent the communities they serve. However, focus for this article is based on my personal experience and opinions as it pertains to women on boards, but with a twist, which may apply to others’ who are included in the broader “diversity” definition.

Women are poorly represented in corporate Australia, particularly at leadership and management levels. There are more men with the name ‘Andrew’ leading ASX 200 organisations as CEOs than there are women CEOs. While the problem is certainly not unique to Australia (a new report found that no country is on track to achieve gender equality by 2030). It is still a very real problem for our people, businesses and broader society.

And that leads me to another ‘problem’ – quotas.

Diversity quotas have been implemented by a number of countries, most notably to promote gender equality. In Norway, it’s a legislative requirement that women make up at least 40% of company boards. Spain, Italy, Belgium and The Netherlands also have mandated quotas.

It’s all part of a broader effort to ensure women are seen and heard in positions of power. But this type of legislation rarely goes unnoticed.

Opponents are quick to suggest that quotas upset the rules of meritocracy – prompting claims of unfairness and fears that unqualified candidates will be promoted ahead of those more deserving. I’ll admit, even as a female business executive, I have doubted the effectiveness of broadly mandating diversity. And while there is a correlation between diversity and increased profitability, I believe it would be unwise to argue that every company will see greater financial outcomes (quickly or even at all) simply as a result of adding a woman, or any person of a minority group, to its board.

Considering, however, how little progress we’ve collectively made on the diversity front, I do believe quotas are one important tool we can use that can help shift the balance of power – not only in our boardrooms but also within the hearts and minds of those who are presented with these career-defining opportunities.

Equal opportunity is all we need

Businesses know they need and will likely benefit from promoting diversity – they’re just not doing it. PwC’s 2018 Annual Corporate Director’s Survey found that 84% of directors agree that board diversity enhances board performance, yet almost half (45%) say their company does a fair or poor job of developing diverse executive talent. And 39% say the same about their recruitment of a diverse workforce.

Quotas can help provide a much-needed nudge to businesses that continue to drag their feet on diversity initiatives and most importantly, create opportunities for people in disadvantaged groups to have a say in their own future. A mother wanting to get back into the workforce after a long career gap doesn’t ‘choose’ to work for less pay if the other option is not working at all. We all deserve the opportunity to choose, but first, we need to be given the opportunity to be considered. By encouraging businesses to provide more opportunities for women and minorities, we give those groups the privilege of real choice. And that is a powerful position to be in.

Several years ago, I was put forward as a candidate for a board position on an ASX-listed company. I was aware that the company was looking to improve its diversity record and it was an excellent opportunity for me. After several meetings, I was offered the position of Non-Executive Director, but after completing my due diligence on the company, I decided not to accept the position. What the experience taught me was very simple: whilst I was put forward as part of the “quota” requirement – ultimately, the power of the decision to either accept or refuse the board position was mine. Without someone pushing that company toward a quota, I might never have had the opportunity in the first place. But that also doesn’t mean that I had to accept the role.

Quotas might not be an ideal solution for every business in every situation but they do help ensure more diverse voices are seen, heard and considered. The goal is not to ‘lower the bar’ to accommodate people who are not qualified. It’s about expanding the pool of competent and capable candidates to include those who might not yet have had the opportunity and/or those with perspectives and experiences that are not yet well-represented. Businesses need to try a bit harder and look beyond the initial shortlist – I know they won’t be disappointed. We all work way too hard for that!

*Diversity is defined in its broadest terms including race, ethnicity, gender, sexual orientation, socio-economic status, age, physical abilities and religious beliefs.

Trena Blair is the Chief Executive Officer of FD Global Connections and is a qualified Non-Executive Director.