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Your total guide to diversity quotas

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26th Mar 2015
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Despite having been around in some mainland European countries for some time, diversity quotas – typically for employee attributes like gender and disability – remain fairly controversial, politically divisive, and continue to occupy a grey-area for HR policy-making.

On the one hand, they can generate a backlash from those with a conservative or meritocratic mindset on the centre-right of politics, who wish to see everyone ‘free’ to perform in a fiercely independent, individualistic manner. On the other hand, given relatively stubborn and dismal figures for the social mobility, senior representation and pay of minorities relative to majority elites in countries like the UK, quotas may, in the minds of those on the political left, reflect a necessary step towards more just and equal societies and workforces. Do quotas work, and how?

Is there a business case for diversifying a boardroom? What are the shortcomings of such policies? Below I attempt to sketch the main arguments surrounding these questions to date, for and against such quotas, and offer a tentative conclusion for the future, by way of compromise.

The arguments 'for'

  • Perhaps the most core argument for quotas is that they are absolutely necessary to address the deep-seated, long-standing structural inequalities in our economies, and the self-evident lack of diversity in the white, male boardrooms of top companies and other, arguably elitist, domains (e.g. education, the media). For a diversity management strategy to be truly fair, equal, and ‘have teeth’, the notion of positive discrimination needs to be put back on the table. Work by Mike Noon has drawn upon President Lyndon Johnson’s 1965 analogy of ‘the shackled runner’; the implication being that it is not just enough to reactively ‘take off the shackles’ when minorities are already ‘left so far behind’; the ‘race also needs to be restarted’, using positive discrimination as a tool for ensuring the rapid, radical changes needed for equality, in spite of inevitable cries of unfairness or reverse discrimination from presiding majorities.
  • A second argument in favour, partly stemming from the first, is that representation, at the top for example, is a tangible, even ultimate, signal that an organization is taking diversity seriously and ‘walking the talk’ in addressing stark inequality ‘gaps’. Hard figures of boardroom membership are equally hard to argue with. Furthermore, once minorities are in place at the top, there should, presuming tokenism is avoided, be ‘trickle down benefits’ where minority leaders can serve as role models for boosting the confidence of other talented minorities to progress from all other levels of the organization.
  • The final argument in favour of diversity quotas is, perhaps unsurprisingly, the business case for diversity, as suggested by research on top global companies by McKinsey, for example – that diversity can directly improve the performance of organizational groups, and/or carry many indirect benefits over longer time-frames too, in terms of new markets/customer relations, improved reputation, reduced legal costs, community engagement, and so on. The note of caution here lies in interpreting evidence for the business case (cause-and-effect being typically difficult to prove), and recognizing that even though the evidence may not be that compelling (i.e. diversity makes no obvious, general difference to performance either way), legal, social, and moral arguments remain entirely important, justified, and legitimate forces for change.

The arguments 'against'

  • Potential arguments against quotas mirror those for them, but with some important twists. First, there is what might be called the ‘where does it all end?’ argument. The fact that diversity comes in so many different forms has been part of the challenge in streamlining recent Equality Act legislation, and the fact that diversity can be highly multidimensional, criss-crossing, and context-specific can make quotas seem like a somewhat crude, blunt, bureaucratic, even offensive policy instrument. At present, most discussion of quotas seems to concern women in the boardroom (arguably the most salient concern based on available evidence of global inequalities), with disability and ethnicity perhaps slightly further behind. Prioritizing differences, if we start to consider the old, the young, sexual orientation, religions, and so on, can start to feel uncomfortable and interminable. Ironically, HR itself struggles to get into the boardroom – should the HR profession therefore have a quota too? However, the counter-argument is of course that this is not enough reason for NOT doing it and some progress on the most prominent areas is better than none…
  • Second, quotas don’t necessarily take account of – and perhaps run the risk of neglecting – the much wider picture of entrenched diversity biases and leadership development processes that need to be addressed. Quotas may be necessary but not sufficient to creating true workforce justice and equality – after all, representation alone is NOT necessarily true inclusion. In terms of gender, for example, even if women are promoted above the ‘glass ceiling’, it may be only to find themselves atop a ‘glass cliff’; a precarious leadership position which is undesired by the majority and/or vulnerable to failure. An HR/policy package that goes bigger and better than – or even a less controversial alternative to – quotas  would consist of flexible working, shared parental leave, cultural sensitivity training, mentoring, and so on. Ironically, or perhaps out of a greater necessity given Saudi history and culture, the Gulf is embracing these values as a region, including Aramco, one of its oil giants.
  • Finally, as noted above, quotas are inescapably politically divisive, across the right and left of the spectrum. This is of particular concern when we feed it into the heady contemporary mix of debates around immigration, benefits, and austerity occurring within and across many developed EU nations. Clearly, for diversity and many other issues, ideology isn’t going anywhere. Quotas can appear somewhat confusing, in that they exhibit some biases of their own – toward the upper echelons (i.e. boardrooms), quantitative figures of representation over qualitative aspects of inclusion, and certain types of diversity (e.g. gender) over others. The solution, as with so many things, seems to lie in saying once again – context matters. Chasing quotas could harm smaller or family firms if not appropriate to their context, resources, or strategy. As noted, the business case is not definitively there, and its espousal may even backfire to generate unfair, unrealistic expectations of minorities.  Furthermore, emerging economies – although not without their problematic aspects – may be finding their own ways without quotas; China for example is a producing a significant class of rich and powerful women.

Conclusions: what should you do?

My own conclusion on diversity quotas, if a little predictable, sits on the fence, leaning slightly against. The debate seems to have stalled a bit; organic, voluntary, context-sensitive efforts, in countries like the UK and Australia, such as targets and aspects of corporate governance codes (e.g. the 2011 30% Club in the UK for gender, and the British Film Institutes ‘Three Ticks’ scheme for ethnicity) have made some, fairly limited progress so far, and it’s unclear whether legislatively mandated quotas will provide a faster, more effective solution in the face of other economic issues like class inequality.

Quotas then might be viewed as necessary, inevitable perhaps, but not sufficient? There are also other solutions under the ‘positive discrimination’ umbrella – including favouring minorities in ‘tiebreak’ selection decisions and lowering the qualification thresholds for jobs, as some apprenticeship schemes manage to do. Research for its part needs to continue to do its best to read between the lines of inequality issues, helping HR and business to understand diversity, talent, and labour markets in more specific ways – for example, the She’sBack project is investigating why talented women may disappear from the workforce and not come back to occupy important senior roles.

In short, diversity quotas are likely to remain controversial, resting on uneasy compromises, given fierce arguments that seem to come instinctively on both sides. HR needs to play an influential mediating role in finding a pragmatic balance between a jungle of conflicting softer initiatives vs. crude, hard, blanket policy that will inevitably provoke backlash from some quarters.

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