In a world where diversity and inclusion are becoming increasingly important priorities for top-tier employers, the debate over the use of quotas and targets in the workplace is particularly interesting.
Over the last half-century, women have made notable advances in educational attainment, professional development and politics, however this progress has not manifested itself in significant increases in female business leadership. For example, whilst some women, like UK Prime Minister Theresa May, have risen to the zenith of political power, a recent report found that on average, only 21.2 per cent of board members of the largest publicly listed companies in the EU are women. While this marks a significant increase from the 11.9 per cent recorded in 2010 when the European Commission first put the issue of women in leadership positions high on the political agenda, there is still a long way to go if we are to achieve sustainable gender balance.
Not taking advantage of the skills of highly-qualified women constitutes a waste of talent and a loss of economic growth potential, say many experts. The same goes for people from other minority groups, such as particular ethnic backgrounds or sexual orientations, those with disabilities, or from a particular religion. It is widely accepted that a diverse workforce is a more productive and successful workforce and the question now is how to achieve this diversity.
Quotas and Targets are one way of tackling the lack of diversity in the workplace and higher up the corporate ladder, but their use comes under frequent fire. While they may indeed improve equality and increase diversity amongst under-represented groups, they have also been seen to generate negative sentiment.
Quota versus target: what’s the difference?
Whilst quotas and targets can both be considered as strategies to improve diversity in the workplace, there are distinct differences between the two.
Quotas are specific and measurable objectives set and enforced by an external body that is authorised to impose these on an organisation. These objectives are mandatory and there are penalties for failing to meet them.
Like quotas, targets are usually also specific and measurable objectives, expressed as a percentage but set by an organisation to be achieved within timeframes it feels are suitable and achievable. The goals may not be fixed, but similarly to quotas, there are consequences for not meeting targets. These are however set by the organisation itself and therefore not necessarily as binding.
Quotas: for and against
Organisations have to comply with quotas set by an external body and as a result, they can work to increase the talent pool of an organisation quickly. While years of aspirational programmes aimed at promoting diversity in the workplace have not achieved the desired change, quotas will force a wider search for candidates, which in turn may also help overcome stereotypes about whether men or women are better suited for a specific role.
Quotas can create a ‘critical mass’ of women in senior roles, thus generating increased awareness of the diversity issue. The hope is that in the long run this may start impacting recruitment in the workplace, and eventually make quotas redundant. Moreover, quotas may lead to better employment policies, such as enhanced maternity rights or more opportunities for flexible working, which in turn may produce more applications for particular roles from women.
On the other hand, filling quotas can also distract from the actual skills required to carry out a particular job and force a focus on recruiting a person from a specific background or of a particular gender just to achieve a quota. The arguments against quotas therefore primarily include the lack of ability to take into account diversity in different sectors, locations or skill sets within under-represented groups.
Also, because quotas are mandatory and enforceable, they may add to the business and regulatory costs of an organisation, ie. shareholders may see quotas as intrusive as they mandate their choice of candidates, or the organisation may not be able to sufficiently train candidates in time to meet the quota.
Moreover, there is a concern that those who get the roles through the quota mechanism may be marginalised and viewed as token employees.
Targets: for and against
Targets can be set, monitored and reviewed at intervals by an organisation to ensure they remain fit-for-purpose, unlike quotas which are set by an external body. This increases their legitimacy and buy-in from stakeholders, thus enhancing the rate at which the target can be achieved. They are set across organisational levels, unlike quotas that are aimed at a specific organisational level, ie. board membership.
Targets equip individuals to compete and be identified for roles that they may ordinarily have been overlooked for.
The arguments against targets include the notion that because targets are not mandatory and are set internally, there is no requirement to adhere to them. If they are missed, there is no formal penalty. Furthermore, the objectives of a target may not always be fit-for-purpose and thus may never be met because the requirements are voluntary. They may also take a longer period of time to be effective.
It has been over a century since women won the right to vote and yet we are still seeing a lack of females in positions of seniority. Add to that concerns about the lack of people from minority backgrounds, and the need to accept diversity in both society and the workplace has never been more important.
As the benefits of a diverse workplace are being increasingly acknowledged, now is the time to embrace diversity as an essential part of life. If this diversity is not currently being achieved on its own, then it appears that there is a place for quotas and targets. In 2010 the 30% club was launched in the UK as a global campaign aimed at creating a better balance of men and women at all levels of an organisation, with a particular focus on boards and governing bodies. Its aim, at launch, was to achieve a minimum of 30 per cent – considered to be the tipping point at which the representation of any minority group achieves critical mass – of women on FTSE-100 boards and has since expanded to include other organisations such as universities and governing bodies. The hope of Helena Morrissey, the club’s founder and CEO of Newton Investment Management, is that as more women join boards and demonstrate the value they add, the system will become self-perpetuating.
According to the most recent Cranfield University report published in July last year, women now make up just over a quarter of FTSE-100 boards and 20.4 per cent on FTSE-250 boards. A new target of 33 per cent by 2020 has now been set as part of the Davies Review. This itself is evidence that quotas and targets, or at least the publicity surrounding them, do indeed have an impact. Now the momentum is underway to promote equal representation for females, the key is to ensure this desire for diversity filters through to other under-represented groups, thus creating the most diverse, but suitable workforce available.