Make gender targets a job measure for managers

Westpac chief Gail Kelly was the first female CEO of a major Australian bank or top 15 company. AAP/Dean Lewins

Australian businesses should set managers “challenging gender targets” and hold them accountable for the proportion of women in their work units, say the authors of a three-year study into gender equality.

Researchers from Melbourne Business School’s Centre for Ethical Leadership argue in their report, Targets & Quotas for Women in Leadership, that managers should be judged on those targets the way they would be assessed on sales, pre-tax profits or any other performance indicators. Companies could even attach bonuses or other incentives to gender targets.

The authors, Jennifer Whelan and Robert Wood, also recommend that companies publish data on their websites about the proportion of women in leadership roles, as well as information about their efforts to increase female staff - and staff reactions to those efforts.

Australia has a questionable record on efforts to boost female participation in the upper echelons of the workforce, the authors say. Although it ranked equal 1st for women’s and girls’ educational attainment in 2010, on the Global Gender Gap Index it slipped from 15th in 2006 to 23rd in 2010. Between 2002 and 2010, the percentage of female board directors in the ASX 200 rose just 0.2 percentage points, from 8.2% to 8.4%, according to the EOWA Census Report. That places Australia behind China (8.5%), Britain (9%), and South Africa (16.6%), among other countries.

Dr Whelan said that “the argument for the benefits of diversity, including increased numbers and proportions of women in leadership roles, is broadly accepted in business and government. However, current push or supply strategies for increasing the numbers of female leaders are not having the desired effects and new approaches are needed.

"Targets with teeth, including challenging standards, accountability and contingent rewards, offer a way out of the current impasse. Managers are familiar with targets in other areas of performance and they work.”

Dr Whelan and Professor Wood note in their report that targets “are hotly debated and often lead to polarised positions. The extremes of that debate are characterised by objection to the violation of the merit principle at one end, and the insistence on the need for drastic action or "temporary special measures” at the other.“

Several studies cited in the report suggest that when women are hired under affirmative action practises, colleagues believe they are less qualified and less competent. One study found that the women themselves who are hired as a result of a preferential selection practice have less favourable perceptions of future female candidates hired under the same process.

While the evidence for negative reactions to affirmative action could be seen as a reason for avoiding gender targets, the authors argue that there is no evidence that the backlash is long lasting as the numbers of women increase, or that it undermines their performance. In Norway, there has been a general acceptance of quotas five years after the country legislated them for women on the boards of all publicly listed companies and specified penalties for non-compliance - including the dissolution of companies. In the US, however, many people still reject affirmative action practices after 30 years.

"It is possible that, as in other areas, people take time to adjust to new challenges and, as the context changes, in this case there are more women who are seen to be performing effectively, the attitudes towards diversity will also change,” the authors wrote.

Diann Rodgers-Healey, an Honorary Fellow at the University of Wollongong’s Sydney Business School and the founder of the Australian Centre for Leadership for Women, said it was time to move beyond complacency and enforce quotas through legislation.

“There are currently no harsh consequences for organisations to ensure they reach recommended targets, so any mechanism whereby there is a quota, and consequences are transparent, I think is a good idea. Hopefully there’ll be a law in place for this to happen,” she said.

“Asking these things in the past to ensure quality hasn’t happened, and a much more stringent mechanism would enable that to happen.

"Hopefully the new equal opportunity bill will clear the legal context for this quota to come about.

"Without this, it could take years before equal numbers appear.”

Rhonda Sharp, an Adjunct Professor in the Division of Education, Arts and Social Sciences at University of South Australia, agreed, saying that “women’s representation is so low in the top executive levels that something ‘big’ has to be done to get things moving. When women are a small minority it is extremely difficult to get past that state.

"There have now been decades of policies and campaigns seeking to increase women’s representation at senior executive levels yet the achievements have been extremely limited.

"Will there be a backlash? Yes of course. This is an exercise in challenging gender power relations and this will be resisted by many men and some women. Companies are dominated by men and have masculine cultures - note the ‘s’ on cultures - so they are often chilly places for women unless they strategise how to fit into such cultures. One strategy women adopt is to avoid any visibility around gender issues and policies, including resisting targets and quotas, because that draws attention to their femininity which is not consistent with success or a large presence in masculine cultures.”

During the 2010 election campaign the Labor government announced a 40%-target policy for women on federal boards, which is yet to be met. The target was not accompanied by any sanctions for non-compliance, and did not extend to the boards of public companies.

The Australian Human Rights Commission’s 2010 Gender Equality Blueprint report recommended a minimum target of 40% representation of each gender be set on all Australian government boards, in senior executive ranks of the public service, in all companies providing goods or services to the Australian government, and on the boards of all publicly listed companies. The blueprint also recommended that if substantial progress was not made, the Federal Government should consider legislating mandatory gender quotas and penalties for non-compliance.

In January last year the ASX Corporate Governance Council introduced changes to their corporate governance rules to require ASX-listed companies to adopt and disclose a diversity policy that includes measurable goals for achieving gender diversity and to report annually on their achievement.

Most large banks and professional services firms in Australia have already adopted targets for women in senior positions. In September last year, ANZ achieved its target of having 40% female managers. Woolworths aims to have 33% women at executive level by 2015, and by the 2008-09 financial year female representation had risen to 27% from 16.7% five years earlier. But despite these efforts, the authors point out, it remains difficult to gauge the extent of target practices in Australian companies.

They conclude that “assigning specific, challenging gender targets will lead to improvements in gender diversity and the benefits that this produces. The evidence is unequivocal.

"In generalising this research we need to be cognisant of the fact that, for many managers, the task of meeting challenging gender targets will be complex and, in many cases, novel. Complex because of the range of factors that can influence the effective recruiting, retention and development of women into roles where there are few of them. Novel because, for many managers, the introduction of gender as a decision criterion into the organisation processes is outside their past experience.

"Based on the evidence that specific, challenging targets with feedback and accountability have been found to apply to every other task in organisations, there seems no reason why specific, challenging gender targets would not produce an increase in the number of competent women appointed to and who performs in senior leadership roles.”

Additional reporting by Frances Nolan