You hear the question a lot in the diversity debate. Targets or quotas? Both are specific,
time bound, measurable objectives. Both are designed to get us to focus on achieving certain outcomes. One we routinely use to run our businesses. The other scares us.
We frequently hear people say: “I’m for targets but I’m against quotas.” Yet there’s a follow up question you need to ask. What kind of targets and are there consequences if you miss them?
Are they “nice to haves” or “must haves”? Government-mandated gender quotas to address a market failure, like those introduced in Germany in March, imply compulsion and consequences. That’s a must have. Are voluntary, or “aspirational” targets
a “nice to have” or a “must have”? Do the targets have credibility in the organisation because they’re connected to your business strategy? Are they disclosed, tracked with rigour and tied to people’s KPIs so that they are held accountable? That makes them a must have. “When something is on your scorecard, you’d be rather silly not to take it seriously” is how Westpac CEO Brian Hartzer put it.
If not they have no weight they’ll lack credibility. If so, what is the point?
Yet it’s a bit of a straw man or woman, this debate. It distracts us from the performance logic that sits behind gender diversity.
There is now substantial body of research that underpins four main ways that diversity boosts organisational success. It creates better financial performance and decision making, gets you closer to your customer; increases your capacity to innovate and leverages all available talent. Credit Suisse’s 2014 study of 3,000 companies in 20 countries points to higher
ROE, stock performance and dividend payout ratios for companies with more women at the top. In 2015, we do not need to rely on a business case for leadership that reflects our broader society. But who wouldn’t want to start getting their head around such compelling data?
A first step is understanding the targets versus quotas argument. A second requires a deeper reflection on the notion of merit and how it is shaped by our unconscious mental models and assumptions.
In the interests of shareholders you need to start bridging the diversity knowing-doing gap.
Published, Australian Company Director, Sept 2015.