Gender Diversity: Carrot or Stick?

female business leader

There are two paths to the pot of gold at the end of the gender diversity rainbow.

You can persuade: proclaim the evidence-supported benefits of having more women in the highest decision-making positions. The percentage is growing but it continues to be a long haul.  Companies still think of it as a human resources issue and not the bottom line issue it is now recognized to be.

Or, if you are a regulator, you can impose a quota. This may sadden you, but you will definitely end up closer to the goal and more quickly.

Many jurisdictions have imposed quotas to speed up diversity. It started in 2008 when Norway required listed companies to have women in at least 40% of board seats. Belgium, France, Italy, Germany, Spain and the Netherlands also mandate minimums, backed by sanctions and fines in the case of the first three. The UK offers “guidelines.”

Just this year, California has mandated the 40% goal within two years.


Quotas Work

The share of women directors in affected countries has grown four- or five-fold since 2007, compared with a global 29% growth overall.  But the imposition of quotas does not sit well with many as a solution.

One of those is Alejandra Aranda, Founding Partner and President of Humanitas, or Cornerstone Santiago in Chile. She is among several of our members who are prominent in civic politics and working tirelessly to bring about gender equality.  Two years ago she played a leading role in persuading her peers in high-end recruiting to adopt a code of internal conduct and commitment to diversity.

It can be a frustrating mission. Interest and involvement on the part of employers ebbs and flows.  Despite growth in recent years, a new survey by Cornerstone Santiago revealed only 15%  who see diversity as a major challenge, a long way behind the flavors of today, namely innovation (38%) or digitalization (30%).


Priorities Change

“Gender diversity is an issue in which substantial progress has been made and that is why today it does not represent a major challenge,” says Aranda. “Right now, digital fluency and innovation are serious concerns. Strategic priorities change.”

Robin Toft, CEO of a recruiting firm the Toft Group, is looking further out.

“We have a talent crisis because there are not enough qualified candidates out there,” she says in a recent interview.  “I believe the answer is women and Millennials, so a huge and heightened forecast on diversity hiring is really on.”

Music clearly to the ears of Alejandra Aranda.

“Quotas may work in some environments,” she says. “But if we were to put a quota here in Chile I would consider our public policy to have failed.

“We have many very influential women eager to participate.  We need to counter the myth that there are not enough women qualified or interested.  That’s our biggest challenge.”

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