December 22nd, 2010 | 6:00 am

Gender Quotas in Practice: The Last Straw

filed under Featured, Industry Leaders

boardroomBy Melissa J. Anderson (New York City)

Last week The Glass Hammer covered a conference hosted by the Athena Center for Leadership Studies at Barnard College and the Sanford C. Bernstein & Co. Center for Leadership and Ethics at Columbia Business School, which asked, “Has the time come for bolder policies for diversity at the top of corporations?”

While the first part of the morning focused on academic research on the subject of quotas and gender targets, the second half focused on the practitioner perspective – how does the implementation of gender targets actually work within companies, what are the drawbacks, and how can organizations work toward a more balanced workforce?

The practitioners’ panel, moderated by Gillian Tett, US Managing Editor, Financial Times, featured Sheila Hooda, Senior Managing Director, TIAA-CREF; Ellen Stafford-Sigg, Board Member and Principal, Deloitte Consulting LLP; James DeGraffenreidt, Corporate Director and Former chairman and CEO of WGL Holdings, Inc.; and Barbara Colwell, Corporate Director, Advisory Board member of Women Corporate Directors and Former Executive Director of ThinkQuest NYC.

Contrasting the morning’s discussions which, for the most part, concluded that quotas would be a positive outcome, the practitioners’ panel was not as favorable. The panelists largely agreed that quotas were not the best outcome in terms of building gender equality in the corporate space, and should be considered, at most, a last resort.

Said Hooda, “Quotas might be necessary as a last straw – like saving a drowning man.”

Tett commented, “Sometimes the last straw is necessary.”

A Holistic Approach to Gender Balance

Hooda continued, “If we have reached a situation where we want to have quotas, we haven’t thought about the issue very well. It needs to be a more holistically approached, with a three pronged attack.”

First, she said, the pipeline needs to be developed further, and quotas could be implemented “in a soft way,” at this level. Second, “Corporate boards must be more vigilant about this,” she said, in imprinting diversity in training programs. And third, gender equality needs to be made more of an issue at a governance and regulatory level, as well as in the media.

She continued, “Do we need quotas? If nobody else is doing their task, and the other prongs are failing.”

Transitional Period Difficult But Worth It

On the other hand, said Stafford-Sigg, Deloitte has worked hard to improve gender diversity within the firm – and “we are as close to quotas as we can go” without actually calling them quotas.

She explained, “We don’t call it quotas, but we mandate different representations by geography to achieve the appropriate balance.” Stafford-Sigg explained that about 12 years ago, the firm initiated an effort ensure the percentage of women partners reflected the percentage of women employed by the firm.

During the transition to promoting more women to senior roles, she explained, “at first you could tell that some of the women who had been given management jobs weren’t ready yet.” It wasn’t easy – but Stafford-Sigg believes the initiative has paid off in the long run.

Of the 18 members on Deloitte’s board, five are women – slightly higher than the partner percentage, she noted – and the chairman is a woman. Three of the board members are minorities, she said, and two CEOs of Deloitte’s businesses are minorities as well.

Do Gender Quotas Ignore Diversity of Experience?

Colwell said she felt that setting gender quotas might detract from the focus on creating diversity of thought or experience. She explained, “It’s easy to set quotas on a sight line. But a number of people still wouldn’t be invited to boards.” The type of people who would benefit from the quota are already likely to look the part – same background, level of experience, education, etc. Is that real diversity?

For example, she said, having served on 8 corporate boards and 15 advisory boards, she’s never served on a board with a physically disabled person. Should we set quotas for every kind of minority voice? “I’m afraid that quotas will not accomplish what we want to accomplish,” she said.

Hooda agreed. She said, “Diversity has to be broader than what we are talking about to get the range of diversity we want.”

On the other hand, Colwell pointed out, she had not been in favor of quotas, but after hearing MIT researcher Esther Duflo’s study on gender quotas in Indian political leadership in the morning session, she was more in favor of them, in terms of the social benefits they provide. According to Dufflo’s study, quotas for women in political leadership improved democratic participation, provided more public works, diminished stereotypes, and created role models for teenage girls.

Workarounds or Bragging Rights

DeGraffenreidt felt that if quotas were enacted by the government, most companies would look for a way around them. He explained, “Quotas are like taxes. You can predict the response. Companies are usually against it. Once the tax is passed, they work around it.”

At the same time, he explained, the discussion on quotas and diversity has been valuable. Referring to the SEC’s recent diversity disclosure law for boards, he said, “Anytime the SEC engages in rule making it prompts discussion.”

“Some companies will stand out,” he said. “They have the opportunity to position themselves for a competitive advantage, in terms of the market face as well as the labor market. Many will enjoy the opportunity to brag about what they’ve accomplished.”

Diversity bragging rights may be a goal for a number of companies – but not many are there yet. In fact, a look at Catalyst’s recent census on board seats and executive roles held by women in the Fortune 500 will show that very few firms have made significant headway toward gender balance.

A look at the 2010 data shows that companies certainly aren’t doing enough to promote and retain senior female leaders. Is it time for regulators to step in?

5 comments

  1. Tim McIntyre

    This is the debate between using a carrot or a stick to influence behavior,no? does it really belong in a true free enterprise system? More thoughts, specifically…
    http://www.theexecutivesearchgroup.com/executiverecruiting/blog/bid/49856/Gender-Equity-Do-We-Really-Need-An-Act-Of-Congress

  2. Mandy Hetherton

    The Norwegian experience suggests that quotas can work in certain contexts. A conservative government introduced gender quotas for company boards, a move which was supported by the opposition. Seven years on, it seems to have worked. But this was in a context where gender equality was already high compared with most other rich countries. See http://findarticles.com/p/articles/mi_go2446/is_5_34/ai_n56248108/pg_3/?tag=content;col1 for a thoughtful article assessing the impact of the change.

  3. Britt Jacobsen

    - Tett commented, “Sometimes the last straw is necessary.” -

    As a practitioner, I believe that we are close to last straw stage. It is true that companies need to take a holistic approach, but so far, these ‘softly, softly’ approaches have not brought results.

    If businesses are worried about quotas being legislated, then they had best do something – fast – to bring about change.

  4. Jennie

    i think we all can see that true free enterprise aka no rules doesnt work on any level. It only works for the people who have always been in charge so they can keep hiring more people who look like them.

  5. banker2

    Agree with Jennie and Britt above. Also, as long as “free enterprise” continues to be propped up by the federal government (through bailouts, subsidies, tax breaks, etc.) then they should no longer be allowed to practice discrimination of any sort. Yes, intervention is sorely needed.