Diversity quotas have been discussed for a long time and while they can be controversial, they have their benefits, especially in workforces where there is little diversity at all.
Quotas have their role in the workplace
The knowledge, experience and skills of a diverse workforce bring several benefits to employers, including potentially greater profitability and innovation.
Diversity in the workplace refers to including people from different races, genders or religions. It can also include employees of different ages, education, skills and levels of seniority.
In Australia, like most OECD countries, diverse populations are protected by non-discrimination legislation in the field of employment. Discrimination is typically prohibited on the grounds of gender and gender identity, sexual orientation, age and race, ethnic origin or skin colour.
To address a lack of diversity in the workplace, some employers go further and adopt targets or quotas to address the under-representation of particular groups. By setting targets for diversity, organisations can actively and more quickly work towards creating a more inclusive workforce with opportunities open to all groups, not just certain people.
That can definitely bring benefits to organisations as having employees from different backgrounds, cultures, and perspectives can enhance creativity, productivity and problem-solving by bringing in a broader range of ideas and experiences.
A report by McKinsey & Company, Delivering through Diversity, found that diverse companies also perform better, particularly if an organisation’s leadership is diverse. That research showed that organisations in the top quartile with gender-diverse executive teams were 21 per cent more likely to experience above-average profitability than their industry peers.
Organisations with ethnic and culturally diverse leadership were also 33 per cent more likely to outperform their peers as diverse teams tend to be better at problem-solving. Overall, the report found that the business case for diversity continues to be compelling.
Other research has shown that there is a strong relationship between diversity in teams and overall team creativity. The more diverse your teams are in terms of characteristics, backgrounds, skills and experiences, the more increased the likelihood of generating a wider range of new and fresh ideas. This innovation can be crucial for an organisation to set itself apart from its competitors.
Retention of staff is often improved in a more diverse workforce. If an organisation is inclusive of all people, it’s more likely that employees will enjoy working there and want to remain with the organisation than leave it. That means lower employee turnover and less time employers have to spend on money recruiting new staff.
It’s also important to recruit leaders from diverse backgrounds to set an example of inclusivity, as an organisation’s leadership reflects the reality of its commitment.
Research suggests that insisting on having women sit on boards can lead to several benefits in terms of board governance, including more robust deliberation, disruption of groupthink, more effective risk management, higher quality monitoring of management, and more systematic work.
Women often bring more diverse experience in a wider variety of functional areas than men – often adding skills in the areas of HR, government relations, and marketing that might have been lacking and introducing new viewpoints not previously considered.
While quotas have advantages in promoting diversity, they should be introduced with other diversity and inclusion initiatives. Quotas alone may not address the underlying problems which limit diversity such as unconscious bias in recruitment and promotion. Organisations should aim to adopt comprehensive strategies that focus on creating inclusivity all round, such as diversity training for managers and addressing biases in the hiring process.
Creating an effective inclusion strategy is no small effort and requires sustained effort. Diversity quotas might not be the entire solution to diversity gaps, but they still could be part of that effort.
Kris Grant is the CEO of the management consultancy, training and recruitment firm ASPL Group.