Speed Read

  • Companies that set and track gender diversity targets achieve greater progress
  • There are many factors to consider when setting targets: timelines, proportion of talent in the feeder population or pipeline, percentage of women in the industry, company attrition rates and more
  • Other measures, such as engagement survey data on levels of inclusion, are equally important in assessing the effectiveness of diversity and inclusion strategies
  • A singular focus on representation targets can have adverse outcomes

Companies that set and track gender diversity targets achieve more progress. That was the finding by consulting firm KPMG in 2016, after its review of Australian corporate governance reports showed those companies which disclosed clear quantifiable objectives, like achieving 35 per cent of women at a senior management level by a certain date, demonstrated a higher level of gender diversity than those which did not set quantitative targets.

Studies like these explain why there’s been significant focus on target setting from the Australian Institute of Company Directors (AICD) and ASX with its Corporate Governance Council’s Diversity Recommendations over the past decade in Australia. The AICD has urged Boards of Australia’s top 200 companies to have a minimum 30 per cent female representation. The top 100 ASX firms reached 30 per cent female board representation in May 2018.

Under the ASX Corporate Governance guidelines, all Australian listed entities are required to report annually on an “if not, why not” basis on the establishment and annual assessment of measurable gender diversity objectives and progress towards achieving these; and the proportion of women employees in the organisation, in senior executive positions and on the board.

A number of organisations in Australia have voluntarily set objectives for gender balance in leadership. BHP, for example, set an aspirational gender target of 50-50 representation at all levels of the workforce by 2025. NAB has made a commitment that every level, from executive leaders through to entry level roles, will have 40-60 per cent female representation by 2020. As reported in the 2018 Senior Executive Census, this reflects the notion that gender balance is commonly expressed as being 40 per cent of each gender and 20 per cent of either gender.

Representation targets help companies assess whether their efforts to achieve more diversity are working. There are many other measures, such as engagement survey data on levels of inclusion, that are equally important in assessing the effectiveness of efforts to create more inclusive and diverse workplaces. Indeed, objectives to improve the representation of women (along with other diversity objectives) are more likely to be achieved when positioned within the broader strategic framework of inclusion, because it reduces the potential for backlash.

Some people see targets as inherently unfair. The counter argument is that targets are a way to level the playing field, which currently implicitly favours masculine norms. Because stereotypes of leadership are more commonly associated with masculine stereotypes in many industries, the reality is that men often have a subtle advantage in hiring and promotion processes. In other words, many processes and decisions that appear to be fair are in fact unfair, as they privilege stereotypes and behaviours more commonly associated with men.

A neon sign on wall saying 'This is the good place'

Even when we think we’re rationally hiring the “best person for the job”, lots of subtle things influence who applies and who we choose, like the words we use in the job advertisement, the way we design the job, the gender of the person currently doing the role, whether the applicant conforms to stereotypes we may hold of men and women.

According to the Workplace Gender Equality Agency (WGEA), targets also provide a disciplined focus for driving change and help companies see how they compare with industry peers. Without targets, gender equality progress is likely to be slow, and may not occur at all. Targets rely on sound measurement and reporting systems. It’s near impossible to set targets if data about hires and attrition isn’t readily available.

When setting targets, it might be tempting for companies to choose a straightforward 50/50 target. But that’s not always realistic, and there are many factors to consider. For example, the WGEA advises setting clear targets with timelines to ensure progress can be measured. Set interim goals as steps toward a longer-term goal. The agency also says it’s important that managers have appropriate control over the strategies and initiatives to achieve the targets and influence metric settings. It’s important managers are held accountable for achieving the targets. Another key principle is setting targets that are realistic, which “requires a thorough analysis of all of the possible barriers to achieving targets and the support needed for maximising the opportunities to achieve them”. Some larger companies assign a project team to target-setting design and implementation.

 

“We only need to look as far as the banking royal commission in Australia to see how a focus on targets, of any description, can drive unethical outcomes.”

 

We advise companies to look at the supply-demand equation. Supply is the proportion of female (or other) talent in the relevant feeder population or pipeline. Demand is a function of medium to long-term annual turnover in the targeted population, and the gender composition of that. That helps companies work out the percentage of hires and promotions that would need to be female to reach an agreed target. Some companies opt for a year on year improvement measure, while others like BHP have set bold targets by an agreed date.

In larger companies, it’s worth doing this type of analysis in each business unit so that managers have realistic targets and control over the process. When considering demand, it’s important to factor in growth or contraction possibilities for the business and possible scenarios for restructuring where possible.

The WGEA advises five years as an effective time frame for target setting. That provides sufficient time for changes such as recruitment and selection to have a longer-term impact. While setting targets for representation is part of best practice efforts, it’s equally important to be aware that an intense focus on representation targets can be associated with adverse outcomes. Ethicist and whistleblower, Dennis Gentilin, says whenever a measure of progress becomes a target, “it beckons gaming and distortion. We only need to look as far as the banking royal commission in Australia to see how a focus on targets, of any description, can drive unethical outcomes.” The risk here is that organisations, by focusing on a diversity target, will provide a distorted picture of their true position. Worse still, organisations may hit diversity targets yet fail to address the underlying issues that were supporting and sustaining a non-inclusive environment.

Gentilin also says that an obsessive focus on gender targets as a measure for diversity can lead to the conflation of two distinct concepts: equality of opportunity and equality of outcome. “By focusing on representation targets, we potentially give equality of outcome undue precedence”, Gentilin says. “Creating workplaces where there is equality of opportunity should be the real goal. In a world where decisions are not made (consciously or otherwise) based on gender, race, age or religion, representation targets actually become superfluous.”

A modern, casual workplace with multiple computers, chairs, lamps and wooden desks

Finally, a focus on gender representation levels can perpetuate the view that women bring “different” and “special” qualities because they are women, leading to greater integrity and more ethical decision making. That is one of those flawed cognitive shortcuts about gender stereotypes that does more damage than good. What really matters is diverse teams outperform more homogeneous groups due to more careful information processing and anticipation of conflict.

The best approach for companies – small and large – is to view target setting as one part of a company’s systemic efforts to promote diversity and inclusion, and that includes leadership commitment, capability development, refreshed talent management policies, communication on diversity and inclusion, and a strong focus on building a culture that promotes inclusion.

Main image credit: Luis Alvarez via Getty Images