Targets, quotas, the AICD and government boards - Women's Agenda

Targets, quotas, the AICD and government boards

Last week the Australian Institute of Company Directors made its submission on Senator Nick Xenophon’s draft bill to achieve gender balance on government boards. Like the ASX, the AICD said that whilst it supports the objective of increasing women on boards in principle it doesn’t support quotas. In fact, they strongly oppose quotas to achieve diversity outcomes.  

Australia has had a 40% target in place for government boards since 2011.  

The Australian Government Boards (Gender Balanced Representation) Bill 2015 was necessary, Senator Xenophon said, given figures show just nine out of 18 boards met the Government’s target in 2013-14, compared to 13 boards which met the target in 2012-13.

The bill doesn’t use the term quota; it uses the term target. Carol Schwartz and Diane Smith-Gander are two high profile business leaders who have expressed some disappointment about the debate heading in this direction.  

“What worries me is that it seems the AICD has misread this bill and are confusing quotas and targets. That concerns me,” AICD Fellow and Women’s Leadership Institute principal Carol Schwartz said. “The fact is quotas are mandated to have penalties involved in the event of noncompliance. This bill has no penalties, it’s calling for a legislated target.”

Chief Executive Women president Diane Smith-Gander says this discussion needn’t revolve around quotas.

The AICD’s John Brogden was frustrated when questioned on this.

“I’m really disappointed we seem to be having a debate about semantics on this issue,” he told Women’s Agenda. “The Bill puts in place a mandatory requirement in commonwealth law for the number of women appointed to boards. A failure to do this means the government has broken the law. I accept there is no punishment but the government breaking its own law would be extraordinary.”

Is it a quota or a target: what’s the difference?  

According to the Workplace Gender Equality Agency, targets are specific measurable objectives, generally set by an organisation at their own discretion, with discrete timeframes in which they are to be achieved. Consequences for not meeting a target may be set and enforced as the organisation sees fit.  By contrast quotas are mandatory and usually entail penalties for failing to meet them.

“Quota is not a legal term and neither is target,” Dr Belinda Smith, Associate Professor at Sydney Law School explains. “Whether it’s a target or a quota depends on the act. Are we aspiring to meet some objective or do we have to? A quota says you have to, a target says you aim to.”

Xenophon’s draft bill carries no penalties for failing to comply, and provides exceptions for when the target has been missed.  

 “What exists now is a policy which effectively asks everyone to please try to do this in making appointments? And if they don’t they can say ‘Oh well we tried’,” Dr Smith says.  “What this bill is saying is you have to do more than try. It mandates that whoever is in charge of making appointments must take gender into account to make sure they meet the 40/40/20 requirements.”

“If there’s no consequence it’s purely academic whether it’s a target or a quota,” PwC Director Susan Price explains. “A quota is enforceable. This bill has no sanctions so it’s symbolic. Even if the language is mandatory – if there’s no consequence for breaching it it’s a quota – but a toothless quota.”

Kate Eastman SC, a public law and discrimination barrister and fellow at Monash Law School, agrees.

“It’s only a target unless there are sanctions. In this area people don’t like the expression quota but as far as management speak goes a target is a quota without a sanction.”

Forget language, what about outcomes?

A target is already in place for government boards and it hasn’t worked so Diane Smith-Gander says it’s perfectly reasonable to explore new strategies.

“When the processes in place aren’t getting the outcomes you know are possible and right, you need to do something different,” she told Women’s Agenda. “This bill implies something different. It is one of many techniques and is perfectly appropriate at this point in time.”

Her commercial experience, particularly in retail banking, has been formative in determining how to achieve cultural or attitudinal change.

“Conversations often centre on do we change attitudes first and know behaviour will follow or do we change behaviour first and know attitudes will follow?” Smith-Gander explained. The latter is more effective.

“Let’s just start appointing women. Once we put gender blind processes in place – and adhere to a  true definition of merit – we will appoint more women. Then 30-40-50% will become moot.”

She says the pool of skilled and capable women in Australia renders any consideration of token appointments irrelevant.

Kate Eastman is similarly persuaded.  that the softly softly approach hasn’t worked.

“I am confident that there are enough women with the skills, capability and merit to ensure those targets would be readily and easily met and wouldn’t be detrimental to the operation of government business,” she says. “There’s no skills deficit. Where there are women who are skilled and capable, a quota starts a conversation and requires people to look at merit differently, as opposed to the way they’ve always done things.

What’s the alternative?

PwC director Susan Price says it’s not difficult to determine why change has eluded us.

“We haven’t traditionally imposed consequences and that’s why I believe we haven’t seen the change we want,” Price says. “No country around world that has made significant change without legislative intervention with consequences.”

People talk about the carrot or stick but Price says neither portray our approach.  

“The reality is we haven’t used the carrot or the stick – we’ve used wishful thinking,” she says. “We wanted people to do the right things but without a carrot or a stick people are slower to embrace change than we imagined.”

Kate Eastman is convinced the status quo won’t deliver change.  

“Having worked in the area of discrimination law for 25 years and seen the slow progress it has firmed up that quotas and targets have to be considered to redress gender inequality. The trickle down and wait for critical mass to occur is just too slow. Those strategies haven’t worked. The time has come to at least try and test quotas and targets.

Dr Belinda Smith argues that this bill strikes a reasonable balance between expecting better outcomes without being radical.

“What this bill proposes is quite significant. It’s not heavy-handed in that there aren’t looming consequences but it creates an obligation to examine this issue and then report progress,” Smith explains. “It’s not radical because there are exceptions – a quota with sufficient exceptions to make it practical.”

“If we can’t do this in the public service where there’s a greater proportion of females – how on earth can we expect private companies to?” Smith says. “Look at other countries like Norway, the sky hasn’t fallen in. Major chaos has been averted. It’s not so radical.”

So why are proponents of gender equality and greater diversity on boards fighting it? 

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