Welcome to Management Culture...

A random walk through management theory with the occasional intercultural critique.






Friday, October 11, 2013

Diversity Quotas

Back in Norway this week I was reminded of the diversity quotas for publically traded companies: the board of directors must comprise of a minimum of 40% women and a minimum of 40% men. This law has been in force for almost 10 years now and any company that does not comply is simply delisted. The quotas appear to work and they are rarely the subject of debate in Scandinavia. Elsewhere, diversity quotas are not always so readily accepted: on the one hand “talent” wants to be promoted only on merit without “help” from a quota; and on the other hand detractors assert that quotas or any form of affirmative action forces companies to hire or promote less qualified candidates.
Hence it was very interesting to come across a potentially paradigm-changing piece of research in respect of quotas in the article “Gender Quotas Attract More High Qualified Women Applicants” posted online in ‘The Glass Hammer’ on 1.8.13. Referencing work by Muriel Niederle, Stanford University; Carmit Segal, University of Zurich; and Lise Vesterlund, University of Pittsburgh (published in “Management Science” Journal, 2013) the research showed that having female quotas could attract highly qualified women because they “become more willing to compete for positions when they learn that quotas are being instituted.
Here’s how followed by further considerations (“et alors”)
Diversity Quotas
The researchers designed a series of tests based on mathematical problems where the events and consequential results were in three stages:
1. No affirmative action
For the tests, people could choose 1/ to be paid a small amount for each right answer they came up with (akin to low risk – low reward); or 2/ they could decide to enter a “tournament”, in which they would receive a significantly higher payment for each right answer, but only if they won the tournament; however if they lost the tournament, they got nothing (akin to high risk – high reward). With no affirmative action, the results were:
·         Men were much more likely to chose the high risk – high reward (“tournament”) option
·         Women were much more likely to chose the low risk – low reward (“initial”) option
2. Affirmative action introduced
The researchers then notified participants of new tournament rules: for every male winner, there would have to be a female winner. The affirmative action changed the “tournament” entry substantially (with responses exceeding that predicted by changes in the probability of winning). With affirmative action, the results were:
·         The number of men entering the high risk – high reward slightly decreased
·         The number of women entering the high risk – high reward significantly increased
3. Affirmative action analysed
Monitoring the results of all the tests, the researchers were able to identify “high performing women”. Analysing the results further showed that in the “tournament”:
·         Before the affirmative action, women who could have won weren’t playing; and
·         The institution of the quota increased the participation of high performing women.
According to the authors, the research suggests that to attract a greater proportion of “high performing women” to competitive jobs “companies need to loudly and frequently proclaim their desire to increase the percentage of women they employ, as well as discuss the programs they have instituted to support them.”
Et alors
The focus of the research is in attracting talent and the quota introduced appears to enhance the perception of equality of opportunity for one of the groups of persons, in this case being the women. When the opportunity to advance is perceived to be equitable, participation increases. The other group, in this case being men, appeared to have a similar perception of the equality of opportunity both before and after the affirmative action. This seems to cut to the very chase of the diversity issue (howsoever diversity is defined, whether gender, ethnicity, education, etc.): it is all about equality of opportunity and if that is perceived by the “diverse” group to be unequal, then some of that “diverse” group will actively not participate. According to a separate report by Bain and Co this year, only 15% of women in large organisations believe they are being afforded the same opportunity to be promoted to senior executive positions on the same timeline as men. Considering that it can be the “ones who could have won” who retreat from the “tournament”, this is a worrying consideration for organizations that wish to attract and retain high quality “diverse” talent.

No comments:

Post a Comment