Are diversity quotas necessary?
Kayleigh Graham considers whether diversity quotas are necessary for firms, alongside the short and long term implications.
Diversity is important. I’ve examined cognitive diversity and its positive impacts on practices, and racial diversity and the need for change across the industry. But how do we track and measure that change?
Diversity quotas are one of the strategies in which firms can and do set a requirement for a certain number of employees to be from a certain race and/or gender. But the nature of a diversity quota, which requires people to be quantified based on their identities, raises some important questions.
Are these quotas are introduced because of a genuine desire to diversify a workforce and reap the amazing benefits this has. Or is it merely a ploy to appear to be ‘doing the right thing.’
So, what are the pros?
“It’s better than doing nothing”
The age old argument that some action is better than no action at all. As much as organic change is welcome and is great to see, many feel it just enough – and I have to agree.
NatWest Group PLC came out this year in support of the Black Lives Matter movement, refined it’s diversity targets and stated its aim to have 3% Black representation in its senior UK management positions by 2025. Some criticised them and said the target was too low and that they should be doing more – but at least it’s a start.
“If you cannot measure it, you cannot improve it.” – Lord Kevin
This raises an interesting point – particularly in the accounting and finance industry. If you make someone responsible and accountable to a number, they will generally work hard to deliver and improve on that metric consistently. We track revenue, profit, efficiency, time, so why not diversity?
Even proponents of quotas tend to agree that they have their flaws but the benefits of change outweigh the imperfections of the method. In an interview for the ICAEW’s report on diversity, one partner said “I don’t want quotas but almost if you don’t have a target, then you’re not going to achieve anything” – and I think that captures many people thoughts.
There is evidence that shows introducing and enforcing quotas can work. In places like Norway, there is legislation is in place for quotas and, as a result, 40% of board members are female.
“The trickle down effect”
Beginning with diversity quotas will ensure that there are more diverse people progressing in practices. Those minorities are much more likely to champion people like themselves.
Senior women are likely to mentor more junior women and help equip them for more senior roles which should, in time, result in more and more organic diversity across the business. Diversity quotas can act as a springboard for cultural change that can help foster the change we need to see.
Why don’t we all have diversity quotas then?
Unfortunately, it’s not that simple. Whilst they can be a great tool to instigate change, they definitely have their drawbacks.
One of the first things noted in the ICAEW report is that, when questioned about diversity quotas, the interviews observed anxiety in all respondents – and that’s just it. They invoke a negative reaction in many people.
Merit v ability
Gender quotas for example call into question every female employee that is hired or promoted. Was it because of ability and being genuinely the best person for the job. Or was it because she’s a woman?
Within the report, a senior manager at one of the Big Four discussed going for a promotion: “I’m worried that if I go – I don’t want to get promoted because I’m a woman.” This causes a real conflict because the same quota introduced to support a minority can be detrimental and make them overlooked in many settings and seen merely as a ‘token’ employee to fill said quota.
Further division and resentment
The flip side of the above is that those outside the minority group may feel like those within it are party to some kind of special treatment and that it’s unfair they have been hired/received a promotion based on their diverse identity. This should not be the case and hires/promotions should always be made on merit. However, it may seem that way to some people and this, on mass, can create a cultural issue within the firm.
Ultimately, both points highlight the need for change in a firm to be authentic, and for diversity and the belief in its purpose and benefits to be embedded in the core culture of the firm and its people. Inauthentic attempts to diversify will be easy to spot and will undoubtedly provoke the negative feelings described.
Diversity quotas for 2021: Yes or no?
Diversity quotas can be divisive, provoke negative emotions and be hard to get buy-in for. They are also a great tool for introducing accountability as well as igniting and expediting the rate of change.
45% of qualified accountants are female and yet only 18% of partners are female. If every firm introduced a gender diversity quota how long would it take before that number changed?
Diversity quotas are definitely not the solution but they’re a great place to start.
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Kayleigh began her career in corporate and commercial banking, before working at an alternative lender and most recently joined the partnerships team at Capitalise, a fintech adviser-led funding platform, designed to empower accountants to help their clients discover and access the funding they need to succeed.