Table of Contents
Australia’s anti-discrimination laws entrench the prohibition on discriminating against an individual on the basis of their gender.[1] However, as the majority of company boards and executive-level positions tend to be male-dominated, the issue of gender quotas has gained recent traction. In fact, in the Australian Institute of Company Directors Director Resource Release, it was found that female directorships in the ASX top 200 companies only constitute 19.9% of all director appointments.[2] The concept of gender quotas being introduced within workplaces has been proposed and debated, but its implementation may not be as straightforward as it may appear at first glance. A quota has been described by the Workplace Gender Equality Agency as being mandatory “specific, time bound measurable objectives” that are “usually set externally by a body with authority to impose them on organisations”.[3] Gender quotas may be used to enforce diversity in the workplace, requiring, for example, 50% of employees to be male, and 50% to be female.
In 2015, the Victorian Premier, Daniel Andrews, announced that he would work to introduce such 50% quotas on government boards to ensure that at least this percentage of representatives are women.[4] As of 2021, 55% of board seats were in fact held by women, which is a significant improvement from the 39% of seats held in 2015.[5] The expectation was that other public sector, as well as the private sector, organisations and bodies corporate, would follow suit and implement similar guidelines. However, this has not yet occurred and the Victorian government’s practices have not translated into mandatory binding quotas.
Norway currently has a quota of at least 40% females and 40% males for employees in public companies. The penalty for failing to abide by this quota is that companies will be forced to dissolve themselves.[6] Similarly, France passed legislation in January 2011 mandating the representation of at least 40% of each sex on the boards of the 2000 companies to which the laws applied.[7] If companies failed to achieve this quota by 2017, board elections would be nullified and directors’ benefits would be suspended. In fact, the Australian federal government also set a target to have at least 40% of both sexes being represented on government boards by 2015.[8]
So the question remains, should we implement quotas to enforce gender diversity in the workplace?
Arguments in favour of quotas
Perhaps the most prevalent argument in favour of gender quotas is that they force the issue of gender equality to the forefront of companies’ policies and procedures. As evidenced by the examples in Norway and France, failure to meet these quotas can have drastic and detrimental consequences for companies, thus providing a natural incentive to ensure a level of gender equality within the workplace.[9]
Furthermore, years of campaigning and promotion for gender equality have not yielded widespread success as women still remain in the minority within senior roles. As of January 2016, women only held 21.9% of ASX 200 directorships,[10] and amongst all key management personnel within private organisations with over 100 employees, women only constitute 27.4%.[11] Therefore, the implementation of gender quotas may redress this imbalance and steer women towards positions of seniority, and achieve greater equality within corporate hierarchies.
Arguments against gender quotas
Do they deserve it? This is the primary question posed by those who argue against gender quotas. The imposition of such quotas may mean that individuals are being almost blindly chosen within a pool of employees, and attaining seniority could become just a means of fulfilling the quotas. Not only could this further entrench marginalisation experienced by women because they are seen as ‘not worthy’ of their senior position, but it may also mean that other capable and competent employees are overlooked for these roles, simply because of their gender.
In fact, this practice of filtering applicants for senior management roles, based only on their gender, exemplifies the definition of discrimination – the treatment of individuals less favourably on the basis of some personal characteristic (i.e. gender). Therefore, the implementation of gender quotas may be counterproductive by encouraging discriminatory practices, rather than attempting to bridge the gap in gender equality.[12]
With the advent of the “woke era”, the implementation of gender quotas may actually be a regression in the movement towards greater equality and recognition. The imposition of male and female quotas may act to reaffirm the gender binary and indirectly exclude individuals who identify as non-binary or outside the labels of ‘man’ and ‘woman’.
What about the best interests of the company?
Before analysing whether the imposition of gender quotas would be in a company’s best interests, it is important to define the term and determine the sources from which these interests can be derived. The traditional shareholder primacy theory of corporate governance suggests that the best interests of the company are aligned with the best interests of its shareholders.[13] In the absence of shareholders, the company’s best interests would derive from the actions and operations which generate the greatest revenue and profit for the company. Empirical research into whether the imposition of workplace quotas has an impact on revenue generation, has been inconclusive as it is almost impossible to remove all other variables that impact a company’s performance and its ability to create wealth.[14]
However, with the introduction of corporate entity theories, the best interests of the company have become closely tied to broader stakeholder interests which include a reflection of the societal values within which the company exists.[15] Stakeholders such as the company’s employees, contractors and other officers, are generally driven by considerations such as employment conditions, working environments and the possibility for career progression within the company. Therefore, the argument can be made that greater prevalence of women in senior executive and director roles, will incentivise and encourage females in the workplace by providing exemplars of career progression goals.[16] Commentators have stated that there are correlations between greater female members on company boards, and the provision of improved working conditions and entitlements, such as leave and child care.[17]
So should it be done?
The trends since 2015 indicate that without government intervention, the implementation of gender quotas is unlikely to be accepted into corporate governance as simply being measures of ‘best practice’. Although empirical evidence would be desirable to support legislative change, it is not necessary for the purposes of accurately reflecting community values and social change. If board equality levels do not reach greater parity within the upcoming years, the introduction of gender quotas, at least at the executive level, may be the only way to address issues around gender inequality in the workplace and perhaps legislative change or consideration needs to be made to this effect.
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[1] Sex Discrimination Act 1984 (Cth).
[2] Australian Institute of Company Directors, Appointments to S&P/ASX200 Boards (31 May 2015).
[3] Australian Government, ‘Targets and Quotas: Perspective Paper’ (2016) Workplace Gender Equality Agency (‘WGEA’)
[4] Matt Johnston, ‘Women to Make Up Half of Victorian-appointed Boards’, The Herald Sun, 28 March 2015, <https://www.heraldsun.com.au/news/victoria/women-to-make-up-half-of-victorian-governmentappointed-boards/news-story/bbc15bfc6056d7487dced191b30f4735>.
[5] Victorian Government, ‘Diversity on Victorian Government Board Guidelines’, 21 March 2022 <https://www.vic.gov.au/diversity-victorian-government-board-guidelines/print-all>.
[6] European Commission, ‘Women in Economic Decision-Making in the EU: Progress Report’ (2012) European Commission.
[7] Ibid 17.
[8] Australian Government, ‘Gender Balance on Australian Government Boards Report 2014-2015’ (2015) Department of the Prime Minister and Cabinet, 6.
[9] Ernst & Young (2011) ‘Women in Leadership. What will it take to get Australia on target?’.
[10] WGEA (n 3).
[11] Ibid.
[12] Ibid.
[13] Renee Adams, Amir Licht and Lilach Sagiv, ‘Shareholders and Stakeholders: How do Directors Decide?’ (2011) 32(12) Strategic Management Journal 1331.
[14] Renuka Rayasam, ‘Do More Women on the Board mean Better Results?’, The New Yorker, 19 November 2013.
[15] Margaret Blair and Lynn Stout, ‘A Team Production Theory of Corporate Law’ (1999) 85(2) Virginia Law Review 247, 248.
[16] Katie Watson, ‘Gender Diversity on Corporate Boards’ (2014) Journal of the Australasian Law Teacher Association 7.
[17] Christopher Thomas, ‘Agender in the Boardroom’ (2008) Equal Opportunity for Women in the Workplace Agency.
