Are diversity quotas the right path to inclusivity?

The business case for broader diversity, particularly in leadership, is incontrovertible. But are quotas the answer?

In August last year, a US lawsuit was brought against Atlanta-based venture capital firm Fearless Fund for alleged racial discrimination. Invoking the Civil Rights Act of 1866, a renowned anti-affirmative action non-profit set its sights on the firm’s “Fearless Strivers Grant Contest”, which awards US$20,000 to black female-led businesses.

The non-profit organisation that brought the claim, the American Alliance for Equal Rights, is chaired by conservative activist Edward Blum.

“A useful way of determining the fairness and ultimately the legality of a policy is to apply the shoe on the other foot test,” said Mr Blum. Would we consider legal or fair “a different venture capital fund’s requirement that only white men are eligible for its funding and support?”

The lawsuit is being called a “test case” to determine the legality of similar affirmative action policies across the US. It’s likely that Australian policymakers will be watching closely.

There are several dimensions to the case. There’s the legal question, which is largely unique to the US constitution and surrounding legal instruments. Then there are the political and moral questions. Naturally, determinations of law are a matter for the courts, but the political and moral aspects are of universal relevance.

Affirmative action

Australia has been struggling to reconcile its own approach to affirmative action for some time. According to the Australian Institute of Company Directors (AICD), “an increasing cohort of Australia’s top-listed companies have introduced ‘40/40/20 male/female/flexible’ gender targets based on a compelling economic and risk mitigation rationale.”

But quotas are nothing new. As noted by Annabel Crabb, there’s a reason you only need about 50,000 votes to become a senator for Tasmania compared with around 600,000 to do the same for NSW. It’s that, at Federation, Australia decided that smaller states should not be drowned out from national politics simply due to their population size.

More recently, national politics began experimenting with quotas of a different kind. In 1994, federal Labor committed to implementing a mandatory 35 per cent preselection quota for women in winnable seats at all elections by 2002. In 2012, the party implemented a “40:40:20” rule where not less than 40 per cent of Labor seats will be held by women, the same for men, and the remaining 20 per cent to be filled by either. The ALP now aims to have 50 per cent female representation by 2025.

When the ALP introduced its first target in 1994, the Liberal Party instead experimented with non-target reforms. Namely, it formed the Liberal Women’s Forum, which served to find and train more female candidates. By 1996, the Liberal Party enjoyed 24 per cent female representation to Labor’s 17 per cent, suggesting to some that quotas were less effective than meaningful, proactive reform. By 2004, though, the Liberal Party trailed Labor, and the gulf has only widened since. Currently, the Liberal parliamentarians are 26 per cent female, while Labor is approaching parity at 48 per cent.

While these figures are not conclusive evidence of the effectiveness of quotas, even gender-specific quotas, they are certainly persuasive. Even if the case for quotas were undeniable, some believe the very idea of affirmative action has become so politicised that it wouldn’t be a realistic option for many.

“Personally, I have no problem with quotas … [but] the term is a no-go zone, and it’s purely because of Labor,” said former Victorian Liberal senator Helen Kroger. The Liberal Party has yet to implement quotas, instead opting for “targets”.

Similarly, the business case for quotas, be it gender, race, or beyond, is strong. The World Economic Forum goes so far as to call the business case for diversity in the workplace “overwhelming”. As noted by the Workplace Gender Equality Agency (WGEA), organisations that have been successful in achieving gender targets report “more effective talent and succession planning systems, a more capable workforce with the best person being more likely to be selected for jobs, and an enhanced corporate and recruitment brand”.

Research shows that diversity on boards correlates with improved performance and that quotas are a reliable way to get there.

Effective or not, the moral questions remain.

Are quotas unfair?

In opposition to affirmative action, commentators tend to say quotas are unjust, they are discriminatory, they are tokenistic and superficial, they hamper freedom of choice, or that they are demeaning. Many point to ideals of meritocracy, where the quality of the candidate is paramount, and others invoke the market as the best determinant.

“The way to stop discrimination on the basis of race is to stop discriminating on the basis of race,” said Chief Justice of the US Supreme Court John Roberts. In the moral sense, anti-affirmative action advocates claim that discrimination is an absolute wrong and that repeating it, regardless of its capacity to address persistent disadvantages, is immoral.

On the other hand, advocates of affirmative action take issue with the characterisation of affirmative action as discriminatory as it is designed to increase opportunities for disadvantaged or overlooked groups while striving to address historical injustices. Others claim that a degree of unequal treatment is a natural, forgivable part of moving on from past wrongdoings.

“It has always been the case in most ethical theories that we must allow a little bit of injustice for us to repair a past wrongdoing to build a more just and equal society,” said Idowu Odeyemi.

The complexity of the moral debate is evidenced by its ongoing relevance. Like it or not, as long as the data makes the case for quotas, leaders will likely continue to use them.