Australian politics, society & culture


Business as usual?

The confused case for corporate gender equality

Image of men at board meeting

© Superstock via Getty Images

March 2017Medium length read

One year, in a class I was teaching, I gave some of the students – all senior professionals – a case about a biotech company. With healthy numbers of women at entry level dwindling away with seniority, the company’s executives were considering a proposal to set quotas for female scientists. In the hope of getting my students talking about ethical principles of fairness and justice as well as economic consequences, I had set a case that alluded to anecdotal evidence of discrimination, a gender pay gap, and an unsuccessful product for women that might have been better designed had there only been a scientist with a female-specific anatomical part on the team.

When the time came for the students to present the conclusions of their deliberations, the spokeswoman announced, to my surprise, that they had wasted little time discussing the ethics of the situation. There was no need, she explained, as they were all already fully convinced of the business case for gender diversity: the benefits to performance, productivity and profitability that women bring to a business. Instead, the group had used the discussion time to develop a plan for maintaining the number of female scientists in the organisation, without the need for unpopular quotas. The spokeswoman then laid out a five-stage strategy in impressive detail.

Although the students had blithely rerouted themselves away from the pedagogical path I had carefully laid out, I felt a rush of admiration and affection. Not for them a tortuous debate about principles and consequences in a flawed, unequal society. Sleeves rolled up, they were ready to get the job done. It was a moment that captured everything that is wonderful and exhilarating – but also concerning – about the now fully entrenched narrative of “the business case for gender diversity”.

It wasn’t so very long ago that an Australian employer could legally refuse to employ a woman, simply because of her sex. Only in 1984, following Commonwealth legislation on race nine years earlier, did this become illegal. In 1986, the government introduced affirmative action legislation and an agency to enforce it. To many, the expression “affirmative action” evokes the appalling image of jobs being given to less-qualified women. In fact, the legislation did little more than require private sector organisations to report annually on how women and minorities were faring, their plans to increase equal employment opportunities, and what progress had been achieved to date.

Today, equal employment opportunity legislation has been expanded to embrace several other attributes, such as nationality, religion and age. These social categories were, of course, not plucked out of a hat, and they reflect, as University of California Berkeley professor of law and sociology Lauren Edelman and colleagues note, “the law’s focus on discrimination, injustice, and historical disenfranchisement” and the “law’s moral commitment to redressing historical wrongs”.

On the ground, however, these earnest concepts have become increasingly unfashionable. Edelman and colleagues documented this falling out of favour, analysing 20 years of professional management literature, from 1975 to 1996. As the journals they looked at were ones read by managers and human relations professionals, the contents, they reasonably assumed, reflected business culture and discourses, and what managers were likely to encounter in training sessions. Their analysis indicates a striking shift. Articles with a pure “civil rights” rhetoric peaked in 1980, they found, then made an undulating descent to an all-time low in the last year studied. Meanwhile, the same analysis shows a new “diversity” rhetoric making its entrance in 1987, with a rapid ascendency that sees it permanently overtake “civil rights” rhetoric in the early 1990s, as the latter begins its final tumble into obscurity.

Does this changing rhetoric from civil rights to diversity simply reflect a repackaging of equal employment opportunity, to give it a fresh palatability? Certainly, many interventions and activities conducted under the old equal opportunity banner – such as training programs for women and ethnic minorities, the deployment of inspiring role models, and monitoring the numbers recruited and retained – continue under the new title of “diversity management”. Or is this a surface similarity, with the two approaches sometimes using similar means to reach different ends?

The origin of the diversity concept is often attributed to a highly influential 1987 report, Workforce 2000, that misleadingly indicated that by the year 2000 American-born white men would make up only 15% of new entrants to the United States’ workforce. Within the professional management literature, this was presented as “a full-blown crisis with rhetoric that justified and necessitated a major change in management style”, write Edelman and colleagues.

Welcoming previously under-represented groups was now a matter of competitive advantage, even survival. Right from the start, perhaps reassured by the neoliberal promise that a competitive market provides all the regulation and mechanically induced ethics that a society requires, the rhetoric of diversity management “began to ignore civil-rights/social justice arguments … and took an economic turn”, note management academics Cliff Oswick and Mike Noon. The rhetoric focused largely on arguments of performance, profitability, survival and growth.

According to Oswick and Noon, reviews of the diversity literature find that the equal opportunity and affirmative action approach “is portrayed as old, tired, failing and reliant on regulation imposed by the government”, while managing diversity “is new, fresh and full of potential, with an emphasis on responsible self-regulation of organisations guided by the free market”. Edelman and colleagues found that almost half of the diversity articles ignored the topic of civil rights altogether. When it did get a mention, it was usually in a fashion that was explicitly negative, dismissive or ambiguous. Profits received as much attention as law and fairness put together.

In keeping with these shifts in rhetoric, in 2005 the Council for Equal Opportunity in Employment, established by the Business Council of Australia and what is now the Australian Chamber of Commerce and Industry, was renamed Diversity Council Australia. A page on its website titled ‘Why Diversity Matters’ focuses exclusively on the business case for “a workplace that values diversity and is free of discrimination”. It cites benefits such as greater productivity, profitability, innovation and creativity; new markets, customers and suppliers; and reduced legal and reputational risk. Fairness, equality and redress do not get a mention. In perfect accord with this, a training session I recently attended invited participants to indicate, using a clicker-voting system, the most important reasons for providing equal employment opportunities. That it is the right thing to do didn’t even feature as an option.

There are strong arguments to be made that the diversity narrative has brought valuable new ideas to public debate and corridor conversations, and fresh energy to the cause. In the old “equal employment opportunity” approach, the principle of “sameness” is in the foreground. Are people with the same abilities and potential being offered the same opportunities, rewards and benefits, regardless of sex? Is that female engineer being treated the same, and judged fairly against the same yardstick, as her male counterparts? Even when it turns to the question of differences, the equal opportunity approach is stern on the matter. It is the warning not to disadvantage those who have caring responsibilities or have to take some time off work in order to complete the miracle of producing another human being: a future citizen, worker, taxpayer, carer and consumer.

In contrast, the diversity approach is the carrot to the equal opportunity stick. It speaks optimistically of the diversity dollars to be made, not reprovingly of lawsuits. The shift from a legal to a managerial framework, one that rephrases legal and moral imperatives as strategic HR management, speaks to skills at which the talented of the business world truly excel. The value of thinking this way is on display on the website of Male Champions of Change, an Australian-founded coalition of powerful CEOs and chairs committed to promoting gender equality in their organisations and the community. “In many ways,” the website points out, “the Male Champions of Change strategy is simply good business, change management and collective leadership practices applied to specific gender equality challenges.” It’s an encouraging message – you can do this. The energetic deployment of managerial skills that this inspires was evident in my students’ response to the gender quota case. There was no need for them to make reference to ugly, controversial and off-putting concepts like “power relations”, “historical disadvantage” or “systematic inequalities”. They could instead confidently draw on their well-equipped toolkits of managerial and leadership skills.

The diversity approach doesn’t just acknowledge differences – it positively revels in them. Take, for instance, In the Eye of the Beholder: Avoiding the Merit Trap, a paper published last year by Chief Executive Women and Male Champions of Change. The paper begins by briefly touring ways in which the perception of “merit” is distorted by the lens of gender: leadership styles that are assertive in a man seen as aggressive in a woman; distaste for successful and competent women; the homophily that draws people towards colleagues who remind them of themselves. It’s an important but familiar reminder of the biases that can stand in the way of the principle of sameness, of according equal respect and opportunities to those whose relevant qualities are the same. But the paper then goes on to challenge the concept of merit much more deeply, by delving into how difference is perceived. Leaders are encouraged to ask themselves, “Are you labelling candidates with different styles, skills and experiences as risky or a poor fit with the team?” If so, you may be overlooking candidates who would be as good, or even better, for the role as the usual suspects, particularly when you think about the merit of an employee in the context of an entire team. If you already have six excellent engineers, how much value is there in a seventh? The report also recommends considering whether the job itself needs to be re-imagined, rather than unthinkingly replicating past office-bearers. “Are the criteria based on past requirements and a description of the incumbent rather than future strategic needs?” These questions – and they seem like good ones – encourage decision-makers to expand their concept of merit, and look more widely and think more creatively about where they might find it.

One of several case studies in this kind of approach comes from Qantas, whose CEO, Alan Joyce, was among the first Male Champions of Change. Unsurprisingly – understandably, even – when gender targets were set for senior technical roles, there was resistance in the ranks. Some complained there just weren’t enough women with adequate technical skills. The equality approach would merely question if that were indeed so, then leave it there. The diversity approach pushes harder. Closer inspection of the roles revealed that many were placing unnecessary emphasis on technical skills while undervaluing the leadership skills likely to be especially important during Qantas’ restructuring. Role requirements were reconsidered in light of the actual demands of the role, then reconstructed. This process, according to the report, brought about a 2% increase in women in six months, and the appointment of Australia’s first female chief pilot, Georgina Sutton, for Jetstar.

The diversity narrative also seemingly promises to dismantle the stubbornly persistent “career mystique” that presents continuous, undistracted full-time devotion to one’s career – every day, from young adulthood to retirement – as the ideal from which all else falls short. Even in the 1950s, this model of the ideal worker was a bad fit for the many families, particularly poorer ones, who failed to neatly cleave into male breadwinner and female homemaker. Today, career mystique collides painfully with the realities of contemporary Australian families, in which 60% of women with preschool children, and 78% of those with children aged six to 14, are in the paid labour force.

The equality approach prohibits unjustifiably disadvantaging women, who, as a group, spend nearly twice as much time a day on domestic activities and nearly three times as much on childcare as men. But this approach, while legally protecting women with care responsibilities who want to participate in the workforce, does little to challenge the status quo. The diversity approach, by contrast, forces the powerful point that if the only folk who have a decent chance of making it to senior roles are those who can and want to prioritise work before family every day, and every year, of their working adult lives, then these roles are being filled from a limited, and likely shrinking, pool. If we don’t want to throw away talent, then career breaks, periods in which family takes priority, and the ability to pick up the kids from school or take time to care for a sick or dying parent are options that need to be not just available but normal. They reflect needs that arise simply by virtue of being a person with a rich, varied and interdependent life. Thus, we find the Property Male Champions of Change making flexible work practices one of their key commitments: not just to make them available, but to make them mainstream. Gloriously and incongruously, this brings to mind nothing so much as the second-wave feminist vision in which both sexes are liberated from the restrictions of traditional roles and expectations. And it’s endorsed by 21 of the most powerful leaders of a self-confessed boys’ club. What’s not to love about that?

Back in the classroom, I asked the other students for feedback on the approach to the biotech gender quotas case that had been offered in lieu of ethical analysis. There were no objections. As one student commented, it just makes good business sense for your employees to reflect the diversity of your clients. But when I asked what a leader should do, then, if their most lucrative clients happen to be white men who prefer to deal with other people just like them, there was no answer.

When you combine good intentions and the celebratory vive la différence philosophy of the diversity approach with the received wisdom that men and women are fundamentally different, the intuitive conclusion is that increasing the representation of women in top decision-making teams will make companies more profitable. In the popular business literature, many commentators on gender seem to take it for granted that biological sex provides a useful proxy for the skill sets employees bring to organisations. Take a typical offering of this kind, Work with Me: The 8 Blind Spots Between Men and Women in Business, respectfully reviewed in Forbes and the Economist. The authors, Barbara Annis and John Gray, argue that leaders cultivate a “gender intelligence”, such as a proper appreciation of the hard-wired female talents for communality, collaboration, intuition and empathy that provide the perfect balance to men’s intrinsically competitive, goal-oriented and sometimes socially insensitive approach. Likewise, the conclusion at the 2009 meeting at Davos that “Lehman Brothers and Sisters” would have provided an ideal balance of risk-preference profiles was presumably based on the assumption that complex credit derivatives and subprime mortgages simply wouldn’t have had the same irresistible appeal to women.

Research has followed the practitioners’ lead, and the past several years have seen a proliferation of consultancy and academic reports that look to test the business case for female leaders. Typically, these look for links between the representation of women at the top of a firm – CEO, board or the top management team – and a variety of measures of financial performance. Sometimes these statistics take account of factors that might influence both (like firm size and industry), and sometimes they don’t. In a way, this is an encouraging and progressive line of enquiry. At last, we are sufficiently beyond hysterical fears of profits fluctuating with women’s hormones that we’re now looking for evidence that sisters are doing it for the bottom line. But this research program also smuggles in beliefs and values that require close scrutiny.

University of Pretoria management scientist Jenny Hoobler recently led a meta-analysis (a statistical technique that integrates findings across multiple studies) of this now voluminous “business case” research. She and her colleagues found that, like much of the popular literature, these studies seem to suppose that adding a complementary sprinkling of womanly yin to the yang of top management will bring diversity dividends. Hoobler and colleagues note that authors typically assume, but never demonstrate, that women and men have “innate differences in styles and perspectives”.

But decades of psychological research challenge the belief that women will reliably possess qualities that men lack. Even when there are average differences between the sexes, there is often also so much overlap that using sex as the basis for predicting whether someone will, say, prefer participative decision-making processes, lead in a transformative style or have a taste for financial risk is usually not a great improvement over flipping a coin. People’s characteristics are also usually made up of an idiosyncratic mix of “masculine” and “feminine” qualities. One way to think of it is this: you might be able to correctly guess whether someone was a woman or a man from their psychological profile, but you wouldn’t be able to correctly guess their psychological profile from knowing whether they were a woman or a man.

The empirical toppling of the “men are from Mars, women are from Venus” view of the sexes doesn’t mean that gender equality at the top wouldn’t make a difference to the overall psychological functioning of senior leadership. For instance, in some countries, white, politically conservative males have been found to perceive some kinds of risk quite differently to other groups. This suggests that senior decision-makers plucked primarily from the old boys’ club will lack the benefit of contrasting perceptions, and fail to evaluate risks in a way that mirrors the values and concerns of the general community. But it does seem unrealistic to expect a transformative difference between boards with, say, two women rather than one or none.

These studies also seem to take it for granted that women will enjoy an untrammelled capacity to wield influence and utilise their skills. This, as Hoobler and colleagues point out, flies in the face of “compelling evidence of the barriers women leaders encounter in implementing changes in organizations”. How much of an issue these barriers are likely depends on factors that influence women’s perceived legitimacy, such as the industry or country she works in, or even the idiosyncratic culture of her organisation and its networks.

Nor does this kind of research account for the differences in context in which women and men are likely to become leaders. In 2003, a disgruntled piece in the Times (UK) claimed that “the triumphant march of women into the country’s boardrooms has … wreaked havoc on companies’ performance and share prices”, based on a supposed link between the appointment of women to boards and changes in monthly share prices of FTSE 100 companies on the London Stock Exchange. When psychologists Michelle Ryan and Alex Haslam examined the data more closely, they found no such link. They did, however, observe an interesting pattern in share prices before an appointment was made. While share prices tended to be stable in the five months before the appointment of a man to the board, they were consistently poor in the months before the appointment of a woman. Subsequent research on this “glass cliff” phenomenon suggests that women are seen as particularly suitable for precarious leadership positions, where the leader is expected to manage people through a crisis, function as a scapegoat, or lead without the support and confidence of stakeholders and the organisational network. Yet studies that comb for evidence of women’s “value add” do not take account of the “glass cushion” enjoyed by white men, which provides them with “preferential access to cushy leadership positions”, as Ryan and colleagues put it in a recent review.

Given all of this, it’s hardly surprising that Hoobler’s meta-analysis of the business case for female leaders reports “equivocal findings”, in the form of an inconsistent spattering of small positive relations between female leaders and financial performance, depending on which particular measures of leadership and financial outcomes are used. Nor can these studies fully disentangle cause and effect.

But a much more interesting question than whether or not a senior female appointment enhances financial performance is: why do we want to know? In a recent interview with Forbes, financial writer Michael Lewis commented that he was “just amazed that after the financial crisis [women] didn’t come in and say, ‘No more men running financial institutions.’” Yet it is not “the presence of men in leadership positions [that is being] … scrutinized by testing the link between their representation and firm financial performance”, observe Hoobler and colleagues. In other words, it is only women who have to economically justify their existence at the top; apparently it can be safely assumed that the men deserve to belong there. They were, after all, there first.

This observation illustrates a point often made in academic discussions: that what we really mean by “diversity” is people who don’t belong to the dominant group. And this “diversity is legitimate only in so far as it is … given a ‘business case for’ or ‘delivering a dividend’”, as Professorial Fellow Amanda Sinclair of the Melbourne Business School wryly puts it. “Accepting the imperative to argue the business case simply reinvigorates and legitimizes the status quo, acceding to a higher level of scrutiny and economic calculability than other spheres of activity.”

Nor is it hard to see where this logic takes us. If data suggests that a gender-balanced board would be exactly as profitable as an all-male one, is there any case for change? What if a critical mass of senior women boosted the value of “pink collar” work, like nursing and secretarial roles, increasing companies’ employment costs? And is it only women who need to demonstrate that they add value to the bottom line, or do, say, people with disabilities and Indigenous Australians also have to prove a causal link to financial enhancement? Of course, we don’t need to create false dichotomies: a business case can run alongside, oil the wheels of, the moral case. Doing the right thing is always more appealing when it is also financially advantageous. But this is where you end up if companies ask not what they can do to further equality but only what diversity can do for their bottom line.

In an oration for the Vincent Fairfax Fellowship ethical leadership program, Australia’s race discrimination commissioner, Tim Soutphommasane, decried the “relentless economism” that pervades public life, together with its bedfellow, managerialist language, which “strips away all feeling”, “reduces everything to technical calculation” and “leaves no room for passion or belief or commitment”. The perfect accompaniment to this economism is a research program devoted to trying to identify the precise percentage increase in profit caused by such-and-such increase in diversity. Consider what evidence isn’t considered a relevant part of this “business case”, what questions aren’t asked. Do senior women reduce gender segregation in the organisation, in the industry? Do they inspire other women, and men who also don’t fit the traditional mould? How does gender equality affect the power of masculine norms that stigmatise all things considered feminine, and mandate winning, toughness and being “one of the boys”? Could an influx of female directors, identified by economist Renée Adams and colleagues as less “shareholderist” in their values, bring about a renegotiation of the social contract between business and society?

The business case line of investigation seems to stifle passion, belief and commitment, and close down imagination. A corporate world in which women and men have equal access to power and responsibility simply cannot be extrapolated from existing data on the ambiguous effects of the handful of women there today. As Swedish journalist Katrine Marçal puts it in her book Who Cooked Adam Smith’s Dinner?, “Thousands of years of history would have to be rewritten in order to lead up to the hypothetical moment that an investment bank named Lehman Sisters could handle its overexposure to an overheated American housing market.”

Of course, the business case narrative has a strong pragmatic appeal and value: it speaks the respectable language of money to leaders who have to answer to others. But there has to be change and action to justify in the first place, and we can wonder just how motivating the prospect of modestly increased returns to shareholders really is. Last year, the Australian Institute of Company Directors wrote to the chairs of ASX 200 companies that had either no women or just one woman on their boards, to ask why. Among the replies were “women aren’t reliable enough to be long-term board members” and “women talk too much and make the board meeting too long”. I think it can be said with a reasonable level of confidence that someone who can defend an all-male board with that kind of debunked old-school sexism would rather drown in business case correlations than admit that the appointments to their board might not be 100% meritorious.

Amanda Sinclair, along with many other sceptical academics, notes that the business case approach relies on “a misunderstanding that values and beliefs are changed by rational economic argument”. If only we can just collate enough evidence of profit enhancement, the “economic incentives will magically remove long-standing racist or discriminatory attitudes”. This, of course, is such an implausible model of human motivation that “not even the economists believe this”. It wasn’t economic rationalism that broke the glass ceiling. It was the feminist movement.

The converse belief – that only self-interest will persuade someone to promote equality – doesn’t seem quite right either. As Sinclair points out, the business case forces us to talk as if “diversity is … all about ‘strategic HR management’ not about people and how they are treated”. But justice and compassion develop early in us, and run deep. I strongly suspect that diversity advocates don’t care nearly so much about the effect of sexual harassment on turnover costs, or the adverse effects of sex discrimination on sales, as they perhaps feel compelled to imply. So why do diversity practitioners and researchers put so many eggs into the business case basket.

In an interview study of diversity practitioners from large private companies in the UK, Ahu Tatli found that “diversity practitioners strategically drew on the business case discourse in order to increase the resources and support available to diversity management activities”. As one interviewee from the retail sector put it:

You know, giving people a reason to change … OK you might know that you’re excluding a couple of people, [but] equally, if you’ve got enough talented people, there’s no sort of burning platform, there’s no reason to do things differently. Why would we then do something differently? … If you know the increased customer and staff satisfaction or if you can say that the average number of companies who do this will see a reduction in their recruitment costs of x per cent … then there are real tangible benefits.

“Diversity”, Tatli notes, “was treated as a ‘product’ to be ‘marketed’ and ‘sold’ to different stakeholders in the company.”

But equality isn’t a “product”. Nor are leaders rational, narrowly self-interested homines economici; they are people. In an interview study of more than 40 Male Champions of Change in 2016, Professor Isabel Metz of the Melbourne Business School found that the most active, passionate members tended to be driven by a desire for a fair workplace, sometimes alongside personal or vicarious experience of discrimination or exclusion. The business case did draw in some Champions, but they tended to be less, well, champion-y. Metz’s observations align with those of a 2009 report by Catalyst, a non-profit organisation that promotes women’s advancement in the workplace. The authors of Engaging Men in Gender Initiatives found that a strong sense of fair play most clearly sets apart men who are champions of gender equality from the rest of the pack. Limited though they are, these studies hint at something important. It seems to be men who care about the principle of the thing who are moved to action. So then why would we, as Tim Soutphommasane observes, “lapse into the kind of enervating economism that believes only a business case will be heard”?

My students showed me firsthand the energising power of the diversity narrative. In the very real world they hail from, pragmatism is a virtue. There is also much to be said for enlightened self-interest: its universal appeal makes it easier to sidestep the debate and get on with it. But at the same time we shouldn’t underestimate ourselves. The most important case for equal opportunity, the moral one, may also provide the strongest motivation.

This, in fact, seemed to be so even for the students I taught. Over the course of their time together, they had developed a strong collective interest in diversity issues. When I talked with them outside of class, some of the men told me that, for them, this interest had been seeded by hearing about ordinary, everyday experiences of workplace sexism, from women in the class whom they had come to deeply respect and admire. And as probably goes without saying, their new-found passion for, belief in and commitment to gender equality had not been roused by concerns about the consequences for shareholders.

About the author Cordelia Fine

Cordelia Fine is a professor of History & Philosophy of Science at the University of Melbourne. Her latest book is Testosterone Rex.