Diversity Dangers In The Boardroom

Written by:
18 May 2018
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The ideology of identity politics, the theory that individuals should be judged not on their personal merits but according to their gender, race, and class, has escaped from university lecture theatres and hit corporate boardrooms.

The Australian Stock Exchange wants at least 30 per cent of company directors of each of our 300 largest listed companies to be women.

The Labor deputy leader Tanya Plibersek has announced that a future ALP government would set a target that 40 per cent of chairs and deputy chair positions on government authorities be women (at the moment that figure is 33 per cent), and half of all government board appointments be provided to women. The ALP requires 40 per cent of its MPs be women. The Liberal Party doesn’t (yet) have gender quotas.

Policies such as those suggested by the ASX and the ALP that categorise people according to their identity as a member of a group confuse what should be the policy aim of any government – that all citizens have equality of opportunity – with something far more problematic, namely, equality of outcomes.

The argument for gender quotas for politicians, while it can be disputed, is at least coherent. The claim is that Parliament should reflect the composition of the community, and that quotas go some way towards redressing the historical discrimination suffered by women in our political system.

No such justification exists for what the ASX is trying to do.

To begin with, the composition of company’s board is a matter for the company’s owners, not the ASX. But there are more fundamental objections to quotas than this.

The ASX maintains that having diversity, as expressed through gender quotas on company boards is “good for business”. Such a claim is highly contested, and given the myriad factors affecting company performance is probably unprovable.

Company boards by their very nature can’t reflect society. Company directors are appointed because their qualifications and expertise maximise shareholder value.

Please explain

Beyond these issues there’s the question that as yet advocates for gender diversity have been unwilling to answer.

If it is claimed that having more women directors is “good for business”, advocates for diversity have to explain why it’s good for business. They have to explain what is the casual relationship between a director of a company being a woman and the performance of that company being better than it would have been if that director was a man.

One seemingly obvious answer to this question might be that women think differently from men. A dozen men sitting around a table might reach a different conclusion to a problem than would twelve women, or six men and six women.

Of course the difficulty with such an answer is it relies on the assumption that men and women could have different cognitive abilities – an argument supporters of gender diversity quotas are reluctant to contemplate.

In 2006 Larry Summers was forced to quite as president of Harvard University when he suggested there were biological explanations for the differences in the number of males and females in science and technology.

Last year James Damore was fired from Google after writing an email on the same topic. Someone like Canadian psychology professor Jordan Peterson might say society should acknowledge and celebrate gender differences and because men and women are different therefore of course company boards should be diverse. For such views Peterson has been labelled “anti-feminist”, and worse.

Another challenge that supporters of gender quotas have yet to deal with, is why diversity among company directors should be determined only according to gender identity.

Many theorists would argue that racial identity (if indeed there is such a thing as “race”) should be no less a factor in determining board appointments than gender.

Which is exactly what the Australian Human Rights Commission contemplated last month when it claimed there was a “dismal” lack of cultural diversity among government and corporate leaders. It found 97 per cent of CEO’s were of Anglo-Celtic or European background.

All of these issues merit discussion – but governments, companies and civil institutions should think carefully about the consequences of picking people for jobs according to their gender, skin colour or religion.

Related Research

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This article was originally published in the Australian Financial Review and was written by the author in their capacity as a contributor for that publication. It has been republished on the IPA website with permission. The views expressed are those of the author alone.

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