An ‘opt-out’ system of automatically considering all qualified women as candidates for top jobs is a better way forward, says Lata Gangadharan. (Photo: Getty.)
An ‘opt-out’ system of automatically considering all qualified women as candidates for top jobs is a better way forward, says Lata Gangadharan. (Photo: Getty.)

BusinessJuly 10, 2019

Forget quotas: How an opt-out system could boost women in leadership

An ‘opt-out’ system of automatically considering all qualified women as candidates for top jobs is a better way forward, says Lata Gangadharan. (Photo: Getty.)
An ‘opt-out’ system of automatically considering all qualified women as candidates for top jobs is a better way forward, says Lata Gangadharan. (Photo: Getty.)

Quotas of women at the top are creating a backlash; an ‘opt-out’ system of considering all suitably qualified females for promotion is a better way forward, argues an expert.

For years women have been told that to break through the glass ceiling they need to be proactive, find mentors, deconstruct the barriers they create for themselves, and ‘lean in’, as uber-tech boss Sheryl Sandberg famously urged her fellow female in 2013.

Even though it’s the 21st century and over half of New Zealand university graduates have two X chromosomes, our stubbornly low number of women leaders is because the female of the species is simply less competitive than her male counterpart – or so the theory goes. Ladies, you don’t push yourselves forward for the top jobs because you’re worried about being seen as aggressive, apparently.

Rather than putting the onus on women to create change how about we debias the organisations they work for, Lata Gangadharan, an experimental economist at Monash University, told the New Zealand Association of Economists conference in Wellington last week.

Gangadharan has led a series of research projects on the topic and made some enlightening discoveries. The most recent shows that using an ‘opt-out’ mechanism to select leaders brings far more female candidates to the fore.

Gangadharan got groups of students to play a game comparing two methods of recruiting people for a leadership role. In one round they used the traditional ‘opt-in’ system of consciously putting their hand up for the job. In another round they adopted an ‘opt-out’ policy where everyone was automatically in the running unless they actively said they didn’t want to be considered for the promotion.

Under the opt-in system, more men than women put themselves forward, but with opt-out the gender difference largely disappeared.

While the opt-in process attracts people who are assertive risk-takers and rewards individuals who like to compete and win, the opt-out mechanism allows people with a far broader range of personality traits to rise to the top, Gangadharan says.

“The opt-out in general seems to increase participation, so it encourages everyone to think of themselves as leaders because it normalises it.

“With the existing mechanism we have, you have to do something active to become leaders, and that’s confronting or challenging for some people.”

There has been a great deal of interest in the results, she says. University sector body Universities Australia has recommended opt-out in its guidelines for improving diversity, and a large Australian public sector organisation is now implementing an opt-out system.

Monash University’s Professor Lata Gangadharan. (Photo: Monash University.)

Even after years of affirmative action such as quotas, female leadership numbers around the world remain dismal. 

In New Zealand the proportions are still pretty grim. Fewer than one in four directors of New Zealand’s top 100 companies are women, and 20 of our top 100 corporates have no female board members at all. It’s worse at senior management level – only four of the CEOs running the NZX’s top 100 are women. The government sector is doing better with half of public service chief executive roles now held by women.

Norway is often held up as a shining example, but even there where a 2003 law requires listed companies to reserve at least 40% of their board seats for women there has been a minimal impact on top management teams. The Norwegian workforce, parliament and government is close to gender balance, yet 89.5 per cent of the CEOs in Norway’s top 200 companies are male.

Worse, there has been a backlash against the quota system, Gangadharan says. “We found that firms are exiting the Norway stock exchange because they think that having this mandatory quota on them is very limiting, and they prefer not to be listed rather than have to comply with these regulations.”

Gangadharan knows a bit about backlashes. Another of her studies was in the eastern Indian state of Bihar, which passed a law in 1992 requiring that a third of all village council heads be women. Gangadharan and her team conducted a simulation game in a random selection of villages, forming groups of four comprised of two men and two women. Each participant was given a sum of money and told they could put as much as they liked towards a common good project such as a school building or water purification project. Alternatively they could walk away with all the funds. In half of the groups the position of leader was assigned to a woman.

The study found that the men in the female-led groups contributed much less to the collective projects than those in the male-led groups.

There was a backlash against female leadership, Gangadharan says. Significantly, the backlash was stronger in villages where there had been at least one female head. The conclusion was that men considered leadership and power to be a male domain and to upset that order was to encroach on their gender identity. In short, the men were acting out.

Intriguingly the bias wasn’t as strong in villages where there had been several female heads since the quota system came into effect. “They got used to it, but it took 15 years,” she says.

Even though Norway and India are totally different environments there are parallels in their experiences, she says. “It perhaps manifests itself in slightly different ways, but I think this problem of how you react when people go against social norms exists everywhere.

“This impacts negatively on women’s leadership.”

Women on Boards chair and former Hamilton mayor Julie Hardaker isn’t convinced by the opt-out idea.

“What we know is that there isn’t a shortage of candidates when we talk about board roles, and in fact there’s plenty of adequately qualified, exceptionally qualified women. The question really is why are they not getting selected and appointed?”

Women on Boards supports quotas because they are about making sure that those within the qualified pool actually get the job, she says.

“So I’m not sure whether opt-out works there. Because the challenge around the board table is getting those qualified women to be appointed.”

Asked about a potential backlash, Hardaker says she’s heard every argument under the sun. “It’s common in these discussions, ‘oh there’s not enough to select from, we don’t get any capable female candidates, we don’t want to be compelled because then we have to appoint people who aren’t capable’.”

Even if organisations were to move to an opt-out system “they’ve still got to actually appoint”, Hardaker says. “And I think this is where the debate is, what are the barriers to actual appointment, because from my perspective working in the governance space there’s no shortage of capable women. And many women of course do put their names into the pool.”

A reluctance in women to put their hands up for a leadership role is “not a common theme I’m hearing”, she says.

New Zealand Rugby board member and former Black Ferns captain Dr Farah Palmer. (Photo: Getty.)

Dr Farah Palmer is a senior lecturer at Massey University’s School of Management and is on the boards of both New Zealand Rugby and Sport New Zealand. An unofficial ‘opt-out’ system exists in sport and the public sector in the form of shoulder-tapping potential candidates, she says.

“I often might get an email from people saying ‘this has come up, would you be interested’. It’s up to me to say yay or nay.

“New Zealand Rugby is looking to see who we’ve got that is interested in taking governance roles. We’ve got our Women in Rugby governance workshops and webinars that we run, and we are trying to identify women that are in these roles already at the provincial union [level].

“Because people do potentially say, ‘I don’t have 9 out of 10 requirements for this role. We go, ‘don’t bother about that because lots of people don’t have all the elements that are required. But if we feel that you can learn and develop and you’ve got other qualities that we want, then why not’.”

She can see the benefits of a formal opt-out mechanism, Palmer says. At Sport New Zealand they are staying away from the term ‘quota’ but instead suggesting targets for encouraging more women and girls and structural change. “That does get away from that backlash a little bit.

“I think there’s the underlying tension that by providing quotas we’re not having women get there on merit.

“I don’t agree with the idea that there aren’t women out there with the right set of skills and experiences and networks. I do think that there’s often a backlash, but I don’t think it’s warranted,” Palmer says.

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Mad Chapman, Editor
Aotearoa continues to adapt to a new reality and The Spinoff is right there, sorting fact from fiction to bring you the latest updates and biggest stories. Help us continue this coverage, and so much more, by supporting The Spinoff Members.Madeleine Chapman, EditorJoin Members

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