Tuesday, November 18, 2008

Free choice the key to get more women on board

Federal Government studies released recently have claimed that the glass ceiling is bearing down on Australian working women, crushing their career aspirations.

According to the Equal Opportunity for Women in the Workplace Agency, the number of female executive managers has fallen to 10.7 per cent, a drop of 2 per cent compared with 2006.  The number of surveyed companies with no women executives has risen to 45.5 per cent, up from 39.5 per cent in the previous survey.

The results have been met with an outcry by feminists, social commentators and by figures in the corporate world.  EOWA chief Anna McPhee said "everyone should be concerned about this chronic waste of female talent".  Meanwhile, Nicole Hollows, an executive for Brisbane-based mining company Macarthur Coal Ltd, labelled the EOWA survey result as "appalling".

When thinking about how women fare economically, it is appropriate to consider the long-term trends.  It then becomes obvious that market capitalism has delivered the goods by improving the economic prospects for women.

Market-friendly measures, such as the removal of discriminatory formal barriers to workplace entry (as in the public service marriage bar), and access to tertiary education has seen significant numbers of women benefit from a growing economy.

Where a female business executive would have been unheard of a generation or two ago, we now have a public debate about the workplace proportions of women executives.

It needs to be borne in mind, however, that these changes are generational by nature, and cannot happen overnight.  A parent today has every reason to hold out high hope that his or her young daughter will have even more opportunities in the capitalist economy of tomorrow.

For some people the current rate of positive market-based change is not enough.  For example, some have called for a debate about workplace quotas enforcing a certain proportion of listed company executives to be female.  Norway is often seen as a role model in this regard, with a law that 40 per cent of board positions in publicly listed companies be held by women.

While proponents of the quota system suggest that it would effect change more rapidly than under market capitalism, the question is whether Australians would be prepared to accept the economic consequences of such radical regulation.

The problem with a prescriptive quota system is that it is highly likely to set women up to fail.  This is because firms would be obligated to fill high-level positions with women who are either unqualified or not yet ready to take the necessary step up the corporate ladder.  Productivity improvements could be compromised because of the quota mandate.

Such regulation could also create resentment among colleagues, who might feel that a newly promoted woman only gained her position via government regulation.  For men and women, a quota system would make it much harder to determine if people gained high-level positions on their own accord or not.

It is easy for an external observer to recoil in horror at what one might interpret as an "obvious" waste of female human capital, and so a blunt regulation like a quota sounds enticing.

However, the reality is that suitability of people for executive positions is not only influenced by their skills and capabilities, but by lifestyle decisions and changes in workforce participation.  These include real-life decisions such as starting a family, or choosing to transition from full-time to part-time work.  It will be difficult to balance an arbitrary, set-in-stone quota against the choices that many women routinely make.

Australian firms are fortunate to have excellent women already in high-level positions, with the prospect of even more to come as generations of young aspirant women enter the labour market.  It is best that we allow businesses to make free choices to employ more women, instead of going down the road of gender conscription in the workplace.


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