Business needs to get serious about diversity

By
Nareen Young
Blog
Topics Inclusion Gender

Equal employment opportunity and anti-discrimination legislative obligations have been in place for many years in Australia. Most organisations today have some kind of diversity capability in place and want to be seen as an ‘employer of choice’ to attract and retain the best talent. New reporting obligations on diversity in recent years has increased pressure on business to be more transparent about their diversity policies, programs and outcomes. But why then has there been such glacial progress in key diversity areas?

Let’s look at women’s leadership. The Australian Census of Women in Leadership shows that only 12 ASX 500 companies have female CEOs and women hold only 9.2% of directorships in the ASX 500. While this represents a small improvement over the past decade, more than half (56.2%) of ASX 500 companies have no women directors. 

And while we might think that at the very least there should be a new generation of women moving into leadership positions, the situation is even worse at executive level. An astonishing 63.1% of ASX 500 companies have no women in executive key management personnel roles. Despite some small progress of late, how can it be that after so many years of public focus on this area that we still have so few women in leadership roles in business?

Another persistent issue for women is that of pay equity. More than 40 years after the Equal Pay Case in the Federal Arbitration Commission established the principle of equal pay for equal work, women working full time still earn 17.6% less than their male counterparts. DCA recently calculated that over a 40 year working life a women in full time work (currently earning an average wage of $63,830 a year) would need to work for another 8.5 years just to catch up to a man on the average male wage.

But looking at women’s total earnings is even more concerning. ABS figures show that the gender wage gap for all employees (that is, including both full and part time workers) stands at $483.60 per week or $43,654 per year. Over a 40 year working life, this difference adds up to more than a million dollars – $1,005,888 – and would mean an average working woman would need to work an extra 23 years to catch up to their male colleagues!  Given that close to half of women – 46% – currently work part time and more than 70% of part time workers are women, the above figure is likely to apply to most Australian women.

So why does such a significant gender pay gap still exist despite decades of EEO programs, strong anti-discrimination legislation and considerable public discussion?

In my view, one of the main reasons is the barriers that continue to persist in many workplaces to flexible working. The great many workers who need or want flexibility including parents, carers, and people with disability are often either excluded from the workforce completely or languish in low paid, low status jobs with little chance of career progression.

From our work with our member organisations, it is clear that many organisations are working very hard to address these issues and are committed to maximising the benefits of diversity. So why are we still failing to make real progress in these key areas of diversity?

The Diversity and Inclusion Study released last week conducted by Korn/Ferry International, Futurestep and DCA examining the profile of diversity within organisations and the professionals leading and implementing diversity strategy sheds some new light on this. The research has revealed many organisations still have a significant way to go in getting traction with their diversity strategies, have low levels of senior leadership engagement on diversity, and many diversity managers have limited experience in the field.

The survey found half of organisations are only at the compliance (8%) or foundation (41%) stages. Some 81% of respondents believed senior leadership is critical to the success of a diversity and inclusion strategy but most senior level managers were only ‘somewhat involved’ or ‘not very involved’. 60% of diversity managers surveyed have no or limited experience in diversity before their current role. And a third of organisations do not have a designated manager with diversity and inclusion responsibilities at all!

Clearly Australian organisations are at varying stages on diversity – ranging from those in denial about the business relevance of diversity through to those that have got with the program and are successfully capitalising on the benefits. And sometimes, within each organisation exist pockets of excellence, as well as pockets of poor practice.

It is true that diversity management is an emerging discipline in Australia when compared to places like the United States where diversity practice has a much longer history. This is one reason why there are not a lot of really experienced practitioners around – and many are learning on the job. But, given the existence of decades of legislation in Australia, it is still surprising to me that we have so few people with significant experience in it.

The fact that EEO and diversity has historically been seen through the narrow lens of legal compliance, rather than a strategy that helps to grow and engage talent and competitiveness required for business growth is part of the problem.

It is also possible that diversity has been seen as a threat to existing power structures in some quarters, which may also help explain why it has failed to get traction. The predominance of women in diversity roles (70%) suggests we need to work harder to engage men, especially given the majority of people in positions of leadership right now are men.

Another contributing factor is that the diversity portfolio commonly sits under human resource management, which itself has historically often been viewed as not core to the ‘main business’. However, this out-dated view is being challenged with research showing significant ROI from investing in people. Indeed, leading (diversity) employers in Australia have long structured HR and diversity roles as senior strategic roles which report directly to the CEO.

We can change the way business approaches diversity. We need do this by continuing to demonstrate the strong correlation between workforce diversity, its effective management and positive organisational, work group and individual outcomes.

We need to engage both women and men in the diversity work in organisations and invest in engaging business leaders on the issue of diversity and its impact on the business bottom line.

And we need to emphasise the importance of ongoing professional development for practitioners, as well as importance of networks to enable emerging diversity practitioners to collaborate with and learn from seasoned practitioners (i.e. all the things that DCA membership provides!).

DCA’s unique knowledge bank of research, practice and expertise assists organisations across all diversity dimensions. Regardless of whether an organisation is just commencing its diversity strategic planning or is well advanced and looking for new frontiers in diversity thinking, membership of DCA will assist. It can be especially useful for new diversity managers, those organisations that have limited resources in the area or anyone who wants to know what leading practice looks like.

But most of all, organisations need to take a serious look at their diversity function to ensure they provide diversity managers with adequate resources and support, and ensure they have the strategic engagement they need. It is only then that we will begin to see progress on some of these intractable issues, and develop workplaces that are truly diverse and inclusive for all.

Nareen Young is Diversity Council Australia's Chief Executive Officer. DCA is the only independent, not-for-profit workplace diversity advisor to business in Australia. We offer a unique knowledge bank of research, practice and expertise across diversity dimensions as well as individual strategic advice and consulting on diversity strategies and programs. For more information on these or to become a member, contact us on (02) 9035 2852 or admin@dca.org.au.

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