Will Quotas For Women Lead To Broader Diversity?

This article was originally published on Forbes on 11/18/20.

When Kamala Harris took the stage as Vice President-elect, it revealed how our leaders serve as our role models, for better or worse. Harris’s presence made it clear how much we need women, and indeed, women of color, in leadership.

Parents around the world watched Harris with their children of all sexes and races. They saw the future in their children’s eyes: a world in which diverse leadership moves from a shared central value to political and corporate reality.  Make no mistake, this is not just for the girls, or for the Black, biracial or South Asian girls. This is for all children, who learn from her example, to value other children without regard to their sex or race.

That image – of Harris taking the stage – proved a point made so eloquently by Justice Sandra Day O’Connor, our nation’s first woman Supreme Court Justice. In her statement on affirmative action, in which she said, “In order to cultivate a set of leaders with legitimacy in the eyes of the citizenry, it is necessary that the path to leadership be visibly open to talented and qualified individuals of every race and ethnicity.”

In politics, we should expect the Biden administration to prove the most diverse in history.  Five years ago, Canadian Prime Minister Justin Trudeau named women to half his cabinet. When questioned why, he answered simply “because it’s 2015.” It’s now 2020, and we have every reason to expect Biden’s administration and cabinet will be the most diverse in U.S. history.

The private sector faces more challenges in some respects. Within the private sector, certain areas face greater challenges. The exclusion of women and people of color from leadership marks millions of missed opportunities, of brilliance and creativity left untapped, of profits and growth left unexplored. Good governance demands the inclusion of talented people from all backgrounds.

California is leading efforts to rectify the lack of equity in private sector leadership.  It passed a quota for women on boards in 2018 and then in late 2020 a similar quota for “underrepresented groups,” which includes a variety of people of color as well as LGBT people. These quotas require representation on corporate boards, leading to the inclusion of a critical mass of women, people of color, and LGBT people by the end of 2022.

How do these quotas related to each other, and how will companies respond to these initiatives? Will they comply willingly or resist the state mandate? Many have assumed a negative response, but the private sector in fact has stepped up to integrate women into leadership.

Let’s take cybersecurity as an example. Since the concern about foreign interference in the U.S. election, it’s clearer than ever than this industry plays a central role in our economy. At the intersection of two heavily male-dominated sectors – technology and defense – cybersecurity may face more challenges than most in diversifying its leadership.  With its fast growth, cybersecurity also provides opportunities for new entrants in the market, creating opportunities for diverse entrepreneurs.

Manish Thakur, Managing Partner of Option3Ventures, a specialist cyber investment firm, explained that most agree that diversity is good for business, including in his primary investment area, the defense sector. He added a note of caution: “Unless it is consciously pushed for, and that includes at the board level, it becomes so easy to copy and paste the same profile of person for top jobs again and again.”

While men outnumber women three to one in cybersecurity, women have more than doubled their presence since 2017. Despite these numbers, women have been finding more paths to management and leadership positions. Women’s increasing representation reflects the value on education in the cybersecurity field. It also surely comes from California’s quota for women, which put direct pressure on firms to diversify.  Inclusion of other kinds of diversity, including race and neurodiversity, prove challenging.

Increasingly, industry leaders are women. Galina Antova, for example, a cybersecurity entrepreneur and co-founder of Claroty.  Antova commented on how, thanks to  California’s quota, many women are joining boards for their first board position: “This proves essential, because once someone acquires some board experience, it opens up the potential for additional governance roles at other firms.”

In some contexts, a genuine paucity of potential leaders exists, including technology. One shocking statistic is that there are fewer women with doctorates in computer science today than there were in the 1970s. Of the many billion-dollar startup companies in the technology sector, only one was headed by a woman. Elizabeth Holmes’s Theranos turned out to be a vast hoax chronicled in the book Bad Blood.

Even with the relative paucity of women in the field, the pipeline issues may not serve as the principal hurdle for women, people of color and LGBT people. Antova argues that “the issues come later on in the cycle due to many factors, including conscious and unconscious bias.”  She also notes the effect of the double bind on women, in which women must behave like women, but also master work skills defined as male. Antova continues by observing that “society socializes and expects women to be more modest, and for some women this results in more modest behavior, perceived as less confidence, when they apply for those jobs, as they are trying to comply with expected social norms.” Quotas like California’s may force firms to take a second look at candidates who they’ve excluded unfairly.

With quota implementation, the path to leadership requires further exploration. Current leaders, mostly men, may respond to the news of quotas by voicing concern about finding people with adequate experience and skills. Advocates of diversity respond by urging men to look farther and wider, to include outsiders who not only possess the experience but also may bring fresh perspectives to allow firms to avoid groupthink-driven governance disasters.  

Famous failures aside, within this context, a new crop of leaders has begun to alter the landscape to foster inclusive leadership. A metaphor Antova used is that including diverse leadership is like drilling for oil. “If you’re drilling for oil, you don’t just wait at your desk, you actually go and drill in multiple locations to find the natural resource.” Likewise, for the inclusion of diverse leaders, firms have to make the effort to go beyond the confines of their usual sources for leadership.

Funding for innovative projects plays a central role. Typically, venture capital (usually all-male teams) often only take women entrepreneurs seriously if they come to present their projects alongside a man to make the project seem legitimate. This phenomenon of “venture bearding,” as described by law professor Ben Edwards, is one in which a woman with an idea hires a man just to appear legitimate. The entire phenomenon reveals just how challenging it is for any outsider entrepreneurs. The solution may be to diversify venture capital itself. Chenxi Wang, General Partner at Rain Capital, is an important example of how funding itself is becoming more diverse.

Will California’s POC/LGBT quota prove as successful as the quota for women? It seems clear that firms proved quite adept at including women in leadership to comply with the sex quota. Will they display a similar agility for other, perhaps more challenging, excluded “underrepresented groups”?

Perhaps California’s POC/LGBT quota may work precisely because it follows in the wake of the prior quota for women. Outsiders who become insiders may bring the ladder up after them, or keep it down for others to rise to power, as Harvard Law Professor Lani Guinier noted.

California’s quota for women elevated many women, previously outsiders, to their first board position. As outsiders, they may improve corporate governance. As new insiders, they may extend the ladder to other outsiders.

Here is where California’s second quota, for POC and LGBT people, may make a difference. The quota ensures the ladder stays down, by obligating firms to “drill” for diverse leadership.  Chenxi Wang makes an interesting point here: women, as newcomers to leadership, have an investment in opening up corporate hierarchies to include broader kinds of diversity. Quotas, as Chenxi Wang argues, “are a great way of getting an underprivileged population to front and center. [I]t’s an acceleration process.” If Wang proves correct, and quotas “accelerate” diversification, we may look in several years and find a corporate leadership landscape transformed by diversity.

California’s quotas may provoke controversy, but they also provide a strong case for how state leadership can guide firms toward more diversified leadership structures. The quotas, it turns out, may provide what Justice O’Connor referred to as a “path to leadership”: they prompt firms to engage the full potential of a diverse pool of leaders.


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