Why we must pay attention to the diversity dividend

Following is an edited transcript of a speech Alex Harrington, chief executive of the Warren Centre, delivered at the Norman Disney & Young breakfast function celebrating International Women’s Day on 8th March.

There has been much to celebrate with International Women’s Day, if not least because the need for gender diversity is receiving the attention it deserves. However, pausing for a moment presents an opportunity to talk about the links between diversity and innovation and why I believe gender diversity plays a pivotal role in a much bigger picture that humanity is in urgent need of addressing.

Gender is the simplest of diversity considerations and, ensuring that there is a strategic approach to have full participation by the workforce simply makes sense. Addressing gender diversity will provide the tools to embrace more complex diversity opportunities such as ethnic, cognitive and experiential diversity.

Diversity offers significant benefits to organisations and there are many different types of diversity that offer a direct dividend to the company. Firms that are uniform in the way they think and behave are at risk of missing subtle changes in societal expectations and, in turn, how changes can radically alter future returns.

The Global Financial Crisis presented such an example. It was, in effect, not what any one individual organisation did that led to the GFC, but the fact that, collectively, the US banking industry behaved in a consistent way that created the magnitude required for catastrophic failure. The IMF has speculated as to whether the GFC impacts would have been so significant had the finance sector been more gender balanced.

We are a diverse and highly connected species but our businesses do not always reflect this in the composition of the workforce. Humans travel and migrate more than ever before and Australia is no exception. We are an appealing country with a (traditionally) egalitarian society, stable and consistent government, a strong industrial relations culture and a very mild climate and environment. It is easy to see the appeal without even getting to the tourism pitch. Multiculturalism is evident, particularly in metropolitan environments. The 2011 census indicates that almost a quarter of Australia’s population was born overseas and 43 per cent of us have at least one overseas born parent.

Diversity is valuable. According to 2015 work by McKinsey, gender diverse firms are 15 per cent more likely to outperform than their counterparts. Firms that are ethnically diverse are 35 per cent more likely to outperform. This benefit is increasingly referred to as the diversity dividend.

The US social scientist, Scott E Page notes that it can provide a foundation for innovation, insurance, productivity, robustness, collective knowledge and be in itself a foundation for further diversity. These rewards are not easy to collect, and we need to overcome centuries of evolution to do so.

Humans are rapidly embracing new technology but we are also becoming impatient. We expect more from our environment while speculating how our world might change with the next technological development. This pace of change and the lack of progress in addressing gender diversity presents a good opportunity to ponder what the future might hold for humanity and where gender diversity sits in this bigger picture.

Perhaps we should start with why are we even still talking about gender diversity? It is 2017. Women have had the right to vote and stand in parliament for more than a century. Change takes time and there are a whole myriad of factors that limit our ability to point to significant progress.

The World Economic Forum publishes an annual report: “Measuring the Global Gender Gap”. This report seeks to recognise that women need to be part of the dialogue on health, education and governance particularly to be active participants in a fully inclusive society. Nations are benchmarked on economic participation and opportunity (pay, advancement and participation), education, health and survival and political empowerment. Australia is ranked 42. We are behind Moldova, Namibia, Mozambique and Cuba, just to name a few. We are weakest in economic participation and opportunity, and political empowerment. Not surprisingly the Nordic countries rank highly but the report notes that no country has closed the gender gap. At our current rate the world will not reach gender parity for another 170 years or until 2186 – this conversation will need to continue for at least another three generations.

Taking a closer look at engineering, a major factor in addressing gender diversity is ensuring balanced representation of women in management. The Australian Workplace and Productivity Agency report into engineering skills in 2013 concluded that engineering firms did not report gender diversity as a major issue but the data is concerning nonetheless. According to the APWA study women made up only 10.4 per cent of senior engineering managers compared with 46.6 per cent for the all industries average.

It seems hard to defend any strategy that does not seek full participation, particularly if we accept the principle that society sits within the world created, largely, by engineering. Work–life balance is an oft cited factor limiting female participation and advancement but engineering is a very diverse field. If we examine engineering as it relates to the built environment is useful then we should find a sector that may offer greater potential for work life balance. There is no FIFO, shift work is an anomaly and risks are relatively manageable. For the most part the built environment is about seeking good design and good engineering and then hopefully efficiency operations. It takes a talented engineer or ops manager to deal with lift failure or elusive thermal comfort while keeping people happy and maintaining, or of course improving, the NABERS rating. But it’s not life or death and the day typically runs more or less to business hours give or take contractors.

When I attended the AIRAH national conference two years ago I sent a text to the CEO suggesting maybe a discount for female attendees. Not seeking any advantage but because I could count on one hand how many women were in the room. And that was before a panel discussion that sought to understand how CIBSE had managed to achieve a female membership rate of six per cent. If women tend to be more sensitive to thermal comfort and thus potentially able to offer a perspective on whether thermal comfort expectations were on track, could they not have more engagement in designing, building and operating the built environment?

In order to redress gender diversity it is necessary to step back and understand some of the drivers affecting our behaviour. Our bias against diversity is deeply programmed. Discriminating against those who are different provided our early ancestors with a crude form of risk management. As Benjamin Franklin put it, “Distrust and caution are the parents of security.” This natural caution also provided the basis for forming clans or communities, based on similarities. Expectations on roles, particularly gender-based ones, evolved over time, changing as society dictated, and to support the structure and requirements of these communities. As humanity evolved, alliances based on similarity became the foundation of segregation along racial, religious and gender boundaries. These characteristics were mostly obvious to the observer creating a simple basis for discrimination but this same approach also provided a deeply coded basis for “in group bias” or what became known as social identity theory.

This principle – that we are each comforted and reassured by observing similarities around us – is also known as affinity bias and it is the first thing to overcome if we are to fundamentally shift our predisposition to discrimination. In male-dominated sectors such as engineering, the risk of gender discrimination based on the principles of affinity bias is high, both as a conscious and an unconscious bias. And this bias is not exclusive to male decision makers. Affinity bias or group thinking has been cited as a major factor in causing the GFC. The discrimination that arises from affinity bias can also be exacerbated by the perception that recognising the value offered by a diverse population presents as a threat or devaluing of one’s own characteristics and contribution. At this point a choice based on gender is potentially either adversarial, if the selection is counter to one’s own gender, or preferential if it is the same. Separating these elements so that affinity bias is recognised and managed without adversity is a key requirement in addressing diversity.

McKinsey identified sponsorship of female succession as a key strategy, which is why the Champions of Change is an important element. There are many strategies to begin the process of addressing gender diversity but I’m going to talk about three potential ones that are aligned with the central theme of this talk.

The first is to ensure selection processes are blind to gender and therefore avoid bias completely. This worked surprisingly well for short film festival Tropfest this year. Removing any gender markers from the film submissions prevented judges from knowing whether a director was male or female. The number of female finalists in the competition in 2016 was five per cent. With the addition of the gender “blind” judging in 2017 this figure rose to 50 per cent. Developing a number of strategies will become increasingly important to embrace other diversity opportunities such as race, experiential and cognitive diversity.

The second option is to force measures such as the use of targets or quotas. This is the least comfortable option for most people, however it has been gaining some interest. Christine Lagarde, head of the IMF, for example, has expressed a desire for gender quotas to be considered based on the rate of progress thus far. While publicly reported, voluntary quotas might be effective, engineering must consider the readiness of the supply chain to meet the potentially higher demand for female engineers.

This supply chain begins with STEM education in primary school. Quota systems would need a mechanism to ensure sufficient quality candidates are available. This is not to say there are not brilliant candidates, however it becomes a numbers game. Currently Australia has 14 per cent female engineering undergraduates and this would need to increase to provide greater numbers of female engineering graduates. This in turn requires greater impact in STEM education strategies enabling full access by female students in particular, and currently this is not the case. Students require an early awareness of STEM starting in primary school so as to develop skills in these areas with confidence. Of particular importance in providing the foundation for engineering studies are secondary studies in higher maths, chemistry and physics. Participation rates by female students would need to be addressed. For example, in NSW in 2010 just over six per cent of girls studied advanced maths for the Higher School Certificate with only 1.5 per cent of girls studying the aforementioned combination of advanced maths, chemistry and physics.

More broadly, on a global basis the ability for all girls to access education is limited. Globally on any given day 130 million girls did not go to school. Many are actively denied education while others are required to accept more domestic obligations limiting their ability to seek education. Strategies are required to both increase engagement in STEM education strategies, and to develop interest and confidence in the subjects themselves. Without this foundation, the pathway for a career in engineering is severely constrained.

Recent dialogue has called for a sort of “feminising” of STEM subjects so as to increase participation, however many, including the Warren Centre, have called for more practical STEM-based teaching with, and this is vital, appropriate support for the teacher cohort to ensure STEM subjects can be introduced in primary years, with confidence and competence. In order to ensure full participation in technology and engineering by more women, education and increasing participation must be considered across the entire supply chain.

The third option to avoid affinity bias is to consider an affinity with humanity rather than with any subset of it. This latter option opens up some fundamentally different thinking that I believe is vital if we are to have a strong society for the future. Every person has their own personal lives, preferences and objectives. These almost always predate the role as an employee or a part of an organisation, but if the roles of the human are subordinate to the role as an employee, then compromises are made and these can have significant and long-lasting consequences. When work demands impinge on family and personal life, then life becomes a balancing act with limited opportunity to maintain a high standard of performance. Limited time with family, failing to find time to exercise, etcetera, are well documented issues that restrict the opportunity for thriving individuals who in turn can be engaged employees. Our employment models have changed little since industrialisation but we have to question whether it is sensible to continue wholeheartedly on this course into the future. There is a looming and vital reason to challenge the way we think about this and it is to do with technology.

Society has lauded the changes that will occur with each technology wave. But we have often been wrong. Early computers were envisaged as a niche requirement with no consideration for home or personal use and yet computing power has increased exponentially in the last 60 years. Many of us can recall the advent of the mobile phone with claims we would be able to work anywhere at any time. The modern employee would enjoy a level of unprecedented freedom and productivity. This hasn’t necessarily been achieved and most of us still go to an office daily but we are indeed contactable 24/7. Technology hasn’t always been the expected saviour.

This wave of technological innovation we are currently experiencing includes the rise of automation and AI. Considerable focus has been given to the risk of workers displaced by automation. The CSIRO report “Tomorrow’s Digitally Enabled Workforce” claims that almost half of Australia’s jobs will be taken by a robot or automated system over the next two decades. Harvard Business Review recently pondered how humans might differentiate and compete in this environment, citing emotional intelligence as a valuable differentiator. But if we cannot effectively engage to deliver gender diversity then will we be any different from the robots? Robots can operate in many cases continuously, without the need for lighting or breaks so competing on cost is futile. There is little upside in valuing humanity in the workplace in comparison with autonomous systems and eventually AI. Humans have the capability to learn and adapt when discrimination is recognised and understood, but autonomous systems will maintain the bias they are programmed with. We need to think about how to be more adaptive and pursue a sustainable future for society and avoiding discrimination within humanity will be vital.

There is one final advantage that humans have over robots and that is to do with creativity and its role in innovation. Psychologists cite divergent thinking as the foundation of creativity. Divergent thinking in a group is almost impossible without diversity. Scott Page simplified this opportunity as the combination of individual ability with diversity leads to collective ability. It is our differences that offer the greatest potential value. For humanity we do not yet know the upper limit of our capability. Our ability to evolve to incorporate different diversity strategies begins with our ability to address gender equity as the most immediate, substantial and straightforward diversity challenge.

Alex Harrington is chief executive of engineering and science policy think-tank the Warren Centre. To watch Alex delivering this presentation, click here: https://www.youtube.com/watch?v=M0IiFRY-lQM

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