October 11, 2011 6:05 pm

Setting standards will encourage greater diversity

Most companies realise they need to make progress towards better gender balance. The question is how can they best measure that progress.

At least two projects – one for multinationals; the other for Australian employers – are looking at how to establish benchmarks that would allow companies and other organisations to evaluate progress against common standards. The Gender Equality Project, launched at the World Economic Forum in Davos in January, is developing what co-founder Nicole Schwab called “a standardised tool... for closing the gender gap”. In Australia, backers are testing the feasibility of Gender Performance Ratings, spurred on by the securities exchange’s latest corporate governance principles, which recommend boards assess annually their progress towards measurable diversity objectives.

Rather than threatening to punish failure to achieve certain objectives, both projects aim to provide an incentive for companies to improve policies throughout the organisation – in areas such as pay, recruitment and training – and then to publicise those improvements. For instance, the outline proposal for Gender Performance Ratings suggests making “five-star” awards to Australian organisations that rank highly in an annual survey, with the aim of “influencing corporate culture, staff and board recruitment practices” and “institutional investor behaviour”. Meanwhile, the Gender Equality Project aims to put in place a global gender equality certification system, more details of which should be announced at next January’s WEF.

Aniela Unguresan, co-founder of the GEP with Ms Schwab, says investor support is key, but a more important reason for companies to aim for certification is to demonstrate to current and potential staff that they have an edge over peers. The GEP hallmark should help companies recruit and retain talented female and male workers. “Gender equality is just the tip of the iceberg: it’s an expression of the ability of the company to reward more than one leadership and decision-making style,” she says. Jillian Segal, who is working on the GPR initiative, says the “main value” for rated companies would be “attraction of staff, retention of female staff and meeting self-generated targets”.

Whereas the GPR project is still at a relatively early stage, the GEP – established as a Swiss foundation – has signed up 11 companies, including Alcatel-Lucent, L’Oreal and Pfizer, for its pilot project. They will come together in Geneva in December to discuss progress and share best practice. The GEP would score companies across five areas of policy and practice – equal pay for equivalent work, recruitment and promotion, training and mentoring, work/life balance and company culture. A combination of an employee survey, statistics, a questionnaire and a qualitative analysis would assess processes and outcomes.

Ms Unguresan says all five areas have equal weight. Nellie Borrero, global managing director for inclusion and diversity at Accenture, another of the GEP pilot companies, agrees: “If you don’t get one or two of these right, it will erode the benefit you get with the other three.” Existing efforts to research and monitor corporate gender policies are useful but “certification raises it to a whole new level”, she says. There is a risk of “box-ticking” by companies, Ms Borrero concedes, but the process itself will “help companies raise the bar”.

Once the GEP certification system is running, companies will be able to compare how they have done against the aggregated performance of other members of the scheme. Ms Unguresan says she hopes that will encourage adoption of best practice and improvement across the whole group: “Our strategic choice was to set standards for certification that are ambitious,” she says.

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