Companies looking to improve gender diversity in leadership could strengthen their efforts through a change to their recruitment process, according to research conducted by Monash Business School.
Researchers investigated how the opt-in mechanism, which requires potential candidates to register their interest in a leadership role or promotion, compares with the opt-out mechanism, where all qualified individuals are considered for a role by default.
In four incentivised experimental studies involving more than 1,000 participants, women were found to be much less likely to opt-in for a leadership role, which the researchers said could help explain the gender gap in leadership roles and promotions.
Previous research has shown that women make up only 7 per cent of CEOs in Australia and New Zealand and 34 per cent of ASX 200 boards.
Professor Lata Gangadharan from the department of economics at Monash University said that qualified women would often hesitate to apply for top roles even though those that apply had a strong chance of being successful.
“Many women feel they are not ready, they would rather wait and be more confident that they will be promoted,” said Professor Gangadharan.
The researchers found that the opt-in mechanism is primarily used by organisations across both the public and private sectors, which often send out “call for expressions of interest” emails when searching for new leaders.
“Under this mechanism, the default is that unless they opt-in, individuals are not considered for the leadership selection process, which can lead to a lack of diversity within candidates,” said Professor Gangadharan.
The gender gap “disappeared” when removing the competitive element to the selection process in the opt-in mechanism, according to their research.
“It seems that women do not want to compete under the opt-in mechanism. In contrast, under the opt-out mechanism, women are just as likely to compete as men,” said Professor Gangadharan.
Neither men nor women demonstrated a strong preference for either mechanism.
“The gender gap persists despite various programs designed to make women more confident, assertive and less risk-averse,” said Professor Erte Xiao.
“Our approach focuses on changing institutions' approach rather than asking women to change themselves.”
The researchers noted that more research is needed to be conducted into the attitudes towards the opt-out mechanism across different organisations.
Jon Bragg
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
