Diversity quotas will be a pain for employers

Plans to impose diversity quotas on companies seeking public sector work could be a major mistake.

For many businesses focusing on surviving the current recession, winning public sector contracts is almost imperative.

Yet, against this background comes the bombshell this month from equalities minister Harriet Harman that she intends to impose diversity quotas that organisations must meet if they are to secure these lucrative public service contracts.

Although this can be seen as another burden for business, the more controversial question is whether diversity quotas actually work.


There is a risk that imposing them may fuel animosity towards minority groups, where the perception might arise that those from minority groups have only been awarded jobs to fill diversity quotas – not because they are qualified and equipped to do the job. This could seriously disrupt workplace harmony, which could, in turn, increase grievances and divert management time from focusing on the business.

Businesses may also be forced into recruiting less able or qualified candidates because they happen to fit diversity quota profiles. Putting people into roles before they are ready may undermine that person’s confidence and actually hinder their career progression in the long term.

Some of those who could benefit from quotas have recognised this: when David Cameron sought to impose diversity quotas on his shadow Cabinet, it was female politicians who felt uncomfortable about potentially being appointed to fill the quota rather than on their own ability, even if this was only partially the case.


European governments that have sought to impose diversity quotas have met with huge opposition. Nevertheless, Norway took the controversial step six years ago of introducing diversity quotas on companies listed on the Oslo Stock Exchange. They were told they had to achieve a representation of women at board level of no less than 40%. Listed companies had five years in which to comply, after which they would be prosecuted and fined for non-compliance.

The general feeling in Norway is that this has not had the detrimental impact on business that was initially predicted. However, these quotas related only to sex were only imposed on large companies with large workforces from which to recruit – with a view to meet the quotas in a structured manner, and they had five years to comply.

A small business or charitable organisation that is looking at tendering for public authority contracts will not have the resources to act in such a way, instead the process may well be one where quotas are filled because they have to, without having any real commitment to equal opportunities. It is not yet clear whether there will be an exemption for small businesses.


If equal opportunities are to be truly addressed, businesses and government should look at the reason why minority groups are poorly represented within an organisation and seek to address that in a positive and constructive way.

By way of example, a business that does not promote flexible working and has a long-hours culture is unlikely to attract female workers and so should look at addressing the hours culture to increase the percentage of female staff. This type of initiative can easily be presented to the local authority in the tender process as a means of demonstrating a commitment to equal opportunities.

As Helen Giles, HR director of homeless charity Broadway, has said: “The reasons why women and some racial groups are under-represented at senior levels are complex and blindly imposing diversity quotas does not even begin to address this.”

Key points:

  • Businesses already having difficulty surviving in the current economic climate will feel only further burdened if they have to focus on diversity quotas.
  • There are serious doubts over whether diversity quotas actually work – do they in fact fuel animosity towards minority groups?
  • Business may be forced into recruiting lesser candidates because they happen to fit the diversity quota.
  • If equal opportunities are to be truly addressed, the government needs to look at the underlying reasons why minority groups are under-represented.

Vanessa James, head of employment law, SA Law

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