Shifting default: Improving gender diversity in leadership by ‘opting-out’ of default

Monash University

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Research published by Monash Business School reveals how an ‘opt-out’ mechanism in the recruitment selection process can help organisations narrow the gender gap for leadership roles and promotions.

Despite organisations facing increasing pressure to adopt diversity programs aimed at encouraging more women to participate in leadership positions, the proportion of women in those positions remains disappointingly low.

The research paper by Professors Lata Gangadharan and Erte Xiao from the Department of Economics at Monash University, with co-author Professor Nisvan Erkal, from the University of Melbourne, investigates how women’s participation in leadership selection can be increased.

Using a series of four incentivised experimental studies with over 1000 participants, the research team compared the opt-in mechanism – where potential candidates have to actively choose to register their interest in a leadership role – with the opt-out mechanism – where all qualified individuals are considered for the leadership position.

It was revealed that women are much less likely to opt-in for a leadership role, which may explain the gender gap and the lack of leadership participation.

Professor Erte Xiao says this opt-out mechanism can help with leadership roles as well as promotions.

“The gender gap persists despite various programs designed to make women more confident, assertive, and less risk-averse. Our approach focuses on changing institutions’ approach rather than asking women to change themselves,” Professor Xiao said.

Professor Gangadharan says qualified women often hesitate to apply for top jobs.

“When they do apply they have a good chance of being successful and sometimes the chance is higher than male candidates. But many women feel they are not ready, they would rather wait and be more confident that they will be promoted,” Professor Gangadharan said.

“We found that the leadership selection in both the public and private sectors relies predominantly on the opt-in mechanism where potential candidates have to put their hands up and actively indicate an interest in the leadership position.”

In many organisations, ‘call for expressions of interest’ emails are sent out whenever there is a need to select a new leader.

“To be considered for the position, individuals have to notify the authority of their interest. 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,” Professor Gangadharan said.

“We also found the gender gap disappeared when the competitive element to the selection process was removed in the opt-in mechanism. 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,” Professor Xiao said.

The researchers found that neither men nor women show a strong preference for either mechanism, suggesting that there is no attitude-based barrier to implementing an opt-out mechanism in their experimental setup.

More research is needed to understand the attitudes towards the opt-out mechanism in different organisations and institutions.

To view the research paper, please visit: https://doi.org/10.1016/j.leaqua.2021.101563

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