Why Corporate Diversity Programs Are Failing America

Diversity & Inclusion

The argument for diversity in the workplace is overwhelming. Research from McKinsey shows that gender-diverse companies are 15% more likely to outperform the market and ethnically-diverse companies are a staggering 35% more likely to outperform the market. That research is backed up with findings from many other sources too. Diversity is a business imperative not just because “it’s the right thing to do” but because it’s a proven factor in overall profitability and success in business.

The Costs of Failing with Diversity

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On the flip side companies, that fail to promote diversity and equality in the workplace, often find themselves in hot water. Merrill Lynch, for example, has spent nearly half a billion dollars paying out for racial and sexual harassment and discrimination claims. That’s a huge dent to put in shareholders wallets.

Diversity Isn’t Happening

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Despite the fact that there is a clear business case for diversity in corporate America and that there are serious business costs for getting diversity wrong; it’s no secret that it’s not happening. Industries as wide-ranging as the arts and banking simply aren’t become more diverse. They’re ethnically and gender homogenous as the nation itself becomes ever more diverse.

According to Fortune magazine the number of women holding top jobs in the Fortune 500 companies has actually fallen by 4% this year. That is in 2015 there were 24 female CEOs out of the 500 and in 2016 that figure actually dipped to 21 female CEOs.

The Harvard Business Review doesn’t paint a rosier picture of the proportion of black men in management either. There were only 0.3% more black men in managerial positions in 2014 than there were back in 1985!

But Why Isn’t Diversity Happening?

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That’s the million dollar question and one which results in a complicated answer. It’s not that corporate America doesn’t understand the importance of diversity; it’s that in general – it’s not going about creating diverse environments in the right way.

Unconscious Bias

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For example Google, a company which has a very public commitment to diversity discovered that despite that commitment – unconscious bias was stalling their ability to deliver on it. In essence they found that while the intake of women into the company was equal to men; a few years down the line – there were far more promoted men than women.

Why? Because it turns out that men are far more likely to put themselves forward for a promotion (a key part of getting ahead at Google for many people) than women are. It wasn’t that women were less-qualified or able; they simply weren’t using the system in the way that the management team had intended it.

Two Common Diversity Approaches

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Most companies with diversity strategies tend to fall into one of two camps when it comes to diversity:

  1. You celebrate the differences between people. You draw attention to those differences and then hold to the idea that they are what makes the company great; the ability to draw on different experiences and backgrounds to get the job done.
  2. You stress equality in the workplace. You tell everyone that they are employed because they are there on merit and that they are now part of single, large whole that works together and respects each other.
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On the face of it – these both seem like good ideas. They’re not identical approaches but they do acknowledge that diversity is important and try to integrate a diverse approach into the company culture.

So what’s wrong with that? Well research conducted by Apfelbaum et al. published in the Journal of Personality and Social Psychology examined the two approaches and drew some startling conclusions.

What they found was this. For minority groups which make up a substantial section of the workforce for example Hispanic workers in a company where one-third of the workforce is Hispanic; these two approaches work well. The level of turnover and staff attrition is reduced by both stressing equality and celebrating differences.

However, for true minority groups – e.g. those that make up less than 5% of a company’s workforce – one of these approaches sucks. Emphasizing equality gives a lower rate of attrition whereas celebrating differences increases attrition.

Celebrating differences makes people feel like they’re being singled out. That they’re only there to make up the numbers for a diversity policy. What they experience on the shop floor isn’t a diverse workforce but rather one in which they’re unique and it seems like “celebrating differences” is a weak explanation as to why they have a job at all.

What Can Be Done About This?

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So now we know that diversity programs are failing America because they’re not achieving their objectives; what can be done about this?

It’s time for companies to shift from diversity-by-the-numbers and quota driven recruitment should fall by the wayside. Instead companies need to look at developing strategies which are inclusion focused. That means first looking inside the business and asking how a diverse workforce can be empowered to seek and attain development and promotion so that the entire business becomes diverse and not just entry-level positions.

Then it means learning to promote that message of genuine inclusion outside of the business to make the business more attractive to a diverse workforce. People don’t want to be a tick in the box or a number on a sheet so that a manager can say they’re embracing diversity. The want to be valued and appreciate for what they bring to the table.

That means emphasizing equality and then taking substantial steps to deliver equality. Training managers is a good start but a scientific approach to examining how diversity is actually performing in a specific workplace is likely to provide far more valuable insight. That will include talking to members of the workforce to understand their current perceptions and what they need to set that right.

The cost of not delivering a diverse organization is one where the business is less likely to succeed in its marketplace and one where the risk of costly litigation is always lurking around the corner. It’s time for corporate diversity programs to come of age and support those who need them.