More than three in four Fortune 500 companies justify their workforce diversity, equity and inclusion (DEI) efforts by making the business case. It sounds like this: By making our workforce more diverse, we’re building a more innovative and competitive company.
The problem? There’s a significant disconnect between a company’s stated argument for diversity and the psychological reality of decision-making.
Your employees, future employees, customers and investors are watching.
As some CEOs weigh the future of their company’s DEI efforts amid recent legal challenges, Williams’ research offers both clarity and caution. While leaders have fallen back on the “business case” for hiring and promoting employees from historically marginalized groups, this rationale can trigger resistance, backlash, and biases, particularly among White decision-makers, according to research by Jamillah Bowman Williams, a visiting fellow at Harvard Business School’s Institute for the Study of Business in Global Society (BiGS). And perhaps even worse, DEI efforts based on the business case usually fail to address the root causes of inequality.
“Your employees, future employees, customers and investors are watching,” she said. “They're looking for more than just a press release or a DEI report. They want change.”
In a study by Williams, who is also a professor of law at Georgetown University, White participants who watched a video that included common research findings about the benefits of diversity were less likely to appoint a Black teammate to a leadership position, compared with those who weren’t exposed to this research. Those hearing the business case were also less likely to agree that racially diverse teams perform better.
In another study, Williams found that a multiracial sample of managers exposed to the business case were less inclined to promote a Black candidate than those who weren’t exposed to this messaging.
Superficial efforts don’t stick, even if they generate early results
Standing up an effective diversity program based on a business case can be particularly problematic because it leads to disconnects at two levels:
Individually, it can make leaders exhibit more bias.
Organizationally, it does not move leaders to confront biased HR systems and corporate cultures.
What this means is that a company might communicate its commitment to diversity because of the benefits it brings, but its efforts and programs may be short-lived or be the first things to get dropped amid competing priorities, conflicting incentives, or adversity.
“They're focused so much on the surface-level benefits—just bringing people in and getting a market jump or a profit jump. That's not going to solve the deeper issues that organizations need to be facing,” Williams said.
In 1996, Harvard Business School professors Robin Ely and David Thomas were among the first scholars to point out that seeking benefits of diversity in superficial ways can alienate employees and deprive companies of the insights and talents of employees from historically marginalized groups.
Research identifies “principle-practice gap”
In her qualitative research on what she and her co-author Jonathan Cox call the “principle-practice gap,” Williams finds that leaders who think about diversity initiatives in terms of the benefits and “bottom line” are the least likely to follow their commitments with action. Conversely, leaders who take steps to expand opportunity tend to be people who acknowledge the underlying inequality and believe that increasing diversity is the moral thing to do.
Unfortunately, you can still profit while marginalizing groups of workers.
“It's about the fact that there are barriers to inclusion and there has been a history of exclusion and continuing race and gender hierarchies,” Williams said. “It's not a rational issue. Unfortunately, you can still profit while marginalizing groups of workers.”
Six steps toward meaningful change
Williams says that corporate leaders who are sincere about recruiting and retaining a diverse workforce must reinforce their DEI programs—with a focus on reimagining their messaging. She offers the following six steps to guide their efforts:
1. Don’t "cancel" DEI. Stay the course, because corporate diversity programs and goals are legal, Williams says, though no one can guarantee there won’t be a future challenge. Williams cited the work of another law professor, Atinuke Adediran of Fordham University, who researches racial targets for corporate hiring and promotion pledges and recently published a paper saying they are legally defensible.
This is important since 44 percent of public companies already have these types of goals, according to Adediran’s analysis of 901 public and privately held companies. Among the examples she cites: Meta’s goal to raise the representation of people of color, including Black leadership, by 30 percent between 2020 and 2025; Hartford Prudential Financial’s goal to have 20 percent people of color in senior leadership roles by 2030, and Procter & Gamble’s open-ended plan to achieve 40 percent representation of multicultural employees at every level of management.
2. Hold up the mirror. Do the work you need to do to acknowledge the inequality that may exist in your organization. Ask tough questions of yourself and your senior leadership team. What might we be doing in our culture and practices to reinforce inequalities, not only in society, but right here in our company? This is often a challenging step for leaders.
If you’re not using scorecards, dashboards or some other measurement system to analyze how everyone’s doing with hiring, promotions, retention and pay equity, then you’ve just discovered your Step No. 1. Another great source of qualitative data? Listen to employees from underrepresented groups.
3. Create an action plan. Once you and your leaders have identified internal systems and messaging that are stymieing efforts to boost and retain diversity at various ranks, think about what must change. Then, craft a plan of action and implement it, Williams says.
4. Be accountable for change. Once you start implementing the plan, Williams says it’s best to regularly assess your progress. Here, persistence and follow-up is required to ensure that key leaders remain committed over time—and that commitment can withstand turnover among both management and frontline ranks. Know that it is not an easy task to combat generations of subconscious learning and socialization around what workplace merit, leadership, and belonging “look like.”
5. Integrate across the enterprise. The most successful DEI efforts are those that don’t sit in a single office, but that get woven into different functions across levels, regions, and workflows, Williams says. This may seem intuitive, but it is common to miss this step. For instance, a chief diversity officer, diversity task force, and diversity recruiters can offer guidance and accountability, but they cannot do this work for the entire company. The CEO, hiring managers, and team leads across the enterprise should not only partner with DEI professionals, but also work on the front line to promote change, according to Williams.
6. Move from transactional to transformational messaging**.** The most critical part of this process is rethinking your motivations and messaging, Williams says. Move away from justifying diversity programs by claiming the “transactional” benefits of diversity. Instead, focus on the people involved. Shift to programs that humanize your employees and prompt leaders within your organization to care about their dreams and hardships they face.
“Once we as a society move away from monetizing and extracting profit from people's identities, we can move on to something where we are further connecting with people. We're relating to them, we're hearing their stories, and that's what helps us get to equity and dignity on a daily basis and closing these inequality gaps in the bigger picture.”
This article combines content originally published by The BiGS Fix.
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Feedback or ideas to share? Email the Working Knowledge team at hbswk@hbs.edu.
Image: iStockphoto/Edwin Tan