Welcome
ESG

Next Steps for Companies That Pledged to Do Better on Diversity

Aug. 4, 2020, 10:00 AM

In June, spurred by worldwide anti-racism protests, companies pledged to do better on racial equality. Two months later, after making internal and public declarations about their commitments, some leaders may be wondering how to handle the next steps.

It starts with gathering data, say experts in diversity, equity, and inclusion (DEI). Ruchika Tulshyan, founder and chief executive officer of consulting company Candour in Seattle and author of The Diversity Advantage: Fixing Gender Inequality in the Workplace, suggests an internal audit. How many people of color does your organization employ, and how senior are they? Have you measured employee engagement levels by race or gender? Do you have performance reviews to indicate how fair and inclusive managers are?

Once you know where you stand, set clear, measurable targets. “Deal with the problem using the tools businesses use for any problem they actually care about—evidence, goals, and metrics,” says Joan Williams, a professor at University of California Hastings College of the Law who studies gender and racial bias. Especially helpful for setting objectives: Look not only at outcome metrics (how many Black people are in the C-suite) but also at process metrics (performance review ratings). Those can help identify why outcomes are uneven. Communicate these goals to staff with a transparent, long-term vision about why meeting them is vital. Tie it back to the company’s mission and values so employees feel they have a stake in the outcome.

As with any reform, there may be resistance. “People don’t volunteer to change,” says Abigail Mary Dunne, a senior faculty member at the Center for Creative Leadership in Greensboro, N.C. Win skeptics over by talking about what your company is missing out on by failing to be more diverse, she says. And though you can make the robust business case for diversity, she adds, make the moral case, too.

The next step is to hold employees at all levels accountable for meeting goals. That’s no different from any other vital business initiative, says Kira Hudson Banks, a consultant and psychology professor at Saint Louis University. Be upfront about progress, even when it’s uneven or stalled. “To be accountable doesn’t mean to be perfect,” Banks says.

Meeting diversity goals will take much more than training sessions on topics such as implicit bias. “Training can be helpful and start a conversation, but only if it’s part of a larger strategy,” says Ella Washington, a professor at Georgetown University’s McDonough School of Business and a leadership coach. Relying too heavily on anti-bias training can give the inaccurate impression that racism is an individual, not a structural, problem. Similarly, mentoring programs and employee resource groups, while popular, are unlikely to create lasting, systemic change in the absence of strong organizational goals. Banks adds, “We can’t nice our way out of racism.”

Any serious initiative requires leaders to analyze their internal processes—formal ones, such as hiring and promotion, and informal ways decisions are made and work gets done.

With hiring, recruit from a broader applicant pool and work with executive search companies that specialize in diversity. Make sure your candidate pools have multiple female and non-White candidates. Research by Stefanie Johnson, author of Inclusify: The Power of Uniqueness and Belonging to Build Innovative Teams and a professor at the Leeds School of Business at the University of Colorado at Boulder, has shown that when half a candidate pool is non-White or female, the hiring committee has a 50-50 chance of choosing one of those applicants. When only one person in the finalist pool is non-White or female, that person is never chosen. You might also anonymize the application process, removing names and other race- or gender-identifying details from résumés; this effectively boosts underrepresented candidates’ success, Johnson’s research has found.

Williams suggests moving to more structured processes for job interviews and performance reviews. Having standard questions and criteria can reduce disparities. One experiment using a structured review process led to Black men and White and Black women getting higher bonuses. In a different study, an insurance company that added objective criteria to the interview process offered jobs to 46% more minority candidates than it had under the old, subjective approach.

When setting salary ranges, Dunne suggests that human resources managers base their recommendations on fair market rates. Managers should share that research with employees during the compensation conversation so hires can see how management arrived at its numbers. Don’t base salaries on what people made in previous jobs; a recent study shows this perpetuates inequities, which is one reason 14 states have made it illegal to ask job candidates about it. The research, led by Boston University economist James Bessen, found that in those states, Black employees saw a 13% pay increase after the ban went into effect. Women saw an 8% uptick.

Making progress on pay and promotions is only part of the challenge. “Representation is not equity,” Banks says. Diversity might be a numbers game, but equity and inclusion stem from company culture—the informal systems that are harder to measure and change. Employee engagement surveys, company culture assessments, or focus groups can help businesses track if they’re creating an inclusive workplace, Georgetown’s Washington says.

Middle managers have an outsize impact on company culture. They shape how engaged direct reports feel and how well they perform, Dunne says; too often, “you have talent that is completely and utterly buried by inept managers.” She says “race-laced” interactions—such as underestimating a Black employee’s qualifications—make those workers want to shut down instead of investing more in their work.

To see how they’re doing on inclusion, middle managers can create dashboards, Johnson says. Make a spreadsheet to keep tabs on who gets what assignment, making sure you’re handing out the plum ones (and the scut work) fairly and spending one-on-one time with everyone on your team. This makes annual performance reviews easier to write, because you have clear records of what people did.

On the other end of the influence spectrum is the chief diversity officer, who too often lacks the authority to make any real changes, says Tulshyan, the Seattle-based consultant. Too many CDOs report to the general counsel’s office (focusing on compliance issues) or human resources (focusing on recruiting). For diversity initiatives to succeed, the CDO should report directly to the chief executive. “If you have a DEI initiative that is not led by someone with the authority to make structural change, it is going to be ineffective,” Williams says.

Another dead-end strategy, Johnson says, is promoting diversity by promoting meritocracy, without explicitly talking about race or gender. Experiments show that when researchers emphasize choosing the most qualified candidate, study participants overwhelmingly choose the White male—even if his experience is identical to everyone else’s.

Above all, the most important strategy for a more equitable and inclusive environment is persistence. This process is going to take awhile; there won’t be a point at which you can declare success and move on. “Though this moment in time has released a lot of energy, we can’t be discouraged by lack of immediate change,” Washington says. “Those of us who have been doing this a long time know it can be great when there’s energy, but there can be whiplash if things don’t change overnight.”

To contact the author of this story:
Sarah Green Carmichael in Boston at sgreencarmic@bloomberg.net

To contact the editor responsible for this story:
Howard Chua-Eoan at hchuaeoan@bloomberg.net

Bret Begun

© 2020 Bloomberg L.P. All rights reserved. Used with permission.

To read more articles log in. To learn more about a subscription click here.