published November 11, 2019

Diversity Should be Good for Business: So Why Isn’t It Working Better?

Diversity Should be Good for Business: So Why Isn’t It Working Better?
  • A growing percentage of companies have instituted policies to implement diversity and inclusion in the workplace.
  • Inclusive cultures make companies more innovative, give them larger customer bases, make them more responsive, and more profitable.
  • While diversity and inclusion have gotten better, there’s still a long way to go. A policy on its own isn’t enough.
  • Being committed to diversity doesn’t erase the challenges. Making it work can be a struggle. But it can work.
  • For those who fight discrimination, there can be setbacks and retaliations.
  • The benefits of diversity go beyond the workplace; the benefits also influence the culture beyond too.

Diversity is important. And besides being the right thing to do, it’s also been shown to make companies more profitable. But for many companies, it’s a completely empty concept.

While companies may talk about making diversity a priority, and many have made great strides, many haven’t.

First, the good news

A recent poll found that 40% of employed adults surveyed said that their employers had implemented new diversity and inclusion policies and/or training in the past 2 years; 43% of respondents also said that the attention to sexual harassment and racial diversity in the workplace is making a difference; 53% believe positive changes have been made.

The poll, a joint effort by The Associated Press and the NORC Center at the University of Chicago, also found:
  • 62% of black employees and 58% of Hispanic employees say diversity and inclusion programs and policies were important factors for them when accepting their current jobs
  • 27% of white employees found diversity and inclusion policies important in accepting their current job
  • 6 of 10 who have been exposed to new policies or training on harassment and diversity believe they’ve had a positive effect on their workplace
  • 53% believe an emphasis on recent sexual misconduct cases will bring a positive change for working women in the U.S.; 21% expect to see a beneficial effect for men
  • 43% believe that things will improve for black employees; however, racial groups in general believe positive changes are more likely to happen to other groups than their own; 46% of white employees believe things will improve for black employees—only 23% of black employees think so

Especially interesting to note is that about 4 in 10 of the workers polled believe that white male employees will have more advantages in the workplace as compared to others. This would seem to indicate that as much as 60% of respondents think that being white and male has a diminishing advantage in the workplace. Whether it’s significant or not might be dependent on the ages, racial and gender makeup of the sample group. That seems like an important detail.

Charge statistics: more good news?

The EEOC published a list of charges filed and tracked over an 11-year period, 1997-2018. This doesn’t necessarily reflect the activity of the culture as a whole but only the filings registered with the organization. It’s also worth noting that a single individual could file charges covering multiple types of discrimination.

According to the EEOC’s statistics, charges have been falling steadily since their peak in 2010-2012: The following presents the percentages by which filings have dropped since their peak:
  • Race by 27%
  • Sex by 18%
  • National Origin by 36%
  • Religion by 31%
  • Age by 27%

And the bad news

The reporting of sexual harassment cases are on the rise; this also according to the EEOC. This rising trend has become global with increased charges filed in India, Australia, Europe (see reports on Germany and BBC England), as well as in the military, at the WHO, and including male-on-male discrimination. And this isn’t simply a reaction to #metoo or the “Weinstein effect”; according to the EEOC, the reporting of sexual harassment cases increased by almost 80% from 2000 to 2010. This report from the Huffington Post suggests that 70% of harassment cases go unreported, and a report based on a million employee reports makes the claim that #metoo has driven an 18% increase in harassment complaints—of those, 41% were substantiated.

Educating employees has made 85% of them confident that they know where and how to report workplace issues. However, only 39% of them were confident that anything would be done; almost half fear reprisals for reporting abuses. The report also claimed that only half of reports were investigated. Women and men report complaints at similar rates. Men’s complaints were more likely to be investigated. One of the major problems with unconscious bias is that it’s unconscious. This is why diversity and inclusion efforts, including education, are so important to implementing change.

A Harvard study suggests that harassment increases when male unemployment rises. In an analysis of the study, the author concluded:

“All of the seminars in the world aren’t going to stop sexual harassment if it’s driven by a desire to assert dominance over women.”

Of course, diversity and inclusion training is important, but it doesn’t often address the root causes—only the actions. As for those causes, the study suggests that when men are threatened with losses of power—in traditional gender roles or as providers—they can respond by taking power by other means. Very often those losing power are women. Interestingly, a group that isn’t protected by Title VII of the Civil Rights Act is the LGBT community. Back in 1964, the Supreme Court Justices tended not to consider such issues. While rulings by the EEOC have been favorable in protecting the rights of the LGBT, the Federal Courts aren’t bound by them. This may be changing but slowly—one case at a time.

And the retaliation

Retaliation is the number one reason for discrimination lawsuits in the U.S. Discrimination includes not just sexual harassment but discriminatory behaviors based on a particular group, category, or class an individual belongs to without respect to their individual merit—this also should include age. Retaliation is not limited to court actions: retaliation in the workplace is far more likely. Retaliation can include:
  • Harassment: This could be threats, increased surveillance, or altering work conditions so that the victim has difficulty performing their job; also, giving unjustifiably poor employee reviews.
  • Pay Cut: According to Forbes, 46% reported their hours or pay were cut as an act of retaliation; along with reduced hours can be forced furloughs, denial of bonuses or other methods of pecuniary penalty.
  • Reassignment, Demotion, & Exclusion: A victim could be reassigned or demoted to a job with duties below their abilities, relocated, provided with circumstances that impede an individual’s ability to complete tasks, given limited access to resources, and harshly criticized for results. They could be left out of meetings, training sessions, or social activities; or coworkers could avoid an employee as a way to have material adverse impact on the terms or conditions of their job.
  • Criminal Acts: While vandalism, assault, theft, or a false report of criminal activity are blatant examples, there can also be more subtle ways that are harder to confront like defamation, libel, slander, or invasions of privacy by monitoring the victim’s email, phone use, or internet activity which can be violations of Intrusion Upon Seclusion, False Light, Appropriation and Publication of Private Facts.
  • Post-employment Harassment: The employer can give the victim unjustifiably bad or falsely negative reference; they can also create circumstances to make the victim lose their next job, such as filing legal charges against them or anything else that could be a part of their public record.

What’s so good about diversity?

Here’s the irony: while we know there are measurable benefits to diversity, a social diversity of race, ethnicity, gender, and sexual orientation in a group can also cause discomfort, more strained interactions, less trust, a perception of greater interpersonal conflict, lowered communication abilities, less cohesion, more concern about disrespect, and other problems.

And yet, to build the kinds of teams or organizations that are most likely to innovate, diversity rules. Diversity enhances creativity. It encourages a broader range of information and perspectives, and it leads to better decision making and problem solving. Over and over again, in study after study, we find that diversity can improve the bottom line of companies and lead to discoveries and breakthroughs.
  1. Diversity drives revenue: Through gender
  • An MIT study found that transitioning from a single-gender office to an office evenly split between men and women would translate to a whopping 41% revenue gain
  • For every percentage increase in the rate of racial or gender diversity up to the rate represented in the relevant population, there was an increase in sales revenues of approximately 9% and 3%, respectively
  • A study of 22,000 companies across 91 countries found that companies with at least 30% female executives made 6% more in profit
  • Companies with the highest rates had an average of 15,000 more customers
  • Interestingly, the high productivity of gender diversity seems to be related to the fact that those who socialize more, work less; in an unexpected twist, the kind of workplace people think they’d like and the one that actually makes them happier is not what workers would expect
  • Having a woman at the top reaps benefits too: This study found that female representation in top management leads to an increase of $42 million in firm value
Through race:
  • Companies reporting the highest levels of racial diversity brought in nearly 15 times more sales revenue on average than those with the lowest levels of racial diversity;
  • Companies in the top quartile for racial/ethnic and gender diversity are 35% and 15% more likely to have revenues above industry medians
  • A study at Columbia showed that diversity makes groups smarter and spurs innovation; homogeneity of any kind can hinder the exchange of ideas and hampers intellectual productivity
  1. Diversity drives innovation:
  • Diverse employees can be a foundation for innovation—diversity of talent, by definition, provides informational diversity by bringing more ideas and perspectives to the table, this in turn drives better business solutions
  • When a company’s workforce reflects the marketplace, their consumer insights can lead to better creativity
  • A diverse workforce often outperforms those composed of even the very best individuals because the diversity of perspective and sources of information, their group problem-solving approach provides a synergy that can exceed individual ability

You can get along with coworkers better than family

A workplace that supports an environment for allowing employees to bond well, the best workplaces can allow for coworkers of different political views, different backgrounds, and different job titles to forge bonds. Imagine! This is something that is often not possible on social media or at the holiday dinner table. This can be important in many ways—in a time when our national cohesion is coming unglued, workplaces can be that place where all people can play an important role in putting America together again, at least socially. When workplaces can show an ability to openly handle adversity, they can build respect with employees. They can help this along with open CEO letters and dialogue sessions.

And yet, diverse groups need to be managed

While diversity has empirical benefits when it comes to decision-making and economics, putting a mixed group of people in a room won’t promise all smooth sailing. Without effective management, a diverse team—and this is even true with larger groups like communities and nations—run into the risk of descending into counterproductive forms of conflict. Conflict not managed can quickly confound the benefits.

As noted above, despite the fact that a large percentage of companies have shown a genuine will to implement productive diversity strategies, few, if any, have come up with something that works. Diversity is not just getting a bunch of different looking faces in the room. It’s also about making them feel included. Everyone should feel included in all parts of the process and each individual should feel that they belong—regardless of their differences. This is both good for morale and your team’s performance. Research reveals that hiding our true identities can dramatically decline professional performance. For diversity initiatives to be successful, they must be open to different points of view and allow workers the safety to express their individuality.

In practice this means that when it comes to race and ethnicity, valuing those differences within the group and emphasizing the benefits of multiculturalism helps the group manage its diversity more effectively. This can be as simple as having leaders describe the benefits of a multicultural approach. Groups that value diversity display less racial bias. They also engage in smoother interactions than groups attempting to take a colorblind approach where differences are explicitly ignored. The idea of “I don’t see race” is an endorsement of a kind of homogeneity that can actually devalue differences within the group. To be an equal opportunity employer means exactly, to employ the talents and insights of every team member because of what their diversity brings—to develop employee engagement through participation.

It’s not the future: It’s already here.

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