The messy business of diversity

Diversity & inclusion isn’t as simple, straightforward or happy-go-lucky as the term implies. The devil’s in the details, and in this feature we take an in-depth look at them, by Bennet Nichol.

Do you remember that incredibly famous 1971 Coke advertisement? The opening shot showed a young, beautiful woman; her face had the healthy glow of naïve youth, not yet worn by any of the difficult and harsh realities of the world. The next shot then slowly panned out to show a group of smiling young men and women from all over the world, some even wearing their national costumes. “I’d like to buy the world a Coke and keep it company,” they all sang in harmony, while holding their bottles of Coke and embracing the diversity of each and every individual. Teary yet?

Unfortunately, in the 21st Century diversity & inclusion isn’t as harmonious and simple as a Coke ad, it takes a little more than just holding hands and drinking Coke together. It can be a very complex business. In this article we’re going to take a closer look to give you a better understanding of why business leaders from all over the world are likely to be as consumed by diversity & inclusion as they are by profit and performance.

In April last year, an incident in a Starbucks cafe in Philadelphia launched corporate diversity & inclusion to the front page of newspapers worldwide. Donte Robinson and Rashon Nelson—two black men—were asked to leave the cafe after refusing to buy anything. The police were called and Nelson and Robinson were both arrested, which caused significant backlash from customers and resulted in a lawsuit.

After story went viral, Starbucks announced that on the 29 May 2018 all it’s US branches would shut their doors and sit their employees down for a day of intensive racial bias education.

Companies (especially those with worldwide reputations to uphold) often have knee-jerk reactions to PR disasters. Critics disagree with Starbucks’s racial bias education day, questioning whether applying diversity training to the whole workforce was necessary.

Many believed it was only that individual manager who required further education to prevent any incidents in the future. We don’t know exactly how much it cost Starbucks to shut down every single one of its US stores for a day, but it’s safe to assume the amount of money lost was astronomical. What we do know is that the training day had mixed results, according to the testimonials from Starbucks employees.

A report in Time reveals an anonymous testimonial from Starbucks employee. He said, “[The training] reiterated common conversations surrounding race, like inclusion, acceptance, and understanding, but [it] failed to address how to end situations like what happened in Philadelphia from occurring in the future.”

This story raises some significant questions. How effective is our current model of diversity & inclusion training? Was it necessary to implement a diversity & inclusion policy in this situation at all? Getting your head around these heavy questions is quite a task, and requires some prerequisite knowledge. So before we dive in – let’s wind back the clock.

The history of diversity in the workplace

We can trace the history of diversity & inclusion policies in the workplace along a parallel line with the social and civil rights movements of the 20th Century. Racially biased social norms began to change in the 1960s, and as the civil rights movement began to gain traction, so did the business case for diversity. The historic 1964 (US) Civil Rights Act outlawed hiring practices that discriminated candidates based upon race, colour, religion, sex, or national origins. This created a legal structure for businesses to work within. It was legislated that discriminatory practise was not only wrong, but also illegal.

Over 20 years later a book was released, with the backing of the US Government, entitled Workforce 2000. This book showed how a diversity-based hiring model could not only make your company more inclusive, but also increase profitability.

The book outlined how due to an influx of migration and the softening of borders, countries like the US would have to start hiring people from different cultures and backgrounds, and argued exclusivity was bad for the bottom-line. In an effort to ease shareholders’ concerns, companies began to strategise and spend money on diversity programs. This gave birth to what we know today as the diversity training industry.

Back then, best practice was built using the idea of ‘affirmative action’ (otherwise known as positive discrimination) where organisations were encouraged to employ and promote groups who were known to have previously suffered from discrimination.

Singling people out based on their background and placing them on different levels than their peers doesn’t quite match up with the spirit of our Coke ad. They might not have been happy and smiling if their background, race or religion determined their career’s success. Here lies the problem with diversity & inclusion – nobody has figured out what the best practice is yet. The early model of positive discrimination has been revised and tinkered with over the years, but each and every organisation has a different idea of what diversity & inclusion should look like, and how it’s achieved.

Ideology for sale

Now diversity & inclusion is big business. Eight billion USD is spent on diversity & inclusion in the US each year. Companies have been established to help organisations achieve their diversity & inclusion goals. They produce training programs and outsourced services that generally carry a hefty price-tag.

There is now a market for diversity & inclusion, with many different companies competing for their share. They promote services that allegedly increase profitability, productivity, and employee retention. But according to some researchers, even the most modern and well thought-out diversity & inclusion services and policies deliver questionable results.

Taking a look at the science

Remember our Workforce 2000 book from before? The motivation for diversity in the workplace hasn’t changed since the 1980s. Most still think that diversity & inclusion is a catalyst for productivity and profit, but there are some scholars claiming this thinking may only serve the interests of the diversity inclusion industry.

One such scholar is Alice Eagly. Eagly is a professor of psychology, management and organisations at Northwestern University in Illinois. She claims that advocates (and businesses) are cherry picking from scientific research. If advocates are reporting an incorrect correlation between diversity and profit then organisations might be spending their money based on misinformation.

“Taking into account all of the available research on corporate boards and diversity of task groups, the net effects are very close to a null, or zero, average,” writes Eagly in The Conversation.

“These kinds of interpersonal relationships are messy and complicated – it makes sense that upping diversity, on its own, wouldn’t be a magical key to success.”

There is money to be made in diversity training and contracting, and a competitive market built on ideology or politics can be bad for business. Our report on the politics of the gender pay gap paints a similar picture. The claim that diversity equals profit is problematic, and reveals that perhaps the services being offered are not so valuable.

Keeping it legal

Complying with the law is a key reason diversity & inclusion money is being spent, according to some critics. This claim points the finger at the people spending money and pushing to achieve a diverse workforce.

Forbes writer and psychology & management expert, Kim Elsesser claims “If the goal is to bring about attitude change in the organisation, and to figure out how to attract and retain women and minorities, why do most diversity heads come from law backgrounds? [sic] The answer is that diversity programs are really more about reducing legal liability than bringing about true change in the organisation.”

Elsesser makes a valid point. There are big fines and consequences for organisations that fail to tick the legal boxes. Discrimination cases have cost Bank of America Merrill Lynch upwards of half a billion dollars, so it’s understandable why legal experts would be so heavily involved in these policies.

This results in management being compelled to adopt policies that attempt to force cultural change. But positive cultures can’t be forced, they develop when people buy into the idea.

Harvard Business Review sums this point up nicely, “…this [top down] approach flies in the face of nearly everything we know about how to motivate people to make changes. Decades of social science research points to a simple truth: You won’t get managers on board by blaming and shaming them with rules and re-education.”

Diversity & inclusion is more than just an idea. It’s an industry, a legal consideration, and a political animal. Governments are now forcing corporate organisations to comply with policies that serve a non-commercial end. If a company fails to meet their standards, there are significant implications for it’s brand, employees and share value. There’s a lot to think about when a board considers diversity & inclusion policy for it’s organisation. It’s more complex than “diversity & inclusion equals profit.”