Are organizations actually making any headway to improve diversity, equity, and inclusion (DEI)? Last Fall, Harvard Business Review (HBR) published a report funded by SHRM and Trusaic to figure out what organizations are doing to improve the effectiveness of diversity, equity, and inclusion training.
The HBR report’s analytics offer unique insight into the less explored issue of how DEI training can affect a company’s office culture. Reading between the lines of the report shows the important yet undervalued data on unintended consequences from DEI consultations.
Rubber Meets Road
If done properly, DEI training affects every facet of workplace culture from what staff celebrates to how co-workers speak to each other according to Dethra U. Giles — CEO at Atlanta-based consulting firm, ExecuPrep, and prolific TEDx Speaker. ExecuPrep works with other companies on rebuilding from the ground up from recruitment strategies to coaching employees and management. She says DEI training affects “our nomenclature” and our “recruitment strategies,” too.
“It begins to infiltrate every level of the organization if people are doing it properly. Now, what often happens is: you don’t have people that are doing properly,” Giles told Workzinga, and by that she means that “DEI is performative. ‘Hey, we got slapped on the hand because we recognize that our population, our staff, especially our leadership does not reflect our actual population.’”
She provided the common example of a company whose staff is 15% Black but whose leadership is devoid of Black representation. Already, leadership doesn’t reflect population, so to some degree, there’s already a failure to navigate equitable, upward mobility among staff. Promoting from within is a requisite pipeline that should automatically preclude this disparity, and when it doesn’t, the organization’s imbalance generally gets increasingly inequitable.
The hiring process, therefore, is key for establishing the right blend of differences among co-workers to make this possible, and the blend is only right if there’s still culture fit. When race, ethnicity, gender, sexual orientation, or creed get in the way of culture fit, recruitment’s often the anomaly.
The Lovechild of Data and Leadership
HBR Analytics Services surveyed 1,115 leaders of North American organizations, 65% of whom called DEI a high, strategic priority. Almost a third of respondents rated their own organizations as unsuccessful at creating DEI-conducive cultures, and half of those attributed the problem to their organizations’ respective leaderships. The other two-thirds of all respondents classified their organizations as only somewhat successful at infusing their workplace cultures with DEI.
The study’s objective was to determine how much organizations generally prioritize DEI as a concept, how they implement DEI initiatives in the first place, and how well they do so. The research concluded that successful integration of DEI practices into workplace culture is built on two cornerstones: the data and the C-suite.
Trusaic and SHRM have collectively interpreted the data of the study as showing that DEI works best when it’s part of an organization’s culture, and the study metrically demonstrates that what activates that for a company is its leaders being committed to a culture built on diversity, equity, and inclusion. Leadership lays the foundation of workplace culture for better or for worse.
Moreover, the Financial Conduct Authority published a report last July that pointed to an office culture’s inclusivity as the difference maker for businesses to reap the benefits that advocates say DEI would afford them; in other words, inclusivity is where the value is. Trusaic and SHRM agree that the value therein is the preservation of everyone’s right to health, safety and dignity — a moral imperative that happens to also correlate with improved performance.
Bias: It’s a Thing
Related HBR research demonstrated in Summer 2016 that there was already a preponderance of published studies to show how often DEI workshops fail due to negative messaging and that this sometimes ends up working against the initial objective. Most people consider themselves objective and immune to the challenges of bias, so when DEI training forces them to face their own bias — which any workshop currently considered to be worth its salt will do — attendees get defensive and shut down.
The same study found that making DEI training mandatory yields an immediate, negative reaction from employees because it comes off as punitive, especially if it follows an actual incident in which some form of discrimination occurred. Even without a culpable incident, people sometimes still double down on their biases.
The new study includes unconscious bias in a list of five foundational issues that need solutions to improve the efficacy of DEI efforts. The complexity, however, stems from different employees having disparate levels of understanding on equity issues.
HBR concluded that training needs to be more targeted, grouping employees according to their variegated degrees of understanding according to Jennifer Brown, CEO of international, New York-based DEI firm Jennifer Brown Consulting. Brown accomplishes this using a “skill and will” matrix to assess managers.
“Is it a skill challenge, or is it a will challenge?” she asks herself.
In this case, a skill challenge is a lack of ability to deal with inner bias due to a lack of understanding. A will challenge would be apathy or even refusal to change any problem detected.
Having a strategy specifically for management is critical for two reasons. Firstly, managers bear microcosmic versions of the effects that executive leadership has on workplace culture. Secondly, White males are still overwhelming all other demographics at the managerial level with their predominance, so it’s very necessary for as many of them to be empathetic as possible.
The 2016 study found recruiting initiatives to be one of few measurably effective DEI efforts a company can make. Despite being a double-edged sword for diversity, culture fit could theoretically maximize inclusivity if implemented at the recruiting level for a workplace whose culture doesn’t explicitly marginalize anyone.
Doesn’t DEI Training Already Work?
Related HBR research demonstrated in Summer 2016 that the financial services sector historically exemplifies the need for DEI workshops yet is simultaneously the quintessence of marginal progress to show for those workshops. Wall Street almost single handedly birthed the diversity, equity, and inclusion segment of the consulting space.
From 2003 to 2014, commercial banks in the U.S. have seen white female representation in management roles drop from 39% to 35%. They’ve seen Black male representation drop from 2.5% to 2.3%. For that matter, Black men have seen an uptick in managerial representation nationwide from 1985 to 2014 across all industries, but it’s from 3% to 3.3%. HBR reports no meaningful increase in the representation of white women throughout the 21st century thus far.
In that 5-year-old study, HBR determined that diversity training and hiring tests only exacerbate the problem based on its analysis of 829 firms over 30 years. They concluded that the trainings, tests, grievance systems, and performance ratings actually decrease women’s and minorities’ shares of the management segment of the job market.
High-revenue corporations often don’t really see the need for DEI training according to Dr. Candace Warner, CEO of People3, but she tells them the Bureau of Labor Statistics predicts a 15.3% drop in White, non-Hispanic representation in the workforce by 2060.
“Our response often alludes to the fact that some of these organizations and industries will begin cycling out of being predominantly White and male,” Dr. Warner said.
Headquartered in Nashville, People3 is currently orchestrating DEI training for leaders at the Chamber of Commerce of Williamson County, Tenn. — the tenth wealthiest county in the U.S. according to Kiplinger.
“At the same time, we also like to say that you cannot ‘hire your way into inclusion.’ If you bring in more talent from a variety of different backgrounds and experiences and they do not feel a sense of belonging — guess what? They won’t stay.”
Prior to Workzinga, no recruiting pipeline has focused on culture fit as a retention mechanism.
The Economy, Though…
A growing number of entrepreneurs found it profitable starting in the late aughts to establish consulting firms offering various kinds of DEI training, and the financial industry spurred a significant spike in demand for those services at the time. Banks were ostensibly compelled to do it even if for no other reason than to prove that they were taking measures to fix what was beginning to look like an industry-wide discrimination problem.
For instance, Morgan Stanley settled a sex discrimination suit filed by the Equal Employment Opportunity Commission (EEOC) for $54 million in 2004. In 2007, they settled a sex discrimination class-action for $46 million to settle with eight female brokers. The year after that, the housing bubble broke the finance camel’s back and triggered the Great Recession, which led Morgan Stanley to acquire Smith Barney who couldn’t otherwise survive the housing bubble. Smith Barney, the biggest tenant of 7 World Trade Center at the time of the September 11 terrorist attacks, had shelled out about $150 million to settle the infamous “boom-boom room” case in July of ’98.
In 2007, the EEOC sued Merrill Lynch for discriminating against an Iranian citizen, and a separate discrimination case the same year saw the National Association of Securities Dealers compel Merrill Lynch to pay $1.6 million to a different Iranian employee whom the bank was found to have fired for his Persian ethnicity.
Anne C. Vladeck, one of the most eminent employee rights attorneys in the U.S., told The New York Times in 2016, “You may no longer have a stripper coming for afternoon entertainment, but that doesn’t mean you are treated as an equal.” Despite all the DEI efforts that appear on paper since then, the best Vladeck could say then was that inequity was less “blatant [than] what went on in the boom-boom room, but it’s still there in a way that makes it very hard for women to succeed. Companies on Wall Street are not changing.”
Some of the things that define the culture of any given workplace come from the sector or the industry at large. Different segments of the workforce are progressing at different paces, and certain trade groups have proven to be stalwarts against change, which means no catch-all statement can be applied to the effects that DEI training will have on a work environment. Following the data, however, would target common hotspots like company leadership, management, and supervision; demographic disparities along the lines of race, gender, or sexual orientation; and what the rate of inappropriate incidents has been in recent history.