Students will create an Organizational Behavior Presentation (from scholarly, Organizational Behavior articles that are listed be

Why Diversity Programs Fail And what works better BY FRANK DOBBIN AND ALEXANDRA KALEV

ARTWORK Roger Clarke, The Deadliest Toxins (dsdc), 2009 Polyester resin, fiberglass, varnish

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SPOTLIGHT ON BUILDING A DIVERSE ORGANIZATION

Frank Dobbin is a professor of sociology at Harvard University. Alexandra Kalev is an associate professor of sociology at Tel Aviv University.

Businesses started caring a lot more about diversity after a series of high-profile lawsuits rocked the financial industry. In the late 1990s and early 2000s, Morgan Stanley shelled out $54 million—and Smith Barney and Merrill Lynch more than $100 million each—to settle sex discrimination claims. In 2007, Morgan was back at the table, facing a new class action, which cost the company $46 million. In 2013, Bank of America Merrill Lynch settled

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a race discrimination suit for $160 million. Cases like these brought Merrill’s total 15-year payout to nearly half a billion dollars.

It’s no wonder that Wall Street firms now require new hires to sign arbitration contracts agreeing not to join class actions. They have also expanded training and other diversity programs. But on bal- ance, equality isn’t improving in financial services or elsewhere. Although the proportion of managers at U.S. commercial banks who were Hispanic rose from 4.7% in 2003 to 5.7% in 2014, white women’s representation dropped from 39% to 35%, and black men’s from 2.5% to 2.3%. The numbers were even worse in investment banks (though that industry is shrinking, which complicates the analysis). Among all U.S. companies with 100 or more employees, the proportion of black men in management in- creased just slightly—from 3% to 3.3%—from 1985 to 2014. White women saw bigger gains from 1985 to 2000—rising from 22% to 29% of managers—but their numbers haven’t budged since then. Even in Silicon Valley, where many leaders tout the need to increase diversity for both business and social justice reasons, bread-and-butter tech jobs remain dominated by white men.

It shouldn’t be surprising that most diversity pro- grams aren’t increasing diversity. Despite a few new bells and whistles, courtesy of big data, companies are basically doubling down on the same approaches they’ve used since the 1960s—which often make things worse, not better. Firms have long relied on diversity training to reduce bias on the job, hiring tests and performance ratings to limit it in recruit- ment and promotions, and grievance systems to give employees a way to challenge managers. Those tools are designed to preempt lawsuits by policing man- agers’ thoughts and actions. Yet laboratory studies show that this kind of force-feeding can activate bias rather than stamp it out. As social scientists have found, people often rebel against rules to assert their autonomy. Try to coerce me to do X, Y, or Z, and I’ll do the opposite just to prove that I’m my own person.

In analyzing three decades’ worth of data from more than 800 U.S. firms and interviewing hundreds of line managers and executives at length, we’ve seen that companies get better results when they ease up on the control tactics. It’s more effective to engage managers in solving the problem, increase their on- the-job contact with female and minority workers, and promote social accountability—the desire to

look fair-minded. That’s why interventions such as targeted college recruitment, mentoring programs, self-managed teams, and task forces have boosted diversity in businesses. Some of the most effective solutions aren’t even designed with diversity in mind.

Here, we dig into the data, the interviews, and company examples to shed light on what doesn’t work and what does.

Why You Can’t Just Outlaw Bias Executives favor a classic command-and-control ap- proach to diversity because it boils expected behav- iors down to dos and don’ts that are easy to under- stand and defend. Yet this approach also flies in the face of nearly everything we know about how to mo- tivate people to make changes. Decades of social sci- ence research point to a simple truth: You won’t get managers on board by blaming and shaming them with rules and reeducation. Let’s look at how the most common top-down efforts typically go wrong.

Diversity training. Do people who undergo training usually shed their biases? Researchers have been examining that question since before World War II, in nearly a thousand studies. It turns out that while people are easily taught to respond correctly to a questionnaire about bias, they soon forget the right answers. The positive effects of diversity train- ing rarely last beyond a day or two, and a number of studies suggest that it can activate bias or spark a backlash. Nonetheless, nearly half of midsize companies use it, as do nearly all the Fortune 500.

Many firms see adverse effects. One reason is that three-quarters use negative messages in their training. By headlining the legal case for diversity and trotting out stories of huge settlements, they issue an implied threat: “Discriminate, and the company will pay the price.” We understand the temptation—that’s how we got your attention in the first paragraph—but threats, or “negative incentives,” don’t win converts.

Another reason is that about three-quarters of firms with training still follow the dated advice of the late diversity guru R. Roosevelt Thomas Jr. “If diversity management is strategic to the organi- zation,” he used to say, diversity training must be mandatory, and management has to make it clear that “if you can’t deal with that, then we have to ask you to leave.” But five years after instituting required training for managers, companies saw no improve- ment in the proportion of white women, black men, and Hispanics in management, and the share of

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black women actually decreased by 9%, on average, while the ranks of Asian-American men and women shrank by 4% to 5%. Trainers tell us that people often respond to compulsory courses with anger and resis- tance—and many participants actually report more animosity toward other groups afterward.

But voluntary training evokes the opposite response (“I chose to show up, so I must be pro- diversity”), leading to better results: increases of 9% to 13% in black men, Hispanic men, and Asian- American men and women in management five years out (with no decline in white or black women). Research from the University of Toronto reinforces our findings: In one study white subjects read a brochure critiquing prejudice toward blacks. When people felt pressure to agree with it, the reading strengthened their bias against blacks. When they felt the choice was theirs, the reading reduced bias.

Companies too often signal that training is re- medial. The diversity manager at a national bever- age company told us that the top brass uses it to deal with problem groups. “If there are a number of complaints…or, God forbid, some type of harass- ment case…leaders say, ‘Everyone in the business unit will go through it again.’” Most companies with training have special programs for managers. To be sure, they’re a high-risk group because they make the hiring, promotion, and pay decisions. But sin- gling them out implies that they’re the worst cul- prits. Managers tend to resent that implication and resist the message.

Hiring tests. Some 40% of companies now try to fight bias with mandatory hiring tests assess- ing the skills of candidates for frontline jobs. But managers don’t like being told that they can’t hire whomever they please, and our research suggests that they often use the tests selectively. Back in the 1950s, following the postwar migration of blacks

northward, Swift & Company, Chicago meatpackers, instituted tests for supervisor and quality-checking jobs. One study found managers telling blacks that they had failed the test and then promoting whites who hadn’t been tested. A black machine opera- tor reported: “I had four years at Englewood High School. I took an exam for a checker’s job. The fore- man told me I failed” and gave the job to a white man who “didn’t take the exam.”

This kind of thing still happens. When we inter- viewed the new HR director at a West Coast food company, he said he found that white managers were making only strangers—most of them minori- ties—take supervisor tests and hiring white friends without testing them. “If you are going to test one person for this particular job title,” he told us, “you need to test everybody.”

But even managers who test everyone applying for a position may ignore the results. Investment banks and consulting firms build tests into their job interviews, asking people to solve math and scenario- based problems on the spot. While study- ing this practice, Kellogg professor Lauren Rivera played a fly on the wall during hiring meetings at one firm. She found that the team paid little attention when white men blew the math test but close atten- tion when women and blacks did. Because decision makers (deliberately or not) cherry-picked results, the testing amplified bias rather than quashed it.

Companies that institute written job tests for managers—about 10% have them today—see de- creases of 4% to 10% in the share of managerial jobs held by white women, African-American men and women, Hispanic men and women, and Asian- American women over the next five years. There are significant declines among white and Asian- American women—groups with high levels of education, which typically score well on standard

Idea in Brief THE PROBLEM To reduce bias and increase diversity, organizations are relying on the same programs they’ve been using since the 1960s. Some of these efforts make matters worse, not better.

THE REASON Most diversity programs focus on controlling managers’ behavior, and as studies show, that approach tends to activate bias rather than quash it. People rebel against rules that threaten their autonomy.

THE SOLUTION Instead of trying to police managers’ decisions, the most effective programs engage people in working for diversity, increase their contact with women and minorities, and tap into their desire to look good to others.

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report discrimination. This leads to another unin- tended consequence: Managers who receive few complaints conclude that their firms don’t have a problem. We see this a lot in our interviews. When we talked with the vice president of HR at an elec- tronics firm, she mentioned the widely publicized

“difficulties other corporations are having” and added, “We have not had any of those problems… we have gone almost four years without any kind of discrimination complaint!” What’s more, lab stud- ies show that protective measures like grievance systems lead people to drop their guard and let bias affect their decisions, because they think company policies will guarantee fairness.

Things don’t get better when firms put in formal grievance systems; they get worse. Our quantitative analyses show that the managerial ranks of white women and all minority groups except Hispanic men decline—by 3% to 11%—in the five years after companies adopt them.

Still, most employers feel they need some sort of system to intercept complaints, if only because judges like them. One strategy that is gaining ground is the “flexible” complaint system, which offers not only a formal hearing process but also informal me- diation. Since an informal resolution doesn’t involve hauling the manager before a disciplinary body, it may reduce retaliation. As we’ll show, making man- agers feel accountable without subjecting them to public rebuke tends to help.

Tools for Getting Managers on Board If these popular solutions backfire, then what can employers do instead to promote diversity?

A number of companies have gotten consistently positive results with tactics that don’t focus on

managerial tests. So group differences in test-taking skills don’t explain the pattern.

Performance ratings. More than 90% of mid- size and large companies use annual performance ratings to ensure that managers make fair pay and promotion decisions. Identifying and rewarding the best workers isn’t the only goal—the ratings also provide a litigation shield. Companies sued for discrimination often claim that their performance rating systems prevent biased treatment.

But studies show that raters tend to lowball women and minorities in performance reviews. And some managers give everyone high marks to avoid hassles with employees or to keep their options open when handing out promotions. However managers work around performance systems, the bottom line is that ratings don’t boost diversity. When companies introduce them, there’s no effect on minority manag- ers over the next five years, and the share of white women in management drops by 4%, on average.

Grievance procedures. This last tactic is meant to identify and rehabilitate biased manag- ers. About half of midsize and large firms have sys- tems through which employees can challenge pay, promotion, and termination decisions. But many managers—rather than change their own behavior or address discrimination by others—try to get even with or belittle employees who complain. Among the nearly 90,000 discrimination complaints made to the Equal Employment Opportunity Commis- sion in 2015, 45% included a charge of retaliation— which suggests that the original report was met with ridicule, demotion, or worse.

Once people see that a grievance system isn’t warding off bad behavior in their organization, they may become less likely to speak up. Indeed, employee surveys show that most people don’t

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While white men tend to find mentors on their own, women and minorities more often need help from formal programs. One reason, as Georgetown’s business school dean David Thomas discovered in his research on mentoring, is that white male execu- tives don’t feel comfortable reaching out informally to young women and minority men. Yet they are eager to mentor assigned protégés, and women and minorities are often first to sign up for mentors.

Mentoring programs make companies’ manage- rial echelons significantly more diverse: On average they boost the representation of black, Hispanic, and Asian-American women, and Hispanic and Asian-American men, by 9% to 24%. In industries where plenty of college-educated nonmanagers are eligible to move up, like chemicals and electronics, mentoring programs also increase the ranks of white women and black men by 10% or more.

Only about 15% of firms have special college re- cruitment programs for women and minorities, and only 10% have mentoring programs. Once organiza- tions try them out, though, the upside becomes clear. Consider how these programs helped Coca-Cola in the wake of a race discrimination suit settled in 2000 for a record $193 million. With guidance from a court-appointed external task force, executives in the North America group got involved in recruit- ment and mentoring initiatives for professionals and middle managers, working specifically toward measurable goals for minorities. Even top leaders helped to recruit and mentor, and talent-sourcing partners were required to broaden their recruitment efforts. After five years, according to former CEO and chairman Neville Isdell, 80% of all mentees had climbed at least one rung in management. Both in- dividual and group mentoring were open to all races but attracted large numbers of African-Americans (who accounted for 36% of protégés). These changes brought important gains. From 2000 to 2006, African-Americans’ representation among salaried employees grew from 19.7% to 23%, and Hispanics’ from 5.5% to 6.4%. And while African-Americans and Hispanics respectively made up 12% and 4.9% of professionals and middle managers in 2002, just four years later those figures had risen to 15.5% and 5.9%.

This began a virtuous cycle. Today, Coke looks like a different company. This February, Atlanta Tribune magazine profiled 17 African-American women in VP roles and above at Coke, including CFO Kathy Waller.

control. They apply three basic principles: engage managers in solving the problem, expose them to people from different groups, and encourage social accountability for change.

Engagement. When someone’s beliefs and behavior are out of sync, that person experiences what psychologists call “cognitive dissonance.” Experiments show that people have a strong ten- dency to “correct” dissonance by changing either the beliefs or the behavior. So, if you prompt them to act in ways that support a particular view, their opinions shift toward that view. Ask them to write an essay defending the death penalty, and even the penalty’s staunch opponents will come to see some merits. When managers actively help boost diversity in their companies, something similar happens: They begin to think of themselves as diversity champions.

Take college recruitment programs targeting women and minorities. Our interviews suggest that managers willingly participate when invited. That’s partly because the message is positive: “Help us find a greater variety of promising employees!” And in- volvement is voluntary: Executives sometimes single out managers they think would be good recruiters, but they don’t drag anyone along at gunpoint.

Managers who make college visits say they take their charge seriously. They are determined to come back with strong candidates from underrepresented groups—female engineers, for instance, or African- American management trainees. Cognitive disso- nance soon kicks in—and managers who were wishy- washy about diversity become converts.

The effects are striking. Five years after a com- pany implements a college recruitment program targeting female employees, the share of white women, black women, Hispanic women, and Asian- American women in its management rises by about 10%, on average. A program focused on minority recruitment increases the proportion of black male managers by 8% and black female managers by 9%.

Mentoring is another way to engage managers and chip away at their biases. In teaching their pro- tégés the ropes and sponsoring them for key training and assignments, mentors help give their charges the breaks they need to develop and advance. The mentors then come to believe that their protégés merit these opportunities—whether they’re white men, women, or minorities. That is cognitive dis- sonance—“Anyone I sponsor must be deserving”— at work again.

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available in many organizations. Though college recruitment and mentoring have a bigger impact on diversity—perhaps because they activate engage- ment in the diversity mission and create intergroup contact—every bit helps. Self-managed teams and cross-training have had more positive effects than mandatory diversity training, performance evalu- ations, job testing, or grievance procedures, which are supposed to promote diversity.

Social accountability. The third tactic, en- couraging social accountability, plays on our need to look good in the eyes of those around us. It is nicely illustrated by an experiment conducted in Israel. Teachers in training graded identi- cal compositions attributed to Jewish students with Ashkenazic names (European heritage) or with Sephardic names (African or Asian heritage). Sephardic students typically come from poorer families and do worse in school. On average, the teacher trainees gave the Ashkenazic essays Bs and the Sephardic essays Ds. The difference evaporated, however, when trainees were told that they would discuss their grades with peers. The idea that they might have to explain their decisions led them to judge the work by its quality.

In the workplace you’ll see a similar effect. Consider this field study conducted by Emilio Castilla of MIT’s Sloan School of Management: A firm found it consistently gave African-Americans smaller raises than whites, even when they had identical job titles and performance ratings. So Castilla suggested transparency to activate social accountability. The firm posted each unit’s average performance rating and pay raise by race and gender. Once managers realized that employees, peers, and superiors would know which parts of the company favored whites, the gap in raises all but disappeared.

Corporate diversity task forces help promote social accountability. CEOs usually assemble these teams, inviting department heads to volunteer and includ- ing members of underrepresented groups. Every quarter or two, task forces look at diversity numbers for the whole company, for business units, and for departments to figure out what needs attention.

After investigating where the problems are— recruitment, career bottlenecks, and so on—task force members come up with solutions, which they then take back to their departments. They notice if their colleagues aren’t volunteering to mentor or showing up at recruitment events. Accountability

Contact. Evidence that contact between groups can lessen bias first came to light in an unplanned experiment on the European front during World War II. The U.S. army was still segregated, and only whites served in combat roles. High casualties left General Dwight Eisenhower understaffed, and he asked for black volunteers for combat duty. When Harvard sociologist Samuel Stouffer, on leave at the War Department, surveyed troops on their racial at- titudes, he found that whites whose companies had been joined by black platoons showed dramatically lower racial animus and greater willingness to work alongside blacks than those whose companies re- mained segregated. Stouffer concluded that whites fighting alongside blacks came to see them as sol- diers like themselves first and foremost. The key, for Stouffer, was that whites and blacks had to be work- ing toward a common goal as equals—hundreds of years of close contact during and after slavery hadn’t dampened bias.

Business practices that generate this kind of contact across groups yield similar results. Take self-managed teams, which allow people in different roles and functions to work together on projects as equals. Such teams increase contact among diverse types of people, because specialties within firms are still largely divided along racial, ethnic, and gender lines. For example, women are more likely than men to work in sales, whereas white men are more likely to be in tech jobs and management, and black and Hispanic men are more likely to be in production.

As in Stouffer’s combat study, working side-by- side breaks down stereotypes, which leads to more equitable hiring and promotion. At firms that create self-managed work teams, the share of white women, black men and women, and Asian-American women in management rises by 3% to 6% over five years.

Rotating management trainees through depart- ments is another way to increase contact. Typically, this kind of cross-training allows people to try their hand at various jobs and deepen their understand- ing of the whole organization. But it also has a posi- tive impact on diversity, because it exposes both department heads and trainees to a wider variety of people. The result, we’ve seen, is a bump of 3% to 7% in white women, black men and women, and Asian-American men and women in management.

About a third of U.S. firms have self-managed teams for core operations, and nearly four-fifths use cross-training, so these tools are already

The Downside of the Diversity Label Why can mentoring, self- managed teams, and cross- training increase diversity without the backlash prompted by mandatory training? One reason may be that these programs aren’t usually branded as diversity efforts. Diversity language in company policy can stress white men out, as researchers at UC Santa Barbara and the University of Washington found when they put young white men through a simulated job interview—half of them for a company that touted its commitment to diversity, and half for a company that did not. In the explicitly pro- diversity company, subjects expected discrimination against whites, showed cardiovascular distress, and did markedly worse in the taped interview.

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Which Diversity Efforts Actually Succeed? In 829 midsize and large U.S. firms, we analyzed how various diversity initiatives affected the proportion of women and minorities in management. Here you can see which ones helped different groups gain ground—and which set them back, despite good intentions. (No bar means we can’t say with statistical certainty if the program had any effect.)

■ White Men ■ White Women

■ Black Men ■ Black Women

■ Hispanic Men ■ Hispanic Women

■ Asian Men ■ Asian Women

POOR RETURNS ON THE USUAL PROGRAMS The three most popular interventions made firms less diverse, not more, because managers resisted strong-arming.

PROGRAMS THAT GET RESULTS Companies do a better job of increasing diversity when they forgo the control tactics and frame their efforts more positively. The most effective programs spark engagement, increase contact among different groups, or draw on people’s strong desire to look good to others.

VOLUNTARY TRAINING doesn’t get managers’ defenses up the way mandatory training does— and results in increases for several groups.

COLLEGE RECRUITMENT TARGETING WOMEN turns recruiting managers into diversity champions, so it also helps boost the numbers for black and Asian-American men.

COLLEGE RECRUITMENT TARGETING MINORITIES often focuses on historically black schools, which lifts the numbers of African-American men and women.

MENTORING has an especially positive impact. Managers who sponsor women and minorities come to believe, through their increased contact, that their protégés deserve the training and opportunities they’ve received.

SELF-MANAGED TEAMS aren’t designed to improve diversity, but they help by increasing contact between groups, which are often concentrated in certain functions.

DIVERSITY TASK FORCES promote social accountability because members bring solutions back to their departments—and notice whether their colleagues adopt them.

DIVERSITY MANAGERS sometimes put ineffective programs in place but have a positive impact overall— in part because managers know someone might ask them about their hiring and promotion decisions.

theory suggests that having a task force member in a department will cause managers in it to ask them- selves, “Will this look right?” when making hiring and promotion decisions.

Deloitte has seen how powerful social account- ability can be. In 1992, Mike Cook, who was then the CEO, decided to try to stanch the hemorrhag- ing of female associates. Half the company’s hires

were women, but nearly all of them left before they were anywhere near making partner. As Douglas McCracken, CEO of Deloitte’s consulting unit at the time, later recounted in HBR, Cook assembled a high-profile task force that “didn’t immediately launch a slew of new organizational policies aimed at outlawing bad behavior” but, rather, relied on transparency to get results.

GRIEVANCE SYSTEMS likewise reduced diversity pretty much across the board. Though they’re meant to reform biased managers, they often lead to retaliation.

MANDATORY DIVERSITY TRAINING for managers led to significant decreases for Asian-Americans and black women.

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CROSS-TRAINING also increases managers’ exposure to people from different groups. Gains for some groups appear to come at a cost to …