[An abridged chapter from Death by HR: How Affirmative Action Cripples Organizations, available now in Kindle and trade paperback.]
As we’ve seen, HR costs continue to rise because cost savings from outsourcing are swallowed up by increasing regulatory burdens. The hiring of “Chief Diversity Officers” (CDOs), HR executives making a median salary of $162,588 a year to protect the corporate image from attacks by Jesse Jackson-like activist organizations, is just the most visible sign of these increasing costs.
Who are these people, and what kind of organization is hiring them? HBR has a story:
Deborah Elam, Chief Diversity Officer at General Electric, describes her job in expansive terms. “It’s about leveraging the new streams of talent around the world, and responding to the changed face of our customers” she says. Anne Erni, Chief Diversity Officer at Lehman Brothers, has an equally large–and strategic–view. “It’s about tapping into the widest possible talent pool … making sure we create a true meritocracy here at Lehman.”
A few years back, these Chief Diversity Officer positions didn’t exist. Today they’re firmly established in the executive suite across a range of Fortune 500 companies–at Johnson & Johnson, Aon, Citi and American Express as well as at GE and Lehman Brothers….
This title started in government and academic settings, then made its way into very large financial corporations (which are thoroughly under the regulatory thumb). The signature programs of the CDOs tend to be designed to buff the corporate image through favorable publicity rather than directly impacting minority recruiting for the CDO’s organization.
A thriving industry in certification completes the picture of a growth industry. The Society for Diversity’s certification offering suggests these benefits of their certification:
The benefits of certification include:
• Higher wages for executives, employees and consultants who possess CDE or CDP credentials.
• A more productive and highly trained diversity resource for employers.
• Prestige for the individual and a competitive advantage over non-certified individuals in the field.
• Enhanced employment opportunities.
• Assisting employers in making more informed hiring decisions.
• Assisting consumers in making informed decisions about qualified diversity providers.
• Protection of the general public from incompetent and unfit practitioners.
• Establishment of a professional standard for individuals in the field of diversity.
All this, for only $3,000-6,000 for certification good for three years, with continuing education requirements costing more in time and money. This is of course a racket, and these competing certification organizations will work hard to get a certification requirement embedded in law or regulations so they can continue to feed off “diversity professionals,” much as teacher continuing education requirements fund connected apparatchiks. Cornell has also entered the market with its “Cornell Certified Diversity Professional / Advanced Practitioner (CCDP/AP)” certificate program, which is cheap at $1,000 and conducted by conference call and an email exam (which of course can be taken by a confederate.)
There’s even a Diversity Officer magazine!
Brigette McInnis-Day of SAP sounds almost chipper as she recounts how pressure to hire for diversity quotas rather than merit overcame manager doubts:
I have an example I love to share that illustrates setting big goals. We started a sales graduate program in the US and the team was trying to establish goals (not targets—don’t get excited) for diversity. Everyone came with a conservative plan using trends and previous statistics, pointing out all of the risks, and suggested a “careful” target. I challenged the team to think big and differently and reach for a target of 70 percent diversity. Everyone laughed, scoffed at the idea, and told me, “No way!” But I held firm on what I knew we could achieve—and we nailed it. We beat our goal by reaching 72 percent. The lead early talent recruiter said to me, “If you did not put that big goal in my head, I would never have strived for it. Once I believed, it was easy!” Even better, it turned the nonbelievers into believers and they changed their hiring approach going forward.
No doubt these converts were waving little red books as they experienced the epiphany she demanded. How the “72% diverse” new hires did over time is not really her concern — she’ll be on to a new and higher-paying post at another company before anyone is allowed to doubt the results.
Even tech companies are getting into the CDO game. Salesforce, which sells CRM and personnel management software-as-a-service to business, announced creation of a Chief Equality Officer position:
Salesforce has taken a leading role on LGBT issues and now it is taking that one step further. The company next week will be announcing its first chief equality officer, who will report directly to CEO Marc Benioff… While [Benioff] has built charitable efforts and equality into his own company, and he admits there is a self-serving component to this, he believes that companies need to give back.
“We can just focus on our own results, our own tech, but you won’t get the joy that comes from giving, the real pleasure of helping people. You’re not only helping other people, you’re helping yourself,” Benioff says.
￼The “Diversity and Inclusion” consulting firms suggest documenting the great ROI (Return On Investment) of their programs to convince management to fund more of them. Upper-level management, it seems, would like to see these program costs as investments returning higher revenues and profits. This is another credit assignment problem—how can the impact of costly programs which both generate more fees to vendors and take up valuable employee time for nonproductive counselling and “mind-changing” sessions be measured?
The correct answer: it can’t. Unless there’s a control company which is very similar at the start but does not undergo diversity training and have diversity programs, there’s no way to determine what impact such programs have on the business. Since both direct and indirect costs are high, showing positive profit impact is going to take real evidence. What can’t be openly admitted is that companies feel they must have such programs or be punished, either by the EEOC or lawsuits. The program itself is partly protective, demonstrating the company made a good faith effort to promote diversity.
Your company certainly has a problem if it needs to reduce noose, graffiti, and hate incidents. But as we have seen in academic examples recently, those benefitting from the diversity movement have taken to false reporting or even producing these incidents themselves to get attention. The solution to such incidents is to fire those creating them or falsely reporting them.
There is no way to prove a whiz-bang diversity program has any effect on productivity numbers. Surveys of employee attitudes and satisfaction are useful, and to some extent diversity programs have a kind of placebo effect — “The company is making an effort, they care!” being the effect on employees and outside observers of media coverage and advertising generated about these programs, which is why there is sometimes more money spent on the PR about diversity programs than on the programs themselves.
An overview of the literature on workplace social or cultural training — that is, training intended to change employee’s cultural attitudes and behavior, like sexual harassment and diversity training — shows that most such programs don’t work, or even cause employees to be more cynical and less likely to believe allegations of racial or sexual harassment. Most such programs are mandatory, and many are online, requiring the subject to read every word of an hour or more of slides and answer quizzes before continuing. These programs are often chosen for low cost and minimal work disruption, but are resented by employees as obvious wastes of valuable time, and condescending since most of the employees subjected to them already fully understand the material presented. The abusers among them are not affected at all.
Hypocrisy is another side-effect. At most companies the programs are required by liability insurance companies and quietly resented by both management and staff, but no one may officially speak against them — diversity is a sacred cow.
Prices for diversity training depend on type and length. One site offers half-day facilitated sessions for up to 12 employees for $3750, c. $300 each. Lost work time per employee would add $100-200 to the cost. A company with 80,000 workers would therefore end up paying about $32 million for all employees for this one half-day session alone, and HR will want to repeat the training with the latest and greatest methods in a few years. Online training takes less time and money—a few hours of time of the employee’s choosing, for c. $100-200 per employee in direct costs, but having little or negative actual effect.
A few contrarian voices speak out against the sacred cow of diversity training. The Harvard Business Review piece (“Diversity Policies Rarely Make Companies Fairer, and They Feel Threatening to White Men”) from the January, 2016 issue slams it hard:
Are all of these [expensive corporate diversity] efforts working? In terms of increasing demographic diversity, the answer appears to be not really. The most commonly used diversity programs do little to increase representation of minorities and women. A longitudinal study of over 700 U.S. companies found that implementing diversity training programs has little positive effect and may even decrease representation of black women….
[Shielding effect:] In a 2011 Supreme Court class action case, Walmart successfully used the mere presence of its anti-discrimination policy to defend itself against allegations of gender discrimination. And Walmart isn’t alone: the “diversity defense” often succeeds, making organizations less accountable for discriminatory practices.
There’s another way the rhetoric of diversity can result in inaccurate and counterproductive beliefs. In a recent experiment, we found evidence that it not only makes white men believe that women and minorities are being treated fairly—whether that’s true or not—it also makes them more likely to believe that they themselves are being treated unfairly.
We put young white men through a hiring simulation for an entry-level job at a fictional technology firm. For half of the “applicants,” the firm’s recruitment materials briefly mentioned its pro-diversity values. For the other half, the materials did not mention diversity. In all other ways, the firm was described identically. All of the applicants then underwent a standardized job interview while we videotaped their performance and measured their cardiovascular stress responses.
Compared to white men interviewing at the company that did not mention diversity, white men interviewing for the pro-diversity company expected more unfair treatment and discrimination against whites. They also performed more poorly in the job interview, as judged by independent raters. And their cardiovascular responses during the interview revealed that they were more stressed.
Thus, pro-diversity messages signaled to these white men that they might be undervalued and discriminated against. These concerns interfered with their interview performance and caused their bodies to respond as if they were under threat. Importantly, diversity messages led to these effects regardless of these men’s political ideology, attitudes toward minority groups, beliefs about the prevalence of discrimination against whites, or beliefs about the fairness of the world. This suggests just how widespread negative responses to diversity may be among white men: the responses exist even among those who endorse the tenets of diversity and inclusion.
In another set of experiments, we found that diversity initiatives also seem to do little to convince minorities that companies will treat them more fairly. Participants from ethnic minorities viewed a pro-diversity company as no more inclusive, no better to work for, and no less likely to discriminate against minorities than a company without a pro-diversity stance. (Other researchers have seen more promising results of pro-diversity rhetoric and images, but it’s clear they’re no panacea.)…Currently, diversity initiatives’ strongest accomplishment may actually be protecting the organization from litigation—not protecting the interests of underrepresented groups.
Identity politics applied to personnel, in other words, don’t do much for diversity, but the constant rhetoric makes the company look like it cares more about skin color and sex than performance. This makes the majority of the workers who think of themselves (correctly or not) as colorblind nervous and wary of discrimination. Meanwhile, it does little to truly support minority employees who may find the rhetoric conceals culture-based discrimination.
Many companies would scrap their diversity regimes if they were not required for legal and PR protection. A corporate culture emphasizing Martin Luther King’s standard of “content of character” over color of skin and type of sex organs is both less hypocritical and more easily supported by all employees regardless of minority status. A multicolored, multicultural workforce where everyone shares the goal of winning in the marketplace can be more inspiring for high achievers than one that divides employees by race and sex.
But under current state and Federal law, diversity expenditures and PR are required to protect the enterprise. The detailed followup article in the HBR should be studied by upper managements since it not only blows the whistle on the waste and harm caused by current diversity programs but suggests a path to more cost-effective and productive programs:
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 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 balance, 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 increased 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.
As we saw elsewhere, all HR-imposed systems will be gamed and routed around by hiring managers keen to improve the performance of their teams and promote their own advancement. When diversity is mostly lip service and an industry is clubbish, not much will actually change — high-performing minority candidates who would have done well anyway are promoted, but the corporate culture won’t change much. The article continues:
…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 recruitment and promotions, and grievance systems to give employees a way to challenge managers. Those tools are designed to preempt lawsuits by policing managers’ 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…. Decades of social science research point to a simple truth: You won’t get managers on board by blaming and shaming them with rules and reeducation….
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 organization,” 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 improvement in the proportion of white women, black men, and Hispanics in management, and the share of 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 resistance — 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 remedial. The diversity manager at a national beverage 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 harassment 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 singling them out implies that they’re the worst culprits. Managers tend to resent that implication and resist the message.
One lawyer comments on the same issues:
If they are doing it for legal protection, most employers really don’t care whether the training works. It is hardly surprising that training could have counterproductive effects when the attitude often is, “Just do it, and just do it as cheaply as possible.” This approach leaves employees feeling cynical and distrustful of the company and in the worse case sows the seeds for conflict.
[From Death by HR: How Affirmative Action Cripples Organizations, available now in Kindle and trade paperback.]
Corporate HR Scrambles to Halt Publication of “Death by HR”
Nobody gets a job through HR. The purpose of HR is to protect their parent organization against lawsuits for running afoul of the government’s diversity extortion bureaus. HR kills companies by blanketing industry with onerous gender and race labor compliance rules and forcing companies to hire useless HR staff to process the associated paperwork… a tour de force… carefully explains to CEOs how HR poisons their companies and what steps they may take to marginalize this threat… It is time to turn the tide against this madness and Death by HR is an important research tool… to craft counter-revolutionary tactics for dealing with the HR parasites our government has empowered to destroy us. All CEOs should read this book. If you are a mere worker drone but care about your company, you should forward an anonymous copy to him.
More reading on other topics:
The Justice is Too Damn High! – Gawker, the High Cost of Litigation, and the Weapon Shops of Isher
Regulation Strangling Innovation: Planes, Trains, and Hyperloop
Captain America and Progressive Infantilization
FDA Wants More Lung Cancer
Corrupt Feedback Loops: Public Employee Unions
Sons of Liberty vs. National Front