Every decade has its share of corporate controversies, investigations, and moral disasters; the 90’s were no different. The Bridgestone/Firestone tire tread investigation. Gerald Ratner’s “total crap” comment. A multitude of fraud cases, from Phar-Mor Inc. and Cascade International to Polly Peck and Bank of Credit.
The 90’s and early 2000s also saw a string of major lawsuits against financial companies, including Morgan Stanley, Merrill Lynch, and Smith Barney, for discrimination, both sex- and race-discrimination. With settlements north of $100 million, companies — financial and otherwise — begin to make some changes, starting with more diversity training.
But, perhaps unsurprisingly, diverse representation in corporate America hasn’t changed much. Between 1985 and 2000, among American companies with 100+ employees, white women increased from 22% to 29% of managers, but those numbers have been stagnant since. Black men in management have only increased from 3% to 3.3% between 1985 and 2014. And in the financial industry, Hispanic managers at commercial banks only increased to 5.7% (from 4.7%) between 2003 and 2014.
This is all in the face of clear evidence that not only does equality and diversity matter, but that more diverse teams perform better. According to a landmark 2015 McKinsey report, companies that are ethnically diverse are 35% more likely to outperform the national industry median. Companies that are gender diverse are 15% more likely to have better financial returns.
Diversity means teams that are varied in gender, ethnicity, and age, but also socioeconomic background, opinion, and skills. Take this imagery, for example (courtesy of Joel Peterson, Chairman of Jet Blue): compare your organization to a symphony orchestra. Now compare the sound of just one section of instruments, for example the percussion, playing the entire piece of orchestral music, versus the entire symphony with every instrument. It’s pretty clear which is better, right?
“The magic of diversity comes in blending various timbres into a harmonious whole that exceeds the sum of its parts. The misery of diversity comes from a cacophony of voices with no common values or purpose. In business organizations, this translates into celebration of input from diverse life experiences-but bone-deep agreement on core values and objectives.”
The question really becomes, are your diversity trainings working or are your selection methods getting in the way when it comes to building diverse teams? Do you know where your biases are? Where your managers’ biases are? And are you fostering a culture that values inclusiveness?
Our Unconscious Biases
We all experience bias — often, unconsciously. The first step is been acknowledging these, which, as you might expect, tricky. Since World War II, nearly 1,000 studies have shown that diversity trainings don’t work, or if they do, the effect is only temporary: people soon forget the “right answers.” Managers and employees also respond negatively to required diversity training, which can not only affect your organization, but can also have the effect of increasing animosity towards other groups. Voluntary training, on the other hand, has the opposite effect, both with employees’ attitudes and on the percentage of minority groups represented in management.
This can particularly affect your hiring practices, both consciously and unconsciously. Some companies implement skills tests — math tests for financial hires or coding tests for technology hires, for example — but the key is that managers must administer these types of tests to every potential hire, not just minorities. Skills tests, though, not only don’t ensure you’ll build a diverse team, they also don’t ensure the team you build will work well together.
Hiring for Talent + Values
Putting objective, unbiased talent measures at the front end of your selection process will improve your diversity in a meaningful way, one that is fair to all candidates. When you understand and place a value on candidates’ behavioral patterns — and what makes them a good match for your team and the role — you’re able to reframe your hiring and selection process. You instead are able to focus on the type of diversity you need to bring to that role, and what key indicators to look for in a candidate so that they flourish in their job.
When you make it clear, in a positive way, that your organization is one that values diversity in many areas — by celebrating diversity, offering voluntary training, and encouraging open debate — you reinforce and grow a team that’s bonded by trust and a sense of community.