Diversity Improves Performance
Diversity is less a function of the isolation of groups than of the relationships which unite them.
—Claude Levi-Strauss, Structural Anthropology, Vol 2
The key word among advocates of multiculturalism became “diversity.” Sweeping claims for the benefits of demographic and cultural diversity in innumerable institutions and circumstances have prevailed without a speck of evidence being asked for or given. It is one of the purest examples of arguments without arguments, and of the force of sheer repetition, insistence and intimidation.
—Thomas Sowell, Intellectuals and Race
A cultural third rail, diversity is seldom discussed in rational, evidence-based tones. The virtues of la différence can be real or mythological depending on the context. Diversity evokes a range of emotions, arguments, theories, biases, and rhetoric. This chapter makes no claim of completely taming the hydra that is the diversity debate. The objective here is far simpler: to call attention to thoughtful opinion and empirical evidence that counter the absoluteness of the maxim Diversity improves performance. Diversity may be beneficial in many instances, but it is far from a guarantee of better outcomes.
I’ll present a dispassionate review of diversity as an explanatory variable with regard to the performance of firms, work teams, senior management, and boards of directors. I’ll also provide a brief look at how diversity is treated at U.S. universities. A thoughtful dialogue on diversity can be difficult for many, even when confronted with compelling evidence.
Recall in the introductory chapter brief mentions of the largely homogenous institutions of the nursing profession, the National Basketball Association (NBA), the venture capital industry, and Silicon Valley senior executives. Nursing is overwhelmingly female (90.4 percent) and highly regarded as a profession for providing health care at all levels of the care continuum.1 For the NBA, most of the players are long (average height is 6 ft 7 in) and all are athletic.2 Even with increasing numbers of European players, roughly three-quarters of NBA players are black.3 The NBA is indisputably the best basketball league in the world. Note that there are very few pro-diversity calls to make the nursing profession more male, or the NBA shorter and less black. Nor should there be.
Silicon Valley is responsible for creating the modern venture capital industry, the microprocessor, and world-beating tech firms such as Apple, Google, Intel, PayPal, and Hewlett-Packard. Largely comprised of white males, the leadership ranks of Silicon Valley’s start-up and corporate community are envied by much of the world. However, when The Atlantic conducted their annual Silicon Valley Insiders Poll in 2015, 63 percent of respondents rated the severity of sexism in tech at seven or above (on a scale of one to ten, with ten being the most severe) and 68 percent scored the seriousness of a lack of ethnic and racial diversity in tech with the same rating.4
A recent article in the Wharton School’s online journal claimed, “U.S. corporations spend $8 billion annually on diversity training. Yet a meta-review of almost a thousand studies finds a ‘dearth of evidence’ about their efficacy.”5 Such data and interpretations should compel us to ask more questions about widespread business practices and beliefs about diversity. And so that is what we shall do.
Goodness of Fit
Researchers often refer to a goodness of fit test when appraising the predictive value of a statistical model. Like the fit of your favorite pair of jeans, an organization desires a nice fit among its members and internal culture. Fit has also become a way to describe a new hire (e.g., “He’s a good fit for the team,” or “She’ll fit right in here at headquarters”) as well as communicating termination: “We have to let you go because this really isn’t a good fit, nothing against you personally.” Homogeneity in the workplace is often explained by a model called the Similarity/Attraction Paradigm. The model theorizes that people feel more comfortable being around others that are much like themselves. Positive reinforcement is more likely to occur thanks to similar cultural backgrounds.6
A lack of fit is often the reason diverse members of a group feel uncomfortable or stressed, and this contributes to high turnover rates.7 You may hear some disaffected employee say, “This place just doesn’t get me.” This may be true, but it is the responsibility of both the employee and the employer to make things work. This applies to schools and other communities as well. If you are a new employee, student, or citizen, you have to get them in terms of the culture of which you are a part. Too often, we place the burden only on the workplace, school, or greater culture for making sure the larger entity gets the new member. It is not easy to be new in a strange environment. It is often harder for those who are new and different. The difference may include one or more of the following characteristics: race, ethnicity, age, gender, tenure, sociocultural or socioeconomic background, level and type of education, physical appearance, physical or intellectual ability, personality type, preferred language, national origin, geography, customs, values, spirituality, sexuality, political ideology, approaches to problems, functional skill set, level of team orientation, leisure activities, type of dress, and even diet preferences. Regardless of what makes someone different, fitting in is a shared responsibility. Two-way empathy matters.
Globalization’s Messy Role
In the interest of full disclosure, I am a globalist and free and fair trade advocate. I am an enthusiastic proponent of cross-cultural exchange, be it through trade, art, education, travel, or media. Most of us are aware of the disruptions caused by globalization, especially in the near term. However, we are products of different cultures due to past interactions with dissimilar people and customs. Globalization, while imperfect, will continue to get more people out of extreme poverty than any global policy initiative in the foreseeable future.
Tyler Cowen, an economics professor at George Mason University, sheds light on a diversity paradox that has resulted from globalization. Simply put, diversity within cultures rises as a result of cross-cultural exchanges. Paradoxically, diversity and differences across cultures decrease. For example, the United States grows more diverse due to immigration, trade, and other forms of exchange. The countries on the other side of these exchanges become less unique in their own right and become more like the United States, even if only in small ways initially.8
Look at the many shared characteristics between Canada, the United States, and Mexico. Increased trade, travel, and cross border consumption of media and entertainment have made the three countries more similar to each other and less unique from the perspective of outsiders. As Mexicans settle and have children in the United States, they make the United States a little more Mexican. As U.S. companies build cars in Mexico, they make Mexico a little less Mexican (i.e., in an arbitrary, historical sense) and a bit more American (whatever that means).
Results of globalization can be far reaching, unpredictable, and occasionally tragic. As economist and author Thomas Sowell reminds us, “Napoleon was not French, Stalin was not Russian, and Hitler was not German.”9 Today, Europe grapples with a sizable influx of immigrants. Even before the recent diaspora out of the Middle East, there has been a rising backlash against multiculturalism throughout much of Europe over the last several years.10
Many so-called advocates of diversity are conflicted when diversity erodes local specialness or creates imbalances. Cowen, in Creative Destruction: How Globalization is Changing the World’s Cultures, points to the concentrated power and global distribution clout of the U.S. film industry as an example. Those bemoaning U.S. movie dominance long for films from other countries. Interestingly, film makers outside the United States are more diverse because of influences from American cinema just as American directors are enriched by techniques from foreign film makers.
Cowen calls out those who are inconsistent with their conditional demands for diversity, accusing them of having particularist agendas. He illustrates this with the distinction between “diversity at any single point in time and diversity across time.” For instance, should a culture that is losing its traditional trappings be allowed to morph on its own? Does anyone have the right to “freeze cultures in a specialized era” because that is how certain observers frame that culture? Where does this selective preservation cross the line and wrongfully inhibit younger generations or others seeking change from outside influences?11 Counterintuitively, Cowen offers, “Most generally, partial homogenization often creates the conditions necessary for diversity to flower on the micro level.”12 Globalization does indeed enable change, cultural dynamism, and yes—diversity!
A recent report by global consulting giant McKinsey & Company is indicative of the common diversity narrative in business today. McKinsey’s 2015 Diversity Matters project combed data from 366 public companies in the United States, Canada, Latin America, and the United Kingdom. The final report reveals just 16 percent of executive team members in the United States are women, and females make up only 12 percent of executives in the United Kingdom and 6 percent in Brazil.13
McKinsey’s report claims that companies in the top quartile for gender diversity are “15% more likely to have financial returns above their respective national industry medians.” For racial and ethnic diversity, those firms in the top quartile are 35 percent more likely to exceed industry performance medians.14 The report cautions that these figures are correlations and do not represent causal links. However, the language in the report repeatedly implies a direct linkage. For example, the executive summary of the report states:
The findings nonetheless permit reasonable hypotheses on what is driving improved performance by companies with diverse executive teams and boards. It stands to reason—and has been demonstrated in other studies, as we indicate—that more diverse companies are better able to win top talent, and improve their customer orientation, employee satisfaction, and decision making and innovation, leading to a virtuous cycle of increasing returns.15
McKinsey should spare the reader from this biased conjuring of dividends “demonstrated in other studies.” The report’s warnings about the erroneous interpretation of statistics are followed up by their own erroneous interpretation of statistics. Unfortunately, the report contains no discussion on the likelihood of reverse causality or halo effects. The report does, however, reveal how companies can become more diverse. After all, diversity is big business and you can’t be expected to enrich your firm’s diversity on your own. Fear not, McKinsey & Company (along with other capable consulting firms) is here to help. Thankfully, the overt pitch for McKinsey’s diversity consulting services is left out of the Diversity Matters report.
A Matter of Perspective
Scott Page, University of Michigan professor of complex systems, political science, and economics, provides a useful framework for seeing the value of relevant diversity. Page distinguishes between identity-based categorizations (e.g., race, ethnicity, gender, and age) by emphasizing cognitively based differences in individuals. Page’s Diversity Trumps Ability Theorem attempts to model the conditions necessary for a group of diverse (and knowledgeable) individuals to be more effective than an expert or group of like-minded experts. For instance, a group of specialized rocket scientists may get stuck on a problem largely because they share the same perspective or approach to solving it. They have similar backgrounds and training. Bringing in outside consultants, who are not necessarily smarter but possess alternative perspectives, will likely produce more novel solutions. Page refers to this synergistic effect from varying viewpoints as superadditivity.16
In order for diversity to outperform ability in a problem-solving context, Page stresses that the following conditions should be present: (a) the problem is hard (otherwise a lone expert would have a higher success rate); (b) the people involved are smart (acceptable degree of content knowledge); (c) the contributors are diverse (different backgrounds and perspectives); and (d) the teams are large enough and chosen from a sizable pool.17
Page also devised a Diversity Prediction Theorem that derives value from a diverse set of interpretations when tackling a predictive scenario. Forecasting product sales is a good example. Results from forecasting are very often wrong even when performed by the best marketing prognosticator in a company. This expert is likely relying on her favorite forecast method, a tool she knows well and has used in the past. However, if you combine the interpretations and predictive models from a group of diverse professionals (e.g., sales representatives, distributors, service personnel, product managers, ad agency contacts, and consumer behavior consultants), you will likely end up with a more accurate forecast than the one proposed by the so-called expert. Page’s logic may be summed up with the following:
Rather than having a single perspective, interpretation, heuristic, or predictive model, people and organizations should have many. We must become Whitmanesque and contain multitudes. The advantages of containing multitudes should be clear. Diverse perspectives and heuristics improve problem solving. Diverse interpretations and predictive models lead to more accurate predictions. Crowds are not wise, but crowds of models are.18
In his 2007 book The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies, Page provides a compelling case for the benefits of properly grouped, diverse thinking. He does, however, point to high correlations of identity characteristics with cognitive similarities. Unfortunately, the often stipulated diversity defaults are race, ethnicity, or gender. Lost is an opportunity to exploit the rich differences of many other diversity characteristics.
Highly related to diversity of perspective is diversity of thought. Amit Singh, President of Google for Work, recently said in a New York Times interview that “Diversity of thought is actually the most invaluable thing in a business community. If we’re always agreeing with each other, then we haven’t gone down paths of debate that allow new ideas to emerge.”19
During a Bloomberg Television program marking the commemoration of International Women’s Day in March 2016, General Electric’s Vice Chair Beth Comstock was asked repeatedly about gender disparities on corporate boards. Comstock responded, “We should have more women in key leadership positions. . . . I’m a big believer that diversity equals innovation.... Innovation comes from diversity of thought. . . . You want more diverse perspectives, more diverse experiences.” Comstock went on to stress the importance of hiring the right individuals, and sometimes you should work hard to hire people that are different from yourself.20
One of the more constructive accounts of diversity in business comes from Martin Davidson of the University of Virginia’s Darden School. In The End of Diversity as We Know It, Davidson proposes the adoption of a broader set of diversity criteria, going well beyond traditional, salient characteristics. He recommends that businesses actively leverage the differences among employees. While he acknowledges the “unqualified assertion that any kind of diversity will lead to superior performance is just wrong,” he stresses that there is hope for diversity efforts. Davidson cites strategic linkages, recognition and appraisal of differences (even nuanced), transparency, and inclusivity as keys to exploiting the “dynamics of differences.”21
A Diverse Look at Diversity Research
Given the massive amounts of research completed to date on diversity in organizations, a complete account of those findings is not feasible. However, I provide a concise and representative review of empirical scholarship and relevant commentary from this domain. I include a few studies conducted as meta-analyses for reasons of economy and comprehensiveness.
I begin with a five-year field study exploring the relationships between gender and racial diversity and business performance. The work was completed by a team of nine scholars from several prominent research universities, forming a group called the Diversity Research Network. The team studied four large (all Fortune 500) companies from an initial list of 20 firms that expressed interest in enhancing diversity management programs. Thus, there is a distinct possibility of self-selection bias with this diversity-attuned cohort of firms.
Results indicated “few direct effects of diversity on performance—either positive or negative.”22 Additionally, a negative effect of racial diversity on performance was amplified in situations with high competitiveness among teams. One firm exhibited a positive relationship between gender diversity and group processes, but racial diversity had the opposite effect. In the case of a large retailer, “Communities with more Whites, Blacks, Hispanics, or Asians did not buy more from stores with similar employees.”23 Findings from a financial services company showed racially diverse branches had a positive influence on overall performance, but only in the context of there being robust “integration-and-learning” programs present at those branch locations. In other words, diversity has a better chance of mattering (positively) if that diversity is leveraged with educational programs, training, and development regarding diversity issues.
The authors summarized the Report of the Diversity Network by saying, “The simplistic business case of the past [for diversity] is simply not supported.” They recommend a reframing of the business case for diversity by urging diversity professionals, industry leaders, and scholars to “recognize that while there is no reason to believe diversity will naturally translate into better or worse results, diversity is both a labor-market imperative and societal expectation and value.”24 The report stressed the use of more sophisticated data analysis with regard to diversity efforts, as well as more experimentation in the field. While field work is more cumbersome to conduct, members of the Diversity Research Network feel the artificiality of laboratory settings may overstate observed effects of diversity.25
In a meta-analysis of empirical studies examining workforce diversity and organizational performance published in Human Resource Management, Michele Jayne of Ford Motor Company and Robert Dipboye of the University of Central Florida acknowledged problems with diversity rhetoric, expectations, and goal orientation of many corporate diversity programs. Key interpretations from this duo’s review included (1) Increased demographic diversity “does not guarantee an increase in diversity of task-related knowledge, skills, abilities, experiences or other characteristics;” (2) “Increased diversity does not necessarily build commitment, improve motivation, and reduce conflict;” (3) Increases in group level diversity do not consistently lead to improved group performance and may introduce additional conflicts; and (4) Although results are mixed, increased diversity does not necessarily lead to improved organizational performance.26
To improve outcomes from diversity initiatives, Jayne and Dipboye recommend the following: use clear goals and metrics; tailor programs to context-specific needs; obtain buy-in across all levels of the organizations (especially upper management); emphasize the team-building process; and link diversity outcomes to the firm’s strategy and business results.27
Another study, hypothesizing a positive performance impact from women in senior management positions, looked at S&P 1500 firms over a span of 15 years. The results were published in a 2012 issue of the Strategic Management Journal and used a reliable data set. The researchers concluded that their hypothesis was supported “only to the extent that a firm’s strategy is focused on innovation, in which context the informational and societal benefits of gender diversity and the behaviors with women in management are likely to be especially important for managerial task performance.”28 Say what now? That sounds like a conclusion desperate to show a positive linkage with females in senior management. This paper claimed to test its results for reverse causality (i.e., checking if female executives were added after firms became contextually successful) and rationalized that positive results may be due to the “human capital advantages” of female executives.29 Unfortunately, these conclusions overreach with wishful interpretations that are becoming more common in this research domain.
In 2016, Harvard behavioral economist and professor Iris Bohnet released What Works: Gender Equality by Design. Bohnet cited research that stressed the importance of role models as a key contributor to making professional careers more gender balanced. She also demonstrated how the method used to select diverse teams is critical in order to minimize unintentional gender biases. Bohnet also cautioned that “In short, diversity can lead to better performance—but not always.”30
A paper in the Academy of Management Journal, looking at the effect of racial diversity on performance at over 500 banks, produced statistical models yielding negative and neutral results. The author concludes that racial diversity added value “within the proper context.” This context consisted of banks undergoing a growth strategy, meaning they were performing well in terms of financial and market metrics. The paper cited costs associated with diversity efforts may be problematic in cases where a downsizing strategy is in effect. To the researcher’s credit, he did surmise that some high-profit banks may have added diversity efforts after strong financial results (i.e., reverse causality) rather than the other way around.31
Diversity and Teamwork: Context is King
The adoption of cross-functional teams in the workplace is arguably one of the most widespread applications of diversity in the history of business. Prior to recent trends of telecommuting and the virtualization of geographically dispersed teams, the matrix organization grew to dominate the organization of work in many companies. The primary offspring of the matrix organization is the cross-functional team. How else could we get marketing to communicate with R&D, and R&D to play nice with manufacturing, and for anyone to sit and talk with cost accounting? Seriously though, cross-fertilization of functional skill sets can be both advantageous and disruptive to group processes and outcomes.
A football team is a good example of diverse skill sets coming together to accomplish shared goals. Teams have specialized individuals that strategize, coach, throw, catch, kick, run fast, block, and tackle. Cross-functional teams are similar in scope to football squads. There has been a great deal of research done trying to determine what makes a successful high-performing team. The last few decades have produced mixed results regarding the influence of demographic and task-oriented diversity on team outcomes.
A meta-analysis, reviewing 35 studies and reported in the Journal of Management, revealed support for the positive influence of task-related diversity on team performance. However, this study found bio-demographic diversity did not significantly relate to team performance, nor did diversity affect social integration (i.e., member satisfaction and team cohesion). Researchers recommended that organizations should “consciously create a high-performing team with members reflecting more task-relevant heterogeneity while focusing less on bio-demographic attributes.”32 The paper also concluded that organizational context may have a large impact on social integration. For example, team training programs and the level of leadership commitment can impact how group members interact and thus perform.
Another meta-study, published in the Journal of Product Innovation Management, focused on 38 studies to determine what makes new product development (NPD) teams more successful. Researchers found group cohesiveness to be a positive indicator of NPD performance (i.e., the more cohesive the team, the better the performance). Note the extant research usually posits team cohesiveness as important to team processes, with diversity having a disruptive effect on cohesiveness. Interestingly, this meta-analysis found no positive impact of functional diversity on team performance. The double-edged sword of functional diversity may spark creativity and improve problem solving in one setting, while fostering “emotional conflict” in another.33
The paradoxical nature of diversity in the workplace appears hinged on the resources put in place to encourage the leveraging of differences. This cognitive resource perspective involves promoting an “affirming climate of diversity.”34 This obviously comes with a cost. Contrastingly, organizations less apt to engage in diversity-related support programs run the risk of disruption and reduced performance from a diverse workforce.
As we’ll see next with a review of boardroom diversity, gender has been a popular diversity variable for management scholars. Prior to 2000, gender studies within the suite of Academy of Management publications outnumbered race-related papers by a factor of three-to-two. Since 2000, management scholarship studying gender has outnumbered race-focused works by a five-to-one ratio.35 This reductionist approach to diversity (in terms of scholarly focus) favors gender at the expense of race and other diversity indicators. This trend mirrors a past criticism of the feminist movement which asserted that women of color were not welcome in the broader feminist tent, resulting in black women missing out on subsequent feminist advances in the latter part of the 20th century.36
Boardroom Bros
The corporate board of directors, as an institution, has received an enormous amount of scrutiny and scholarly attention over the last few decades. The relatively low incidence of female corporate directors has been a popular research theme.
For the Conference Board, Stanford’s Deborah Rhode and Amanda Packel recounted their findings and interpretations regarding diversity on corporate boards from a 2014 article in The Delaware Journal of Corporate Law. Citing data from the Spencer Stuart U.S. Board Index 2014, women account for 19 percent of S&P 500 board seats, and just 13 percent of those in Russell 3000 firms.37 The authors acknowledged there is much to be done to attain “more equitable leadership structures.”38 Their suggestions included mandatory interviews of minorities for open board seats (in the spirit of the National Football League’s [NFL’s] “Rooney Rule”), maintaining female board seats for those presently female, and targets for minority representation in the near term. Incidentally, Scandinavian countries have markedly increased the ranks of female board members partly through the use of targets and legislated mandates.
Rhodes and Packel acknowledge that the traditional business case for board diversity offers inconsistent results, and therefore does not offer a convincing case to shareholders in terms of financial returns. Instead, they argue on the side of diversity initiatives for “reputational arguments” and societal equity.39
An ambitious meta-analysis consisting of 140 studies examined the relationship between women on boards and firms’ financial performance. Published in a 2015 issue of the Academy of Management Journal, this paper suggested that “board diversity is neither wholly detrimental nor wholly beneficial to firm financial performance.”40 This paper noted that board independence (examined because female directors are more likely to be independent board members) does not materially influence a firm’s performance. The study concluded that the level of female board representation is positively related to more diligent monitoring and strategy involvement by the board.41 This finding is a common silver lining trumpeted by researchers desiring positive linkages from female board membership, at least when compared to boards with fewer or no females.
A report in 2012 received a great deal of media buzz when it touted that female executives give venture-backed start-ups a greater chance of succeeding. Published by Dow Jones, Inc., the Women at the Wheel report studied over 20,000 venture capital (VC)-backed firms from 1997 to 2011. The report claimed, “The overall median proportion of female executives is 7.1% at successful companies and 3.1% at unsuccessful companies [within the four largest industry sectors].”42 Relying on some statistical gymnastics, the authors ventured further out on a limb as they, “claim with statistical significance that there is a dependence between a company having female executives and its success.”43 However, when looking at the entire data set (including more than just the top four sectors), the authors admit that “In the pool of successful companies versus failed companies, we do not see any significant difference between the proportion of female executives.”44
A flaw with the initial claim above is that the report’s definition of “unsuccessful companies” excludes several thousand firms characterized as “not yet successful.” Additionally, the report acknowledges that women often join VC-backed firms later in their development (i.e., closer to being successful). This point is supported with the report’s own finding that the incidence of female executives is “much higher” with VC-backed initial public offerings (IPOs) versus VC-backed firms that exit (as successes) via mergers and acquisitions.45
The media and the report’s authors should share the blame for the misleading conclusions presented in the popular press about gender’s fantastical impact on business performance.
Seemingly, in an effort to shame boards into becoming more diverse (in terms of females and minority representation), many researchers have attempted to show that female directors make for better performing companies. But doesn’t this strike you as an odd proposition? Step back and ask yourself why would gender, or race, or ethnicity, or hair color matter significantly to the financial returns of a corporation? Why this obsession with finding the “El Dorado” of gender-based performance links? I maintain that these attributes should not matter, be it in the board room or C-level management ranks. The skills and behavior that get certain men to the top of corporations are fundamentally the same skills and behavior that benefit high-achieving women and minorities.
Recounting her study of over 900 top and middle managers in Norway (known for its progressive liberalism regarding gender and work), sociologist Anne Grethe Solberg concluded the following: “Leadership style can be independent from biological gender. Men and women don’t have different styles of leadership. We should be cautious when working with gender balance and gender equality in organizations.”46
Let’s try a hypothetical. Suppose that all-female, all-black boards and black female CEOs are found to indicate superior financial results for their companies. If this were the case, I posit that 99 percent of the most bigoted investors would flock to invest in firms run by black females. Why? Because profits will trump sexist and racist ideology. Thomas Sowell once wrote, “Racists may prefer their own group to others, but they prefer themselves most of all.”47
Centuries of past prejudice against women and minorities seem to have influenced the overstatement of benefits imagined from more proportional representation in upper management. Specious research conclusions and reckless public relations agendas are not uncommon. It is, to a large extent, irresponsibility from mostly good intentions. While scholars should be (and usually are) disinterested in their pursuit of truthful explanations, the lure of finding diversity linkages to performance may be too compelling for some. Frustration with the slow pace of change may have unfortunately created research streams that have drifted toward a more hopeful orientation, and away from a dispassionate approach required of social scientists.
Epicenters for Diversity Discourse
The forefront of the diversity debate is occurring where you might expect—U.S. colleges and universities. Idealism, young adulthood, intellectualism, a vibrant community of scholars, and (hopefully) the freedom to speak freely are hallmarks of a university campus. Diversity debates and controversies on campus often lead the country at large to further ruminate and discuss issues related to inequality, access, and policy.
Notable resistance to the swelling of college diversity initiatives came long ago from the likes of David Sacks and Peter Thiel. In their provocative book The Diversity Myth: Multicultural and Political Intolerance on Campus, the authors painstakingly describe the downside of political correctness and aggressive diversity efforts on college campuses. The book uses Stanford extensively as a case study, highlighting the overhaul of Stanford’s curriculum and its loss of Western philosophy-oriented courses in exchange for more contemporary and diverse subjects.48
Sacks and Thiel point out the hypocrisy of many diversity initiatives that were created largely because of past intolerance. For example, themed dorms (e.g., ethnic or lifestyle-specific buildings) have been established as a way for certain minority students to feel more comfortable with their identities. Ironically, themed houses often represent a segregation redux. Sameness is purposefully clustered together, fostering a less integrated student body. Demands for safe spaces on campus and trigger warnings in classrooms are symptoms of hypersensitivity to potentially offensive language or exclusionary behavior.
The following captures the caution expressed in The Diversity Myth, and its challenge to wanton multiculturalism for its own sake:
The new culture of multiculturalism (or “multiculture”) defines its own taboos, creates its own mythos, initiates its own rites of passage, and distributes its own social roles. It is in many ways a self-contradictory culture—one that advocates liberation from moral certitude and all other forms of authority, but maintains itself with maximum authority and certainty of belief. This contradiction runs through the heart of the multiculture, and so runs through its denizens, whose daily choices ultimately must sustain it. Like all cultural systems, it has a sacred core—a bundle of values, superstitions, and beliefs never articulated by its citizens but fiercely guarded nonetheless. To pierce this sacred veil is to occasion sacrilege.49
Sacks and Thiel assail multicultural theology partly because of its attack on Western religion and its principles. As multiculturalism seeks to erode the unfair hegemony of Judeo-Christian values, the “new multicultural religion becomes transformed into a religion of antireligiosity.”50 Indeed, ideological conservatives have complained for years of the intolerance they encounter at universities and in the media.
Others warn that the revamping of college general education requirements, with rigid diversity components, acts as a platform for political thought reform. While rebuking recent strengthening of the diversity requirements at the University of Massachusetts Amherst, Daphne Patai and Harvey Silverglate (both board members of the Foundation for Individual Rights in Education, or FIRE) rouse with the following:
In a society where students have long been granted the right to refuse, for example, to recite a biblical passage or even the Pledge of Allegiance in public schools, college students are now required to genuflect before the banner of diversity, inclusion and social justice. It’s insufficient for students to refrain from uttering offensive or “wrong” words and ideas. They must increasingly be trained to mimic their professors and affirmatively utter the “right” ones.51
A major driver for diversity on campus is the admissions office. The diversity push by many universities runs the risk of creating diverse (in some ways) student populations comprised of nondiverse students (i.e., ultraspecialized individuals). Well-rounded students without distinct, unidimensional attributes are not what many elite institutions desire.
College admissions offices have long trumpeted the number of countries represented on campus. They enjoy touting that students from all 50 states make up the new class of freshman. Remarkably, many elite institutions proudly recount how each year they reject several students with perfect SAT scores. I know there are multiple forms of intelligence, but why would elite universities think rejecting academically gifted students (in favor of admitting students with dramatically lower scores) is a good idea? Does it help provide space for preferential groups, including underrepresented minorities, legacies, musicians, and athletes that may not qualify under normal admissions parameters?
Nearly 90 years ago Aldous Huxley wrote, in Proper Studies, “It is precisely for the philomaths that universities ought to cater.”52 Sadly, many universities have resorted to new ways of pursuing their research and education missions. Public relations-oriented diversity efforts and aggressive forays in the entertainment business (i.e., costly big-time athletics) have become commonplace in recent decades.
Forcing diversity breeds resentment and puts pressure and unwanted scrutiny on those benefiting from preferential treatment. The most notable mandate for preferences is that of affirmative action. The subject of executive orders signed by U.S. Presidents Kennedy, Johnson, and Nixon, affirmative action began as a well-intentioned (and temporary) rectifier of past injustices. Hardly just an American problem, preferential placements, and subsequent cries of reverse discrimination are argued over in many countries.53 Thomas Sowell, of the Hoover Institution, laments the results of affirmative action in the United States with:
It was after the civil rights movement itself began to move away from this concept of equal treatment of all individuals and toward the concept of equalized outcomes for groups, that a backlash against affirmative action set in and grew over the years.54
In Mismatch: How Affirmative Action is Hurting the Students its Intended to Help and Why Universities Won’t Admit It, UCLA law professor Rick Sander and Brookings fellow Stuart Taylor provide a strong case for reforming affirmative action. The authors cite a dramatic drop in failure rates for minority students at UCLA after racial preferences were eliminated from admissions decisions. The ban on racial preferences stems from California’s Proposition 209 which was passed by voter referendum in 1996. Sander and Taylor report that “the total number of black and Hispanic students receiving bachelor’s degrees was the same for the five classes after Prop 209 as for the five classes before.” The authors tout the ban on racial preferences resulted in “better matched students at UCLA,” reducing incidences of mismatch.55
Gail Heriot, law professor at the University of San Diego and member of the U.S. Commission on Civil Rights, claims that affirmative action results in lower rates of college completion by blacks and Hispanics. She contends that if less qualified minority applicants (that currently get preferential admissions treatment) attended less select institutions, there would be more (in absolute terms) minority engineers, doctors, and lawyers—just not as many from the most elite institutions.56
Richard Sander continues to press his critics for their disinclination to acknowledge empirical evidence regarding mismatch. In a 2015 Wall Street Journal opinion piece, he reiterates his position with:
The mismatch theory is not about race. It is about admissions preferences, full stop. Mismatch can affect students who receive preferential admission based on athletic prowess, low socioeconomic status, or alumni parents. An important finding of mismatch research is that when one controls for the effect of admissions preferences, racial differences in college performance largely disappear.57
Bamboo Ceiling?58
Many Asian American groups have been at a distinct disadvantage with regard to college admission. Dozens of Asian American organizations filed complaints with the U.S. Department of Education against Harvard for racial discrimination.59 The truth is that as a group, Asian Americans have better test scores and grades than their white, black, and Hispanic counterparts. Asian American students come from a culture where education, college readiness, and aspirations are valued higher than in other demographic groups. Sure, family income and parents’ education have some influence, but hard work and the prioritizing of education have driven the imbalance in the metrics.
Citing data from the National Center for Education Statistics, The Economist reported the percentage of Asian Americans enrolled in 2014 at Cal Berkeley was 41 percent, and 44 percent at the California Institute of Technology. Both are sharp increases compared to figures prior to Proposition 209.60
Outside of the ivory tower, Asian Americans do well professionally and economically. However, they appear underrepresented within top executive ranks. A report by Ascend, a Pan-Asian professional organization, claimed Asian Americans at several tech companies (Google, Intel, Hewlett-Packard, LinkedIn, and Yahoo), comprised “27% of professionals, 19% of managers, and 14% of executives.”61 Whites meanwhile, make up over 60 percent of professional positions in these same firms, roughly 75 percent of the managers, and a more disproportionate 80 percent of executives.
Asian Americans fare worse in the C-suite of Fortune 500 firms, garnering just 2 percent of those coveted CEO posts in 2014. According to Guilford College’s Richard Zweigenhaft, the number of women CEOs in the Fortune 500 has risen sixfold in the last 14 years, and now stands at 24 (4.8 percent).62 The Harvard Business Review recently pegged female CEOs at just 3 percent of the S&P 1200.63 Asian Americans account for only 10 of over 3,000 college presidents in the United States. Relatedly, The Economist reports that in 2014, 11 percent of law firm associates were of Asian descent while just 3 percent of law firm partners were Asian.64
The Economist also points to a higher incidence of political leadership of Indo-Americans over Chinese Americans. Importantly, Indian immigrants emanate from the world’s largest democracy, while Chinese immigrants were influenced by a home country soaked in Confucianism and communist rule—hardly fertile training grounds for politicking or chest pounding bravado. So yes, not surprisingly, culture matters a lot.
Given the unevenly distributed leadership demographics of corporate, higher education, legal, and political realms, is it practical to assume that these institutions would perform better if leadership demographics were more reflective of the general population, or at least be more diverse—racially, ethnically, or gender-wise? The short answer is probably no. Why would it matter?
I fail to see how the performance of the organizations in any of the domains just discussed will be improved by making the racial, ethnic, or gender profiles of the organizations and their respective leadership more reflective of the general population. Will new demographic distribution paradigms in these institutions bring other benefits? Probably. Will higher representation of minorities in senior ranks connote, on the surface, more fairness? Yes. Are many of the disproportional statistics presented in this chapter reflective of past injustices? Absolutely. But bear in mind that much of the data can be explained by obvious as well as subtle sociocultural factors, pipeline issues, geography, and network effects. Diversity efforts that try for home runs in terms of improving performance outcomes are often overly ambitious and lack objectivity. Many diversity mandates are uneven in scope and not representative of a truly meritocratic society.
I have used a combination of broad strokes and specific empirical evidence in my criticism of many inaccurate claims of diversity’s dividends. This chapter is far from a complete accounting of this contentious topic. Diversity is too complex to treat with media sound bites and sweeping rationalizations void of evidence and transparency. Generally speaking, diversity’s impact on performance is mixed at best. The ramifications on policy, organizations, and people are too important to blindly accept shallow dogma on this issue.
As academics are fond of saying, further study is recommended.
Contra Maxims for Diversity
Avoid using and identifying with stereotypes. Focus on relevant diversity.65 Diversity of thought and perspective matter. Leverage diversity—in all its forms. Respect differences. Be mindful of biases. Individual–organizational fit is a two-way street. Fitting in is everyone’s responsibility. We all have to get each other, and sometimes just leave each other alone. Sometimes, diversity improves performance, and sometimes it doesn’t.
Notes
1. U.S. Census Bureau, “Men in Nursing Occupations: American Community Survey Highlight Report,” 2013, http://www.census.gov/people/io/files/Men_in_Nursing_Occupations.pdf (accessed Jan 22, 2016).
2. Sports Reference, LLC, “NBA League Averages,” 2015, http://www.basketball-reference.com/leagues/NBA_stats.html (accessed Jan 22, 2016).
3. Richard Lapchick and Angelica Guiao, “The 2015 Racial and Gender Report Card: National Basketball Association,” The Institute for Diversity and Ethics in Sport at the University of Central Florida, 2015, http://nebula.wsimg.com/6e1489cc3560e1e1a2fa88e3030f5149?AccessKeyId=DAC3A56D8FB782449D2A&disposition=0&alloworigin=1 (accessed May 22, 2016).
4. The Atlantic, “Silicon Valley Insiders Poll,” Nov 2015: 76–81. Note: The poll uses a panel of “101 executives, innovators, and thinkers.” Selection methodology for the panel is not stipulated, but names of respondents are provided.
5. Knowledge at Wharton, “‘Gender Equality by Design’: Building a More Inclusive (and Productive) Workplace,” Knowledge @ Wharton, 24 Mar 2016, http://knowledge.wharton.upenn.edu/article/gender-equality-design-building-inclusive-productive-workplace/?utm_source=kw_newsletter&utm_medium=email&utm_campaign=2016-03-24 (accessed Mar 26, 2016).
6. Katherine Williams and Charles O’Reilly, “Demography and Diversity: A Review of 40 years of Research,” in Barry Staw and Robert Sutton (Eds.) Research in Organizational Behavior 20: 77–140 (Greenwich, CT: JAI Press, 1998); Jeffrey Pfeffer, “Organizational Demography,” in Barry Straw and Larry Cummings (Eds.), Research in Organizational Behavior 5: 299–357 (Greenwich, CT: JAI Press, 1983).
7. Joshua Sacco and Neal Schmitt, “A Dynamic Multilevel Model of Demographic Diversity and Misfit Effects,” Journal of Applied Psychology 90, no. 2 (2005): 203–231; Williams and O’Reilly, “Demography and Diversity”
8. Tyler Cowen, Creative Destruction: How Globalization is Changing the World’s Cultures (New York, NY: Basic Books, 2002).
9. Thomas Sowell, The Thomas Sowell Reader (New York, NY: Basic Books, 2011), 272.
10. Raymond Taras (Ed.), Challenging Multiculturalism: European Models of Diversity (Edinburgh, Scotland: Edinburgh University Press, 2013).
11. Cowen, Creative Destruction, 134–135.
12. Ibid., 16.
13. Vivian Hunt, Dennis Layton and Sara Prince, Diversity Matters (McKinsey & Company, 2015), http://www.mckinsey.com/Insights/Organization/Why_diversity_matters (accessed Jan 16, 2016).
14. Ibid.
15. Ibid., 1.
16. Scott Page, “Making the Difference: Applying a Logic of Diversity,” Academy of Management Perspectives 21, no. 4 (2007): 6–20.
17. Ibid.
18. Ibid., 14.
19. Adam Bryant, “Fostering a Respectful Clash of Ideas,” The New York Times, 24 Jan 2015, BU2.
20. Bloomberg Television, “Bloomberg Go,” 9 Mar 2016, http://on.aol.com/video/comstock%3A-we-need-more-diversity-in-the-boardroom-519560692
21. Martin Davidson, The End of Diversity as We Know It (San Francisco, CA: Berrett-Koehler, 2011), 191.
22. Thomas Kochan, Katerina Bezrukova, Robin Ely, Susan Jackson, Aparna Joshi, Karen Jehn, Jonathan Leonard, David Levine and David Thomas, “The Effects of Diversity on Business Performance: Report of the Diversity Network,” Human Resource Management 42, no. 1 (2003): 3–21. Note: Authors represented the following institutions: MIT, Wharton School of the University of Pennsylvania, Harvard Business School, Rutgers University, University of Illinois at Urbana-Champaign, and the University of California, Berkeley.
23. Ibid., 16.
24. Ibid., 18.
25. Ibid.
26. Michele Jayne and Robert Dipboye, “Leveraging Diversity to Improve Business Performance: Research Findings and Recommendations for Organizations,” Human Resource Management 42, no. 4 (2004): 409–424.
27. Ibid.
28. Cristian Dezso and David Gaddis Ross, “Does Female Representation in Top Management Improve Firm Performance? A Panel Data Investigation,” Strategic Management Journal 33, (2012): 1072–1089.
29. Ibid., 1085.
30. Iris Bohnet, What Works: Gender Equality by Design (Cambridge, MA: Belknap Press, 2016), 228.
31. Orlando Richard, “Racial Diversity, Business Strategy, and Firm Performance: A Resource-based View,” Academy of Management Journal 43, no. 2 (2000): 164–177.
32. Sujin Horwitz and Irwin Horwitz, “The Effects of Team Diversity on Team Outcomes: A Meta-analytic Review of Team Demography,” Journal of Management 33, no.6 (2007): 987–1015.
33. Nagaraj Sivasubramaniam, S. Jay Liebowitz, and Conway Lackman, “Determinants of New Product Development Team Performance: A Meta-analytic Review,” Journal of Product Innovation Management 29, no. 5 (2012): 803–820.
34. Donna Chrobot-Mason Nicholas Aramovich, “The Psychological Benefits of Creating an Affirming Climate of Workplace Diversity,” Group and Organization Management 38, no.6 (2013): 659–689.
35. Note: Search of publication titles form all Academy of Management journals and proceedings, by date constraints, using research title as key search field. Gender was used as gender indicator while race and racial were used as markers for race-focused studies. http://journals.aom.org/search.(accessed Jan 22, 2016).
36. Makers: Women Who Make America (Washington, DC: Kunhardt McGee Productions, Public Broadcasting Service, 2013, WETA-TV).
37. Deborah Rhode and Amanda Packel, “Director Notes: Diversity on Corporate Boards: How Much ‘Difference’ Does Difference Make?” The Conference Board, Feb 2015, No. DN-V7N2. www.conference-board.org/director notes.
38. Ibid., 4.
39. Ibid.
40. Corinne Post and Kris Byron, “Women on Boards and Firm Financial Performance: A Meta-analysis,” Academy of Management Journal 58, no. 5 (2015): 1563.
41. Ibid.
42. Jessica Canning, Maryam Haque and Yimeng Wang, Women at the Wheel: Do Female Executives Drive Start-up Success? (New York, NY: Dow Jones & Company, 2012), 3, http://www.dowjones.com/privatemarkets/pm_download.asp.
43. Ibid., 21.
44. Ibid., 32.
45. Ibid., 12.
46. Ira Irene Bergstrom, “Gender Differences in Leadership Are a Myth,” Committee for Gender Balance and Diversity in Research, 1 Nov 2013, http://eng.kifinfo.no/nyhet/vis.html?tid=83367 (accessed Jan 27, 2016).
47. Sowell, The Thomas Sowell Reader (New York, NY: Basic Books, 2011), 264.
48. David Sacks and Peter Thiel, The Diversity Myth: Multiculturalism and Political Correctness on Campus (Oakland, CA: The Independent Institute, 1998).
49. Ibid., 117.
50. Ibid., 105.
51. Daphne Patai and Harvey Silverglate, “From Suppressing to Compressing,” Inside Higher Ed, 2016, https://www.insidehighered.com/views/2016/04/25/new-diversity-requirements-umass-amherst-compel-speech-and-belief-essay (accessed May 2, 2016).
52. Aldous Huxley, Proper Studies (London, United Kingdom: Chatto & Windus, 1929), 132.
53. Sowell, The Thomas Sowell Reader (New York, NY: Basic Books, 2011).
54. Ibid., 300.
55. Richard Sander and Stuart Taylor, Mismatch: How Affirmative Action Hurts the Students It’s Intended to Help and Why Universities Won’t Admit It (New York, NY: Basic Books, 2012), 8.
56. Intelligence Squared U.S., “Debate: Affirmative Action on Campus Does More Harm than Good,” 27 Feb 2014, http://www.intelligencesquaredus.org/debates/past-debates/item/1054-affirmative-action-on-campus-does-more-harm-than-good (accessed Jan 22, 2016).
57. Richard Sander, “How Colleges Make Racial Disparities Worse,” The Wall Street Journal 18 Dec 2015, A17.
58. The Economist, “The Model Minority is Losing Patience,” Oct 3–9, 2015, 23–25.
59. Ibid.
60. Ibid.
61. Ibid., 25.
62. Ibid.
63. Harvard Business Review, “Interaction: The Best Performing CEOs in the World,” Jan–Feb 2016, 22.
64. The Economist, “The Model Minority”
65. Scott Page, “Making the Difference,” 16.