Businesses Must Be Accountable for Their Promises on Racial Justice

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A year after the murder of George Floyd and a summer in which businesses declared themselves to stand for racial justice, many of those promises remain unfulfilled. Companies fail to hold themselves accountable for a number of reasons, ranging from a disbelief in the fundamental problem of racial inequity to realities about how hard it can be to pinpoint certain inequitable behaviors. To establish accountability, companies should: be transparent about current levels of racial representation, future goals, and progress; develop incentives for leaders to practice inclusive leadership and penalties for when they don’t meet those goals; and pay close attention to the language used to discuss equity in the workplace.

The past year has been filled with company-wide meetings and communications about race, public commitments to racial justice, and aspirational goals for equality. But communications and statements aren’t enough: Companies need to hold themselves accountable for action so they don’t simply maintain historical structures and cultures of racism. Indeed, some of the statements from last summer have already been met with skepticism from employees who claim that company proclamations of racial justice are hypocritical given the way they’re actually treated in the workplace.

As we approach the anniversary of many companies’ original declarations, senior leaders will be obligated to speak to what exactly has changed over the last year. For those who fall short — and for those who realize that despite important gains there is much more work to do — here is a brief guide to building real accountability into a company’s diversity program.

Why we don’t hold leaders accountable for diversity goals

The first step is to understand why accountability slips through the cracks. We see five primary reasons:

  • People don’t believe there’s a problem. In the workplace specifically, SHRM surveys show that 35% of Black employees feel racial discrimination exists at work, compared to 7% of white employees. This hinders accountability, because those who believe things are already equal can say they believe in equity but will not make any changes to establish it.
  • They don’t believe the problem is business’s to solve. Not everyone buys into diversity as a business case, and in considering diversity and profit separately, leaders may avoid accountability by speaking to financials alone. Board members of profitable firms may be reticent to penalize senior executives who underperform on diversity targets if they deliver on financial results.
  • They want to avoid conflict. A recent SHRM report shows that 45% of Black workers and 30% of white workers feel their workplace avoids discussions about race. This can be due to feelings of discomfort, cultural norms, or fear that such discussions will stoke divisiveness and exacerbate intergroup conflict. The former White House administration issued an executive order (since revoked by the Biden administration) that prohibited discussions of structural racism in federally sponsored or subsidized training programs, calling them “divisive.”
  • The dominant group feels threatened. Diversity initiatives can be seen as a threat when they appear to question the norms, social identity, position, or value of the dominant group. When leaders publicly cast the initiative as this kind of challenge to the group’s culture, they often escape taking any kind of action. Relatedly, leaders themselves may also fear the implications of admitting wrongdoing on diversity matters.
  • Favoritism is hard to prove. Favoritism within the dominant group is a prevalent if subtle form of workplace discrimination. Members of the dominant group are more likely to accrue higher performance ratings, visibility, opportunities for advancement, and mentorship. However, in-group biases can be difficult to pinpoint outside of controlled experiments. This makes it harder to document the subsequent disadvantages for marginalized candidates, and thus hold leaders accountable for enabling favoritism.

These hurdles can be overcome with accountability programs that include the following elements. These recommendations are critical in ensuring that leaders are true to their word in leading change, not simply engaging in performative allyship. While any one can be impactful, the most robust efforts involve all five elements.

Make racial representation levels transparent.

First, to overcome the belief that there isn’t a problem, companies must be transparent about racial representation within their ranks. Without information to the contrary, people will not be convinced that Black workers are underrepresented in the company’s higher-wage jobs, yet overrepresented in low-wage, low-status, high-risk roles, as is generally the case. Moreover, without data transparency, it will be challenging to make the case for implementing any other forms of accountability.

In an effort to be more transparent, many companies, such as LinkedIn and Citi, publish an annual diversity report with quantitative data about racial representation for hiring, attrition, and broadly, leadership roles. This helps hold them accountable by providing insight into workforce demographics.

However, reporting basic demographic numbers is just a first step. Real transparency should also include measures of equity like a breakdown of representation in hiring by job level and promotion rates; defining representation in various leadership levels (mid-management vs senior); and results of climate surveys. These additional data points can be strong indicators of economic equality, career progression, and the quality of experience for Black, Latino/a, and other underrepresented groups.

Share goals and track progress publicly.

Data provides an account of the current state, while goals establish the standards and metrics by which organizations demonstrate that they are becoming more inclusive, equitable, and representative. Without goals, leaders and organizations cannot hold themselves accountable for progress. These goals should be made public to be meaningful.

Starting points for data-driven equity goals include percentage increases in hiring, promotion, retention, environmental sustainability, wage equality, and investments that support business and social justice. We are starting to see this type of goal setting become more common; for example, Sephora announced last year that they will increase their shelf space for Black-owned businesses from 3% to 15%. Salesforce publicly documents diversity and equity workforce goals on their website. They’ve been publicly tracking progress with equal pay since 2015, and in 2021, spent approximately $3.8 million to “address any unexplained differences in pay, bringing total spend to $16.2 million to date.”

Incentivize leaders to practice inclusive leadership.

Leaders at all levels of the organization should be rewarded for practicing inclusive leadership.

This requires changing incentive structures to reward trailblazing work by chief diversity officers, as well as those who hire and promote underrepresented leaders, identify areas where the organization’s actions are out of step with its values, and encourage allies who advance DEI initiatives and advocate for underrepresented coworkers. Care should be taken that people of color who take the lead on voluntary diversity efforts such as employee resource groups (ERGs) don’t go unnoticed, or worse, fall behind in promotions and raises. Rewards for these efforts should include compensation, permitting billable hours, and giving this work significant weight in performance reviews.

Senior executives need to own their business units’ performance on diversity, inclusion, equity and justice initiatives, just as they treat other strategic imperatives.  Starbucks, Chipotle, and Wells Fargo, for example, have all stated they will link executive compensation to workforce diversity goals. The amount of the incentive signals whether your company takes diversity seriously or simply thinks of it as supplemental.

Issue penalties for not meeting diversity goals.

Beyond aspirations and positive incentives, accountability is about consequences. It’s difficult to motivate behavioral change when there’s no cost for noncompliance, especially among members of the dominant group.

Leaders and board members should establish and issue penalties for breaches of company values, as well as failure to meet stated diversity goals. For example, a manager can refuse to review a slate of hiring or promotion candidates that does not include Black or brown people.  More serious violations of company values and anti-discrimination policies necessitate larger penalties, and raise the stakes for inaction. In these situations, appropriate action may include dismissing an employee, as we saw when Franklin Templeton fired Amy Cooper for calling the police with false accusations against Christian Cooper, a Black man in New York’s Central Park. Boeing has fired 65 people and penalized more than 50 others over the past year for “racist, discriminatory, or otherwise hateful conduct.”

We are also seeing business leaders become more active stakeholders in issuing penalties for discrimination on a societal level. Recently 72 prominent Black executives called on companies to fight restrictive voting laws that are being pushed in 43 states. Major League Baseball decided to relocate its draft and all-star game out of Atlanta, and with it, millions of dollars in lost revenue, in response to a Georgia voting law. As companies impose these political penalties, the question becomes whether businesses can hold themselves accountable to the same degree.

Use specific language.

The language that we use when we talk about personal bias and racism makes a big difference in how (and whether) we hold each other accountable. For example, many trainings describe biased acts as unconscious, unavoidable mishaps, instead of focusing on personal or organizational responsibility for fighting biases.  This makes participants feel less culpable — and less likely to hold themselves and each other accountable. Use specific language that underscores collective responsibility and personal accountability to avoid such pitfalls.

Similarly, broad-brushed statements of purpose for diversity initiatives such as “our goal is to increase a feeling of belonging” can be problematic because they often prioritize the needs of dominant groups to feel comfortable and included. One-size-fits-all approaches can also create a false equivalence between those feeling left out because of personal experiences and those being left out because of systemic inequalities. Initiatives which equate these experiences lose clarity of purpose, precision of intervention and thus the ability to hold organizations accountable for systemic patterns of inequity.

A company that handles these issues well is Ben & Jerry’s, which takes an active public stance, including a lengthy statement on their website specifically in support of Black Lives Matter, using unequivocal language and calling for specific policy outcomes. The company also posted on social media in solidarity with Asian Americans in response to anti-Asian hate crimes. These statements capture the energy that global demonstrators directed toward criminal justice reform and anti-racist leadership across sectors during the racial reckoning of 2020.

Words can be impactful, but they are not enough. True accountability aligns words with actions, through transparent processes that are subject to stakeholder scrutiny. Many companies have set ambitious goals, made great strides in the last year, and now have an opportunity to continue to improve and distinguish themselves in the marketplace, to the benefit of their employees, customers, and business. We encourage others to follow suit.

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