Why Mending, Not Ending, DEI Programs Is Good for Business

Why CSR Is Still Vital for Companies

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By Nick Keppler

Any act of corporate wrongdoing—real or perceived—can be publicized worldwide instantly via the internet and social media. This has made ideas of sustainability and corporate social responsibility (CSR)—which includes organizations’ initiatives geared toward achieving environmental, ethical, philanthropic, and financial objectives—increasingly important and far-ranging, said Academy of Management Scholar Herman Aguinis of the George Washington School of Business.

“Because of information flow across the internet, now we know about sweatshops, we know about companies polluting the environment, and we know about companies that are abusing and taking advantage of farmers and not providing benefits,” he said.

Not coincidentally, measurements of CSR initiatives that make a positive societal impact have grown not just to consider the company’s adherence to laws and regulations but also its impact on globalization, technological developments, fair trade, workers’ rights, pay equity, pollution, habitat destruction, and climate change.

“The expectations have changed mostly because of pressure from the outside,” Aguinis said.

To manage an increasingly complex set of considerations related to CSR and sustainability, many companies have emphasized the three Ps, Aguinis said: people, the planet, and profit.

The “people” aspect does not only encompass employees and shareholders but also a wide span of stakeholders, including “the communities you serve, your customers, the communities around your business locations,” he said.

For example, Intel, a computer components manufacturer, holds town-hall meetings before finalizing plans to open new chip plants.

Small steps like these make operating the business easier and bolster its reputation, Aguinis said.

“The argument is that you can do good and do well at the same time, that those things go hand in hand, is replacing an older cynical argument that some economists have proposed, which is that your priority and loyalty group and number-one stakeholder is your shareholders,” he said. “‘You should just be making money for them, and anything else that you do that goes outside of that is not your mandate, not your responsibility.’”

That thinking—exemplified by American economist Milton Friedman—will not help companies stand up to increasing social pressure and could hurt their reputation, Aguinis said.

“The CSR movement has changed because customers, consumers, vendors, and partners want companies to do more to impact society positively.”

Going Beyond Surface-level Diversity Key to Avoiding Bias

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By Nick Keppler

Spurred by the racial reckoning after the 2020 police murder of George Floyd, many large, public-facing companies in the U.S. implemented diversity, equity, and inclusion (DEI) programs with the stated goal of addressing their own barriers to hiring of, and advancement for, historically disadvantaged groups.

Too often, these efforts are only aimed at what Academy of Management Scholar Herman Aguinis of George Washington University calls “surface-level diversity,” the presence of people of different races, ethnicities, genders, and other classifications without a change in corporate culture led by executives who value varying perspectives.

“Deep-level diversity is when you have people around the table who bring different experiences and opinions and perspectives to the table, and organizational leaders listen to those diverse voices,” Aguinis said, who has both researched and consulted on institutional barriers that prevent the rise of “star performers” from various backgrounds.

“Surface-level diversity is when you look at someone’s gender, skin color, or race or ethnicity, and that’s what you call diversity,” he said. “It’s much easier to go for surface-level diversity.”

This gravitation towards superficial diversity often starts at the recruitment and interview stages. People in charge of hiring tend to like people with views and appearances similar to their own, said Aguinis, and they can slip into looking for candidates who have the same race, ethnicity, gender, and background as they do.

To prevent bias from creeping into the recruitment and hiring processes, Aguinis recommends conducting structured interviews.

“In a structured interview, you ask the same questions to all the candidates, and you actually score the answers with a scoring key you have created in advance,” he said. “If you have an unstructured interview, where you just chit-chat with a candidate, you’re more likely to like them or not, based on how similar they are to you.

“Also, you should never have just one interviewer because that person’s biases are more likely to be undetected.”

Aguinis added that the perception of a superficial quota system is one cause of a backlash that has led many companies to roll back or rebrand DEI efforts.

“When companies use it—the shortcut of surface-level diversity and just trying to use quotas or things like that—that’s when the diversity seems to be the opposite of what it tries to do: being exclusive instead of inclusive,” he said.

“Just Add a Woman and Stir” Is Not Enough for Board Success

By Daniel Butcher

Even at organizations that have made strides in adding women and people of color to their governing boards, tokenism is all too common. Diverse board members can’t make a difference if their longer-tenured colleagues routinely disregard their suggestions.

Academy of Management Scholar Kris Byron of Georgia State University said that female board members and those representing an ethnic or racial minority are often sidelined, technically part of the board but to whom the other directors or trustees don’t really listen.

Byron and research colleague Corinne Post of Villanova published an article on this topic in Academy of Management Journal.

“There’s this idea that you just add women and stir and that’s enough, but that’s not enough,” Byron said. “If we’re saying that the ways in which a woman might add value is that she might have different perspectives or a different lens through which to look at an issue, or she might have information or knowledge or experience that maybe some of her male colleagues don’t have.

“That knowledge, experience, and perspectives mean nothing—they’re not going to have any effect—if people aren’t willing to acknowledge the usefulness of that perspective or knowledge or experience,” she said. “There’s probably lots of other things that are important to whether or not the woman on the board is a token, or whether or not there’s some kind of critical mass of female directors on the board.

“Do people think, ‘Oh, she’s just there on the board because we had to fill this quota—she wasn’t the best person to serve in this role; she’s just here for window dressing to make us look good.’”

Diversity is hollow if it isn’t accompanied by equity, inclusion, and fostering a sense of belonging among members of marginalized and minority groups. Actually listening to female board members’ ideas and suggestions and enacting the best of them are crucial for them to have a chance to improve an organization’s leadership.

“There has to be this real belief among the other board directors that these women, that all of the directors, have some value-add, and that isn’t a given,” Byron said. “So that’s what it means that you can’t just add women and stir.

“There has to be some other things that are in place in order for women to have a positive impact on an organization, especially on something that’s so distal or downstream like firm performance,” she said. “Board directors largely have an indirect effect on organizational performance.”

What Are the Effects of Adding Women to Boards? It’s Complicated.

By Daniel Butcher

Research shows that companies with more female directors can have better firm performance—and this is especially the case in countries that have stronger shareholder protections or that have greater gender equality. In addition, organizations whose boards have more female directors tend to be more engaged in activities that are central to boards’ responsibilities: monitoring and strategy involvement.

Academy of Management Scholar Kris Byron of Georgia State University said that board monitoring refers to the extent to which boards engage in activities that entail oversight of the firm and seek to control managers. Board strategy involvement refers to the extent to which boards engage in activities related to their advising role and decide how firms should compete in the marketplace.

Byron and research colleague Corinne Post of Villanova published an article on this topic in Academy of Management Journal.

“What we found was that there was a positive effect of adding women to the board on strategic involvement and a positive impact on board monitoring, but that board diversity is neither wholly detrimental nor wholly beneficial to firm financial performance,” Byron said. “There is some research showing that when you have more women on your board, they’re more likely to influence fellow directors’ or trustees’ behavior and that the norms of the board changes, for example, attendance gets better.

“There’s this spillover effect that women might have; maybe they come onto the board and they’re more diligent,” she said. “In some ways, that makes sense, because there aren’t tons of women who are in those kinds of senior positions, and so, if she got to that position, then she is probably quite exceptional and especially conscientious.

“Those behaviors may spill over to her male counterparts on the board, and there is research suggesting that that’s something that probably occurs.”

The Gender Pay Gap Gets Worse Over Employees’ Careers

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By Daniel Butcher

The gender pay gap between the earnings of male and female business professionals starts small on average but tends to grow over time.

“It’s so interesting that when we look at pay gaps among male and female MBA graduates coming out of the same program in the same year, the gap is so small; it’s really little initially,” said Academy of Management Scholar Carol Kulik of the University of South Australia. “But the problem is, it gets bigger every year, because the way we usually get people pay raises is we make it a percentage of their past salary, and so any sort of pay gap that you have in the first year after graduation gets a little wider, year after year.

“And women are still primarily responsible for caring for children and elderly family members,” she said. “And so they have these career gaps, where they step off the career ladder for a bit, and when they come back, they never quite catch up on the pay raises that the men in their cohort have gotten.

“By the time they get into executive roles, this gap can actually be really wide.”

Taking a step back, Kulik said that it’s important for leaders to recognize that there are gender pay gaps, even at the highest levels of organizations.

“From the public’s perspective, they say, ‘These are women at the top of their game, and companies are under so much pressure to hire women and have women represented in senior roles; surely, they can just negotiate a higher wage,’” Kulik said. “But you’re talking gaps of 20%—that’s a big ask when you’re going into one of these senior roles.

“I want to emphasize that the gap is big, and it’s really important to talk about it, especially because in executive roles, a lot of times the biggest part of your salary is not in the base salary; rather, it’s in all the discretionary bonuses that you get for good performance,” she said.

“The higher you get in an organization, the more subjective performance evaluations are, so it’s harder to tell when you’re a high-performer, and so we tend to see very big gender pay gaps among senior executives.”

A sample of Kulik’s AOM research findings:

• Keeping Older Workers Engaged
• Engage Me: The Mature-Age Worker and Stereotype Threat
• Aging Populations and Management
• Physical Environments and Employee Reactions: Effects of Stimulus-Screening Skills and Job Complexity
• Relations Between Situational Factors and the Comparative Referents Used by Employees

Pay Gaps Undermine Diversity and Inclusion

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By Daniel Butcher

Lack of pay equity can undermine an organization’s efforts to improve diversity and hurt the effectiveness of the leadership team.

Academy of Management Scholar Carol Kulik of the University of South Australia said that her research has found that in organizations that had pay gaps within their executive teams, as organizations added more women to executive teams, the companies’ financial performance actually went down.

“In other words, the firms are shooting themselves in the foot, as they’re trying to have more gender diversity in the senior team, but they simultaneously have this gender inequality in pay,” Kulik said. “They are sending a signal to the leadership team: ‘We’re putting women on the team, but we don’t value them as much,’ so as a result, the team doesn’t operate as effectively as it should.

“The leadership team isn’t able to take advantage of the gender diversity that it has,” she said. “I’m really proud of that research, because we often think about gender pay gaps as being a problem for women, but our research shows that gender pay gaps are a problem for women’s employers, that when they have gender pay gaps at the top, they’re actually making their whole executive team function less effectively.”

Women tend to be paid less than their male counterparts in the same leadership group, regardless of the quality of their respective performance. Kulik and fellow researchers suggest that the voices of these underpaid women exert less influence on the leadership team’s decisions and activities. Unheard and discounted, the women become demotivated and less engaged in the leadership team.

“It’s actually an interaction effect, so it’s not the gap itself that lowers performance; rather, it’s the exacerbating effects of the gap as you add more women to the team,” Kulik said. “So if you have one woman on the team, you’re probably not going to see that drop quite as strongly.

“But the more women you have on the team, the clearer it becomes that this is a function of gender, and not one person having less skills or less experience, the more it becomes clearly a gender gap,” she said. “And so that’s when it becomes a problem for the organization.”

A sample of Kulik’s AOM research findings:

• Keeping Older Workers Engaged
• Engage Me: The Mature-Age Worker and Stereotype Threat
• Aging Populations and Management
• Physical Environments and Employee Reactions: Effects of Stimulus-Screening Skills and Job Complexity
• Relations Between Situational Factors and the Comparative Referents Used by Employees

A Gender Pay Gap Solution Is Within Leaders’ Reach

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By Daniel Butcher

Women working full-time, year-round are paid 84% of what men are paid on average, according to the U.S. Census Bureau. What is the answer to closing the gender pay gap? The solution might not be simple but is within leaders’ reach.

Academy of Management Scholar Carol Kulik of the University of South Australia said that the answer is auditing the compensation system and monitoring disparities within it.

“Data on the pay gaps that have just been released in Australia are company-wide, and what you really need to do is dig down and say, ‘At what level do we start to see pay gaps?’” Kulik said. “That’s so important, because when men and women come into an organization, the pay gap might be really small, but there could be at some critical stage in the future—maybe it’s at the point where they’re getting promoted into that first layer of management where there was a bigger difference. “You have to know where the problem is in order for you to really address it,” she said.

Role segregation is a significant aspect of the issue.

“We know that one of the big problems leading to gender pay gaps is role segregation,” Kulik said. “And that’s a really important thing for organizations to look at: whether women are concentrated in roles that don’t pay very well, are there some barriers that are keeping them from getting into some of the high paid jobs?

“One of the common examples that we use here in Australia is forklift operator—it turns out they get paid pretty well,” she said. “And women rarely apply for those jobs, because many organizations will require that you already have a license before you’re even considered for the role, but if the organization says, ‘We’ll provide some training to help you to get that license,’ we get much more gender balance in applications.

“And then we see a narrower gender pay gaps, because women now have access to roles that are higher paid—so there’s a lot of factors to consider.”

A sample of Kulik’s AOM research findings:

• Keeping Older Workers Engaged
• Engage Me: The Mature-Age Worker and Stereotype Threat
• Aging Populations and Management
• Physical Environments and Employee Reactions: Effects of Stimulus-Screening Skills and Job Complexity
• Relations Between Situational Factors and the Comparative Referents Used by Employees

Gender Diversity in Senior Leadership Boosts Corporate Citizenship

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By Daniel Butcher

Organizations don’t always appreciate the value that gender diversity in leadership roles can bring. Academy of Management Scholar Carol Kulik of the University of South Australia said that organizations have been reluctant to increase gender diversity in their senior leadership.

“We’ve put a lot of regulatory pressure on organizations to increase gender representation in senior levels.” Kulik said. “Some organizations respond to that pressure by doing the minimum; they’ll make a couple of appointments and then they are ‘one and done’ or ‘two and through.’

“However, having women in the leadership team can deliver major benefits to organizations,” she said. “We know that organizations that have more gender diversity in senior leadership are better corporate citizens.

“They’re less likely to engage in unethical behavior; they engage in more philanthropy and corporate social responsibility; they have smaller gender pay gaps; they offer more employee participation; they actually become better organizations.”

The effects of diversity in senior leadership aren’t as straightforward as many assume.

“It’s not because the women are so good on their own; it’s because anytime you have a decision-making group that has visible demographic diversity, they’re sitting around the boardroom and see there’s some men and there’s some women, the group acts differently,” Kulik said.

“The group automatically assumes that there are some hidden differences that they need to explore; they ask more questions, and they consider more solutions; they look at more data,” she said. “So they make more thoughtful and better decisions—it’s a really powerful effect.”

Kulik said that if leaders make organizations more inclusive and better for women and people with cultural and racial variations, then they’re actually creating better organizations.

“We see the same sorts of beneficial effects of diversity in any kind of decision-making group,” Kulik said. “And because of trickle-down effects, increasing diversity at a senior level increases diversity at lower levels too.

“So choose any level to start with and increase diversity at that level,” she said. “You’ll soon see more diversity at other levels and you’ll create a more inclusive organization.”

A sample of Kulik’s AOM research findings:

• Keeping Older Workers Engaged
• Engage Me: The Mature-Age Worker and Stereotype Threat
• Aging Populations and Management
• Physical Environments and Employee Reactions: Effects of Stimulus-Screening Skills and Job Complexity
• Relations Between Situational Factors and the Comparative Referents Used by Employees

Why Some People with Mental Disorders Thrive as Entrepreneurs

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By Daniel Butcher

Symptoms and traits associated with certain mental disorders, including attention deficit/hyperactivity disorder (ADHD), bipolar disorder, dyslexia, and autism, may help entrepreneurs and other businesspeople succeed, noted Academy of Management Scholar Dean Shepherd of the University of Notre Dame.

Shepherd said that conditions that might be seen as a negative, particularly in employment, can sometimes be an advantage in entrepreneurship.

“Some mental disorders are perceived to negatively impact reliability in traditional nine-to-five employment but can actually be an asset in entrepreneurship,” Shepherd said. “Research has found that people with dyslexia tend to have weaker aspects in their left hemisphere of their brain, but their right hemisphere is stronger, and so therefore they can enter entrepreneurship and be successful in it.

“We have the statistics to say that the people with dyslexia are more likely to become entrepreneurs than the general population—in fact, it’s true for many groups who feel like they’re constrained in being promoted in corporate employment turned to self-employment or entrepreneurship,” he said.

“That includes minorities, marginalized groups, and people with all sorts of disabilities, for example, women and immigrants, because they feel like they have constraints or face discrimination in the workplace and that they don’t have those as much in entrepreneurship.”

Research has found that people with ADHD are more likely to become entrepreneurs.

“People with ADHD are more prepared to engage in risk taking, they’re more proactive, and they’re more innovative, and we also found that people with autism are actually getting used by companies engaging in software testing, because they have some advantages in being able to test software,” Shepherd said.

“Entrepreneurship may cause some mental disorders through high stress or loss when a business fails, which can be an important point to consider when deciding on your career path, but people with disorders are also drawn to entrepreneurship,” he said.

Immigration Debates Rarely Mention This Important Fact

By Daniel Butcher

Many immigrants—both legal and illegal—are willing to do the kinds of unglamorous, undistinguished, and downright dirty jobs that no one else wants to do, according to Academy of Management Scholar Dean Shepherd of the University of Notre Dame. He likens their psychology to that of Dalits, India’s most oppressed and stigmatized people, many of whom are garbage collectors who scavenge through slum trash dumps for items to sell. They’re commonly called “ragpickers.”

“In some ways, immigrants think like the ragpickers, because they say, ‘I’m doing this so we can eat tonight, but I’m mainly doing this so my children get educated, so that they can get a good job, so that they can marry well, and so that our family’s future generations are going to move forward,” Shepherd said. “And researchers have found that in a lot of immigrant communities, they place a high emphasis on the children’s education—and that’s the reason they’re willing to do dirty jobs.

“They come over to a new country, and they work very hard in order for their for their children to have a better education,” he said. “That’s why they immigrate in the first place, in order to have a better life for their family.”

In the United States in 2023, foreign-born workers were more likely than native-born workers to be employed in service, natural resources, construction, and maintenance jobs, as well as production, transportation, and material moving occupations, according to the U.S. Department of Labor’s Bureau of Labor Statistics. Foreign-born workers were less likely than native-born workers to be employed in sales, office, management, professional, and related occupations.

“We spoke to ragpickers and other entrepreneurs that live in slums, and we asked them, ‘What are your personal goals?’ and they almost don’t understand the question, because their goals are all to do with the next generation,” Shepherd said. “They don’t see much hope for themselves, because when we asked them, ‘What do you plan on doing after retiring?’ they told us, ‘What retirement? I’m never going to retire.’

“It’s all about future generations, and immigrants do the same thing,” he said.