Ethical Corporation is now Reuters Events - LEARN MORE
What’s wrong with command and control and the rise of prize philanthropy
Rethinking diversity programmes
Command-and-control approaches to increasing diversity don’t work. Worse than that, they can actually be counter-productive. This conclusion, based on an analysis of three decades’ worth of diversity data from more than 800 US firms, is alarming, because command-and-control is exactly what most large companies do when trying to boost their diversity performance. That said, it shouldn’t come as a surprise. Despite all the noise around diversity in recent decades, representation by minority groups remains fairly static. Among US firms with 100 or more employees, for example, the proportion of black men in management increased by less than one third of a percentage point (from 3% to 3.3%) between 1985 to 2014.
This fascinating paper unpicks each of the traditional mechanisms for righting the diversity imbalance in corporate America – and, drawing heavily on insights from occupational psychology, explains why they don’t work. Take the most common: diversity training. Most training carries an implied threat – “discriminate, and the company will pay”. Such “negative incentives” rarely if ever change long-term behaviour. In fact, they can actually lead to resentment by employees, turning them against the very inclusive policies they are being trained to promote. The same outcome can occur with formal grievance procedures. Rather than persuade managers to address discrimination, research shows that those facing complaints often seek to get their own back on discriminated employees. This ends up accentuating the problem, as employees then don’t complain and the problem of discrimination continues unreported. Mandatory hiring tests are another tactic that comes in for short shrift. First, managers don’t use such tests for all potential recruits (as they are supposed to), with minority job candidates typically facing the biggest burden. Second, on the occasions when white males are in fact tested, managers often overlook the results (in a way they don’t with minorities).
So if policing workplace inclusion doesn’t work, what does? The answer is threefold. Top of the list is “social engagement”. Experiments show that if people don’t hold a certain view but they are prompted to act in ways that support that view, then their opinions shift to match that behaviour. So ask managers to actively help boost diversity in their companies, and, lo and behold, they begin to see themselves as diversity champions. The trick is to pitch it as a challenge to the manager: the company has a diversity problem; can you – voluntarily – help be part of the solution? Involvement in college recruitment programmes and mentor schemes is proven to be another effective way of achieving such as switch.
The second answer centres on the notion of contact. Mixing individuals from a variety of racial, ethnic or gender groups can lessen bias (a fact first proven in the US Army during the Second World War, when black and white soldiers fought alongside each other for the first time). “Working side-by-side breaks down stereotypes, which leads to more equitable hiring and promotion,” the authors state. One means of achieving this is to rotate management trainees through departments. Encouraging social accountability is a third alternative approach. The idea plays on our need to look good in the eyes of those around us. Once, say, average pay grades in a particular business unit are published across the company as a whole, then managers realise that they will be held to account by peers and superiors if women or ethnic groups are unfairly treated. Corporate diversity taskforces are shown to be a useful way of doing this.
Dobbin, F and Kalev A (July/August 2016), ‘‘Why Diversity Programs Fail,” Harvard Business Review, 94 (7): 52-60.
Evrnu, a Seattle-based social enterprise that promotes an innovative method of recycling used cotton garments, recently won the inaugural Fabric of Change awards. The $100,000 competition (half of which goes to the overall winner) is supported by the C&A Foundation and aims to promote sustainable improvements throughout the clothing industry value chain. The initiative is emblematic of a growing phenomenon known as “prize philanthropy”. More than 20,000 such awards and prizes now exist, many of which are designed to promote innovative solutions to the large social and environmental challenges of today. Worth somewhere between $1bn and $2bn, the value of such prizes is growing at an estimated 18% per year – far outstripping the 2.5% annual growth in charitable giving in the US.
This nascent sector can be roughly divided into three categories. Recognition prizes are the most established and best known. These celebrate an established record of achievement, the archetype being the annual Nobel prizes. A second category might best be described as an “incentive” prize. Unlike the first category, prize winners are not nominated but instead choose to enter a competition that focuses on achieving a particular goal. A third and arguably more interesting (although less prominent) model is what the authors define as a “resource” prize. Unlike the first two categories, winners of this type of prize are given funding before they finish their project. In this sense, it acts more like a traditional grant: participants enter the contest, win funding and then work towards completion of their proposed project.
One way that these prizes differ from normal grant-making is the use of web-based platforms such as Bankiton, IdeaScale, InnoCentive and Skild. These offer ready-made tools that simplify document handling and facilitate communication among prize applicants, administrators, and judges, as well as allowing prize administrators to track performance data.
Wasson, RR (Summer 2016), “The Future of Prize Philanthropy,” Stanford Social Innovation Review, 14 (3): 42-48.
The University of Washington’s School of Business is organising a new one-week professional certification course entitled Accelerating Social Transformation. The course, which runs 7-12 August and includes visits to Microsoft and the Bill & Melinda Gates Foundation, is designed to teach “fresh approaches” to social development and philanthropy.
The Cambridge Institute for Sustainable Leadership is running a two-day immersive course on operationalising natural capital on 11-12 October. A similar course focused on sustainable innovation is scheduled for 24-25 November. Both courses can be credited towards a Postgraduate Diploma in Sustainable Business.
Academic news philanthropy social engagement social accountability corporate diversity CSR recycling Environment sustainability