Pay equity, diversity and inclusion
Companies’ DEI Pledges: Good Intentions Won’t Be Good Enough
In the wake of the police killing of George Floyd last year, companies pledged to make real progress on issues surrounding diversity, equity, and inclusion (DEI). Since then, it’s become clear that investors, employees, governments, and the general public won’t settle for promises … and will demand fact-based proof of companies’ efforts.
A recent article in the Harvard Business Review (HBR) notes that, “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.”
From Day One, a conference series and media outlet, points out several proclamations made by high-profile companies to “do more and do better” – “PepsiCo promised to increase its number of Black managers by 30% by 2025, while Facebook pledged to double the number of Black and Latino employees by 2023. America’s largest bank, JPMorgan Chase, committed to a $30 billion, five-year plan to provide economic opportunity to underserved communities.” However, they also note that “such promises stand against tough realities and deep-rooted inequalities embedded into the capitalist system,” citing a report from Bloomberg that found “only 4 of the 37 companies surveyed had Black employees in 10% or more of executive and management roles.”
Another article from Bloomberg notes that while “George Floyd’s murder one year ago spurred corporations to proclaim their commitment to racial equality … workforce disclosure is something firms must do to back it up.” Companies, they say, would be wise to “improve transparency and ramp up efforts to hire and retain diverse talent. … [C]ompanies that get ahead with real action will be rewarded. Laggards will find themselves punished.”
Presidio Graduate School agrees, stating it’s “paramount that companies are transparent regarding their internal and external actions related to race and ethnicity. … Stakeholders will continue to demand corporate disclosure on race and ethnic workplace data, perhaps most importantly, hiring, retention, and promotion rates of people of color within the company.”
So, what are well-meaning companies to do? The HBR article stresses the importance of “building real accountability into a company’s diversity program.” For example, “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.”
HBR adds that “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.”
MIT Sloan Management Review similarly recommends that companies “choose evidence-based practices.” They write that “anti-racism goals may fail … because companies choose tactics to address particular issues that aren’t designed for that purpose. For instance, many companies use unconscious-bias training as a standalone cure-all for racial bias, although it was never intended to address systemic racism built into organizational policies and practices. When developing a comprehensive action plan, choose compatible practices and tactics that have proved effective for reaching the intended goals. Equity officers and human resource managers should review the range of available tools, training, and practices, and seek expert insight into their efficacy and potential implementation challenges.”
An excellent place for HR leaders to begin is by undergoing a pay equity analysis. It’s a proven way for employers to understand whether or not pay inequity exists within their organization, and it’s best undertaken with the help of an expert, external technology partner. With the first anniversary of George Floyd’s killing, and the recent recognition of Juneteenth as a federal holiday both fresh in mind, now is the time for companies to take action.
For more information on what employers can do to help build a more diverse, equitable, and inclusive workforce, download this no-cost white paper, Designing a Successful Pay Equity Policy for Your Organization.
If your organization needs assistance achieving its DEI goals, check out our professional consulting services and DEI software, PayParity.