The idea for this book came to Martin Davidson during a disarmingly honest conversation with a CFO he worked with. “Look,” the executive said, clearly troubled. “I know we can get a diverse group of people around the table. But so what? What difference does it really make to getting bottom-line results?”
Answering the “so what?” led Davidson to explore the flaws in how companies typically manage diversity. They don’t integrate diversity into their overall business strategy. They focus on differences that have little impact on their business. And often their diversity efforts end up hindering the professional development of the very people they were designed to help.
Davidson explains how what he calls Leveraging Difference™ turns persistent diversity problems into solutions that drive business results. Difference becomes a powerful source of sustainable competitive advantage instead of a distracting mandate handed down from HR.
To begin with, leaders must identify the differences most important to achieving organizational goals, even if the differences aren’t the obvious ones. The second challenge is to help employees work together to understand the ways these differences matter to the business. Finally, leaders need to experiment with how to use these relevant differences to get things done. Davidson provides compelling examples of how organizations have tackled each of these challenges.
Ultimately this is a book about leadership. As with any other strategic imperative, leaders need to take an active role—drive rather than just delegate. Successfully leveraging difference can be what distinguishes an ordinary organization from an extraordinary one.
About the Author
Martin N. Davidson is associate professor of leadership and organizational behavior at the Darden School of Business, University of Virginia, and served as associate dean and chief diversity officer. He has consulted with dozens of Fortune 500 firms, government agencies, and nonprofit organizations, including Merrill Lynch Global Wealth & Investment Management, AT&T, Pitney Bowes, Harvard University, and the Nature Conservancy. He was elected chair of the Gender and Diversity in Organizations Division of the Academy of Management and has been featured in numerous media outlets including the New York Times, Businessweek, the Wall Street Journal, the Washington Post, and National Public Radio.
Read an Excerpt
The End of Diversity As We Know ItWhy Diversity Efforts Fail and How Leveraging Difference Can Succeed
By MARTIN N. DAVIDSON
Berrett-Koehler Publishers, Inc.Copyright © 2011 Martin N. Davidson
All right reserved.
Chapter OneThe End of Diversity as We Know It
I met Aaron Evans when I was in Northern California conducting research at Silicon Valley high-tech firms. He struck me as a bright and thoughtful manager, and a genuinely nice guy. His peers had high regard for him, too, as I learned during my visit. As we talked about diversity and its role in his company, he was cordial and a little bit stiff—just his normal demeanor, I assumed. But as we talked, I sensed his increasing agitation. I asked if he was okay. He said he was fine, so we kept talking, but he still seemed uneasy. Finally I inquired, "Aaron, you really seem uncomfortable. Is everything okay?" He sat quietly for a moment and then replied, "To be honest, I know we're supposed to spend this time talking with you about diversity, but I have a real problem with all this. I have an issue with this topic."
From there, we had a long conversation about what was really on his mind. Aaron took great pains to tell me that he was not biased, sexist, racist, or any other such label. Rather, he had a problem with diversity in his company because in the fifteen years he had been a manager there, he had seen diversity efforts do more harm than good. He had felt pressure to hire so-called "diverse" people (code for women and people of color)—who weren't easy to find—when he already had great candidates in his own pipeline who happened to be white males. And then the diverse hires often left the company within two years—or worse, they stayed but just couldn't do the job. Promotion decisions in favor of women and minorities seemed unfair, since people were often pushed forward before they were really ready. He had attended more than a few diversity training programs, but they had had little impact on his day-to-day work. Even worse, the real diversity that mattered to him—how to manage people of diverse styles of thought and work habits—didn't seem to count in the company's definition of diversity.
Eileen Vargas had been working at the same Silicon Valley firm as Aaron Evans for eighteen months. We spoke for a while, and I was struck by her professional, no-nonsense style. She was clearly very smart, both with regard to her particular area of expertise and with regard to the firm's social and political machinations. The more we spoke, the more she seemed to relax, and we began to really talk about her experience there. She described how difficult it had been for her, as a Latina, to fit in. She was clear about the structural impediments: she was only the third female to be hired in her department of thirty-three employees, and the only person of color.
As a seasoned manager, she had known she might have to deal with both unintended and deliberate bias. And she had known she would need to "influence gently" in order to win over skeptical colleagues who would quietly question her credibility when she advocated for cutting-edge ideas. This was all familiar terrain for Eileen.
But she kept feeling that it should be better than this. She had come here because her research had shown that this firm was an industry leader, with senior management who understood the importance of investing in people as a way of creating value. She knew that the CEO had a particular passion for diversity, and she thought that boded well. And even though her department was thin on diversity, in recent years the company as a whole had made great strides in its hiring and promotion of women and people of color.
And she was miserable.
She said to me, "Look, I'm not naive. I know that places like this are almost always difficult for people like me. But it shouldn't be like this. I'm talented and I want to contribute to this company, and there must be a way for me to do that and be properly rewarded for what I offer. I want to work well with my peers and to be a part of this place. I see lots of my colleagues enjoying their work and one another, and I want that, too."
Current Approaches to Diversity Are Failing
Aaron and Eileen are but two examples of how the admirably passionate pursuit of diversity in organizations has fallen short. Employees, regardless of identity, remain confused, frustrated, and disheartened by the way diversity is managed. Annual reports and websites like Chevron Corporation's boldly proclaim that "having a workforce that reflects the composition of the marketplaces we serve and the communities where we operate is an important competitive advantage." Diversity celebrations abound, with ethnic food days and diversity awareness seminars peppered throughout the year. Companies use such activities to communicate that they are committed to diversity and thriving because of it. In fact, commitment frequently wavers, and more than two decades of research shows that very few organizations are actually thriving because of their diversity.
Greater diversity does not easily translate to greater excellence in performance. It takes work to make that happen. Yet many leaders are content in the illusion that symbolic activities and underfunded training classes will turn their increasingly diverse organizations into world-class performers. It's not that these symbolic activities don't have merit. They often help illuminate the experiences of marginalized and undervalued members of the organization. But they don't make the organization truly more inclusive, and they don't catalyze the performance the organization needs to remain competitive in a dynamic global marketplace.
Most leaders don't doubt the potential of diversity to add value, and they certainly don't intend to disempower and confuse their employees. Yet they do both of these things. And changing that dysfunctionality begins with looking at the facts about the current state of diversity.
Increased Diversity Doesn't Always Improve Performance
Despite assertions that workforce diversity makes an organization better, research says otherwise. A survey of the top research on the connection between diversity and performance over the past decade reveals few reliable studies that show a direct relationship between greater workforce diversity and increased bottom-line performance. Complicated links are much more common. For example, racial diversity neither improves nor diminishes performance in financial services firms, with two exceptions: if the firm is in a strategic growth mode, racial diversity helps. But if it is in a downsizing phase, diversity decreases performance.
In one of the more comprehensive evaluations of the link between diversity and performance, Thomas Kochan and his colleagues examined the impact of race and gender diversity on performance in two information-processing firms, a financial services firm, and a retail company. Across these varied organizations they found little evidence of any direct relationships between increased race and gender diversity in the workforce and higher returns on investment, profits, revenue, costs, or other financial measures.
Indeed, in a large study of fast-food establishments, an even bleaker picture emerged. Joshua Sacco and Neal Schmitt studied the effect of race, age, and gender diversity on the financial performance of more than 3,400 quick-service restaurants. They had hypothesized that diversity would hinder financial performance, reasoning that the disruptions that frequently occur within diverse teams would have a kind of domino effect that would adversely affect financial performance. While their study didn't show that gender or age diversity had any bearing on financial performance, increased racial diversity among employees was correlated with lower levels of profitability.
These results are stark and challenging. It is worth noting, however, that some types of diversity can make a positive difference. Specifically, having people with diverse functional backgrounds or tenures on top management teams can positively affect the return on assets. Similarly, racial diversity on boards of directors can increase the return on investment. And managerial diversity may enhance performance for some firms in the long run, if not immediately. These results suggest that increasing diversity could affect organizational performance in positive ways. The inquiry must continue. But the unqualified assertion that any kind of diversity will lead to superior performance is just wrong.
Diverse Groups Do Perform Better ... Sort Of
While it's hard to find positive links between diversity and performance for firms, the link between high performance and diversity is clearer with groups or teams. In a survey of team diversity research published in the leading academic journals between 1985 and 2006, one powerful finding stands out: diversity related to work tasks—diversity of functions, expertise, or tenure—leads to better team outcomes.
Teams that include this kind of diversity generate more innovative decisions, consider a wider variety of relevant factors, and engender more thorough debate than groups without it. But it is not all about quality of output. Teams with task-related diversity also generate superior measurable outcomes. For example, a link has been shown between functional diversity and faster time to market for new products in the computer industry. In both quality and quantity of performance, there is undeniable value in having task-related diversity on a team.
But when it comes to diversity of race, gender, and age, the gains in team performance disappear. The same survey of team diversity studies revealed no discernible relationship between these kinds of diversity and team rapport or productivity. Having these demographic diversities may not hurt, but it doesn't make the team function more effectively. In other words, the benefits of demographic diversity commonly suggested in the team performance literature have probably been overstated. Simply increasing the degree of demographic diversity isn't an effective approach for building better teams. Focusing on cultivating task-related diversity is probably the better strategy. The bottom line is that not all diversity is helpful when it comes to making teams more effective.
Increased Diversity Doesn't Make Everyone Happier
Another common hope is that diversity will create a happier, more harmonious workplace. American psychologist Gordon Allport proposed the Contact Hypothesis in 1954, suggesting that people of different groups would generate positive relationships with one another under the proper conditions. Many leaders, perhaps forgetting about these conditions—equal group status, common goals, intergroup cooperation, and support from leaders—expect positive effects simply by assembling groups of diverse people. To be more precise, leaders often rely on increased diversity to build commitment, improve motivation, and reduce conflict. Unfortunately, generating more diversity can have the opposite effect on some individuals. One area of research called "relational demography" has focused on how individual employees react to situations in which they work with people who are demographically similar to themselves as opposed to situations in which they work with people who are dissimilar.
This research has shown that working with "dissimilar others" can breed lower commitment to the organization, diminish job satisfaction, increase perceptions of discrimination, and generate various other negative attitudes and behaviors. In one study, male managers' commitment to the organization decreased as the number of women in their work units increased. The same thing happened among white managers when people of color increased. Incidentally, in this study, the commitment level for people of color was not affected by the number of whites they worked with. And women were actually more committed to the company the more men they were able to work with. So whether a person is a member of the majority or the minority probably influences how he or she feels and acts when entering new diverse situations. Suffice it to say that just putting diverse groups of people together, absent the right context and skills, can create, rather than solve, problems.
Hiring for Diversity Is Tough
Despite the evidence to the contrary, many leaders remain committed to the vision that diversity matters, and they feel accountable for getting people of diverse backgrounds into their organizations. But after two decades of learning about best practices in recruiting and hiring of people who are different, it remains extremely difficult to apply those lessons. According to one survey of more than 2,500 senior HR executives in North America, 29 percent reported that although their managers valued diversity, they didn't know how to recruit people who were different.
Hiring to enhance diversity is difficult because often organizations haven't discovered where to find the talented people they want. Recruiting systems frequently fail to connect hiring managers with the right people. The problem may stem from inadequate access to talent pools of the people who have the desired difference. It's standard practice to seek out these candidates at job fairs or to access culturally specific organizations—the Hispanic Association of Colleges and Universities, for instance, or historically black colleges and universities (HBCUs). But even these sources become overused, and companies may struggle to find candidates to fill their positions.
An additional flaw in many recruiting systems is the fact that job descriptions may not adequately capture real job requirements. Therefore, people who could perform quite well in a job are overlooked because they appear to be unqualified, based on the description. At PWM Group, a mid-sized private wealth management firm, one managing director reported that he wasn't sure what attributes would lead to high performance in his financial advisor positions, so he had come to rely more heavily on his general sense about who could succeed in the job. He and his firm hadn't done a good job of collecting reliable data on what qualifications correlated with performance.
These recruiting system flaws are exacerbated by the biases that hiring managers invariably hold. A great deal of research outlines the deficiencies of managers in recruiting and hiring people who are different. For example, managers may have stereotyped perceptions about race, age, disabilities, and other differences. Sometimes these biases are conscious and explicit, but perhaps even more damaging are the unconscious and implicit psychological biases that influence decisions about whether to hire an applicant for a position. An especially dramatic example of this phenomenon garnered widespread attention in 2005 when Marianne Bertrand and Sendhil Mullainathan published a study on hiring bias. They had sent fictitious resumes in response to help-wanted ads in Boston and Chicago newspapers, randomly assigning them names that "sounded" African American or white. Resumes with white names received 50 percent more calls for interviews than those with the African American names. This gap was uniform across occupation, industry, and company size.
These dynamics can make it difficult for managers and leaders to hire enough diverse people. Managers I speak with frequently lament that there simply are not enough women or people of color available. And at times this may be true; there may not be a large enough pool of diverse talent for a given position. But more often than not, this perception is fueled more by poor recruiting systems and biases than by reality. The challenge is to establish the conditions for transforming that perception into energetic and innovative thinking about how to find the people you need, no matter what.
Excerpted from The End of Diversity As We Know It by MARTIN N. DAVIDSON Copyright © 2011 by Martin N. Davidson. Excerpted by permission of Berrett-Koehler Publishers, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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Table of Contents
INTRODUCTION: A NEW POSSIBILITY FOR DIFFERENCE
Who This Book Can Help
Overview and Roadmap for the Book
The Research Methodology
CHAPTER 1: THE END OF DIVERSITY AS WE KNOW IT
Current Approaches to Diversity Are Failing
The Problem with Managing Diversity
How It Can Be Done Differently
CHAPTER 2: THE BEGINNING OF LEVERAGING DIFFERENCE
After Managing Diversity
Scope of Differences Engaged
Impact of Change
The Intersection of Managing Diversity and Leveraging Difference
CHAPTER 3: THE LEVERAGING DIFFERENCE CAPABILITY, by Martin N. Davidson & Heather R. Wishik
The Leveraging Difference Capability
The Case of Wipro Technologies
The Leveraging Difference Cycle at Wipro
CHAPTER 4: SEEING DIFFERENCE
The Cost of Not Seeing Relevant Difference
How to See Difference
CHAPTER 5: UNDERSTANDING DIFFERENCE
How to Understand Difference
How Understanding Difference Encourages Seeing Difference
CHAPTER 6: ENGAGING DIFFERENCE, by Martin Davidson and Heather Wishik
How to Engage Difference
Offer a Vision of Business Benefits to Be Seized
Involve Multiple Stakeholders
Support Innovative Approaches
Stay the Course
Be Open to Being Changed
Caveat: Not All Engaging Difference Experiments Are Successful
CHAPTER 7: BECOMING A LEVERAGING DIFFERENCE ORGANIZATION, by Martin N. Davidson & Heather R. Wishik
How You Know When You Are Leveraging Difference
How Leaders Move their Organization to Leveraging Difference
EPILOGUE: THE POWER OF THE MARGIN
Taking from the Margin to Rethink the Whole
About the Author