Businesses Must Be Accountable for Their Promises on Racial Justice

Summary.   

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.

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