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America’s 2020 racial reckoning ushered in a barrage of diversity pledges from corporations large and small. In the three-year aftermath, a new study from researchers at Columbia Business School and the London Business School suggests that many of these firms engaged in “diversity washing.” It’s making bold, public proclamations about diversity but failing to implement them in their hiring practices, yielding few tangible results.
The report, which examines the workforce makeup of approximately 800 federal contractors from 2016-2020, reveals small diversity gains, especially among middle managers.
Women account for just 39% of the workforce at these companies, while racial minorities comprise 36%. Predictably, the workforce becomes more homogenous as one scales the org chart. For example, white employees hold 72% of middle management roles, despite making up just 64% of employees. The diversity numbers are especially low for Hispanic and Black middle managers, who respectively account for 6% and 4% of employees at that level.
Despite these lackluster numbers, more firms have become transparent about their diversity stats. In 2020, the last year researchers conducted the study, 15% of federal contractors released diversity metrics compared to a paltry 0.8% in 2016. But as the researchers point out, only firms with data increases worth sharing actually open up about their workforce representation.
In fact, a firm’s willingness to release diversity data was positively correlated to the presence of minorities in leadership roles, according to the study.
Interestingly, most diversity disclosure pressure on companies that don’t share their metrics comes from investors, not the public. “Investors increasingly view (the lack of) diversity as a material source of risk for public companies and often call for the SEC to introduce a disclosure mandate to obtain comprehensive and comparable public data on firms’ DEI practices,” the report states.
While it’s notable that some companies share this information voluntarily, there are no consequences for those that don’t. Many prefer to keep those numbers to themselves to avoid the negative publicity of a diversity deficiency. Ultimately, the paper’s authors conclude that an SEC disclosure mandate is necessary, writing, “To the extent that this information is material to shareholders, the lack of unraveling through market forces suggests that a disclosure mandate might be necessary to inform and protect the public.”
The most compelling data, quotes, and insights from the field.
People leaders have been waiting with bated breath—and paused talent budgets—to see if a recession would occur. Economists are now saying the U.S. will likely avoid one.
“Yes, the economy is fragile and vulnerable to losing the script. And goodness knows we have been off script more often than not in recent years. But odds are that we will buck history and avoid recession,” wrote Moody’s Analytics chief economist Mark Zandi in a CNN op-ed this week.
Around the Table
A round-up of the most important HR headlines, studies, podcasts, and long-reads.
– Is HR a corporate keeper of rules or a conflict mediator for employees? It depends on who you ask. Listen time: 18 mins. Financial Times
– The $24 billion in pandemic relief funds allocated to childcare expires in September, likely exacerbating the staffing shortage. New York Times
– More than a quarter of the U.S. population is covered under some form of a pay transparency law, according to the National Women’s Law Center. CNBC
– Women are more likely to be in roles that automation could affect. CNN
– An internal snap poll at Microsoft shows that most employees would leave if they got another job offer. Insider
Everything you need to know from Fortune.
Ethics 101. McKinsey’s ethics department is on a hiring spree after a series of high-profile controversies. Salaries go up to $325,000 a year, according to job listings. —Matthew Boyle, Irina Anghel
A.I. pink slip. The CEO of publisher Axel Springer laid off hundreds of employees Tuesday, replacing some of their jobs with A.I. —Prarthana Prakash
Halfway RTO. Last week, 49.7% of employees were in the office on any given day, a hair under the January high of 50.3%, according to data from property management company Kastle Systems. —Jane Thier
A.I. staff. A round table of 200 CEOs identified HR duties as the second-most useful application of A.I., with 25% saying it could help with staffing. —Jeffrey Sonnenfeld, Steve Tian
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