August 2022 Newsletter
Can You Switch Off Caring?
I don’t think so. If someone cares enough to help another person – or a group of people – then chances are they’re fundamentally a caring person who will look to help others, too. And if you’re choosing to spend your working time with somebody (from either a candidate’s or employer’s perspective) I bet your life will be better if you choose the person who cares.
But how do you figure out who cares?
We might be able to help. We’ve worked with some great individuals & companies and, as recruiters, we can’t help but interview them. And capture it on camera. And then condense it down to the key moments, the things they care about. The result? 60 second clips that give you an insight, and help you choose. 60 second clips that highlight humanity.
We’ve done a bunch of these and will be posting them on LinkedIn. Follow us to see them all.
Want us to highlight your humanity, to attract candidates or employers?
Just get in touch.
Rob Williams
Director
The Business Case For Diversity May Be Backfiring, A New Study Shows
Business spending on diversity, equity and inclusion (DEI) initiatives has skyrocketed in the last decade. It’s estimated the global market for DEI reached $7.5 billion in 2020 and is expected to double by 2026. To justify these initiatives, many organizations claim a diverse workforce is good for business.
These organizations tout how their diversity efforts will result in improvements to their bottom line by increasing organizational effectiveness, improving morale and enhancing productivity. Now experts are cautioning that using this business case to justify diversity initiatives may backfire.
New research reveals that linking diversity to corporate profits may be a turnoff for the underrepresented individuals the organizations are trying to attract. In fact, the use of the business case to justify diversity can result in underrepresented groups anticipating less belonging to organizations, which, in turn, makes them ultimately less likely to want to join the organization.
The research conducted by Oriane Georgeac, professor at Yale School of Management and Aneeta Rattan, professor at London Business School, found that a large majority of organizations use the business case to justify their diversity efforts. A whopping 404 of the Fortune 500 companies included the business case for diversity on their corporate website by suggesting that diversity was important because it would contribute to their profits or bottom line in some way.
“First and foremost, we were curious about how this kind of rhetoric shaped the anticipated sense of belonging of underrepresented job seekers. And second, as a consequence of their anticipated sense of belonging, we were interested in how much they wanted to join the organization,” Rattan explained the motivations for their research.
To answer these questions, the researchers asked their participants, including women in STEM fields, Black college students and LGBTQ+ individuals, to read diversity messages from a fictional employer’s website. The website excerpt either provided the business case justification for diversity suggesting diversity will improve the bottom line, a fairness justification which suggests moral and fairness reasons for diversity or no justification at all.
Compared to the other two groups, those that read the business case for diversity reported that they were less likely to feel belonging to the company, more concerned they would be stereotyped, and more worried that the company would view them as interchangeable with other members of their group. As a result, the underrepresented groups were less likely to say they wanted to join the company which used the business case.
Rattan explains, that the business case “made members of these underrepresented groups feel like they would be seen as interchangeable. It’s kind of like being known as the Black engineer or the woman professor. These people were reporting feeling depersonalized by the business case.”
No Justification For Diversity Is Best
No justification at all was best when it came to attracting underrepresented groups. “The first recommendation based on our research is to shed the business case,” Rattan explains. Instead, she recommends that companies express their commitment to diversity with no justification. But she’s encountered many leaders who are hesitant to scrap their justification for diversity. She explains to these individuals, “You don’t justify why you have a corporate value around trust or integrity, so why do you feel the need to justify diversity? Why do you think people will question why you value underrepresented groups?”
Getting Diversity to Impact Bottom Line Requires More Than ‘Add Diversity And Stir’
Not only can stating the business case have deleterious effects when trying to attract underrepresented employees, but some academics doubt the accuracy of claims of a direct link between diversity and profits. Harvard Business School professor Robin Ely and professor emeritus David Thomas have urged organizations that they need to do more than just add more women and people of color to their ranks if they’re expecting to increase their bottom line. “Increasing the numbers of traditionally underrepresented people in your workforce does not automatically produce benefits. Taking an ‘add diversity and stir’ approach, while business continues as usual, will not spur leaps in your firm’s effectiveness or financial performance,” they write. What’s important, they say, is how a company harnesses that diversity. If not handled correctly, adding diversity to a workforce can even increase tensions and conflict.
Failure To Meet Profitability Goals Can Lead To Disillusionment
University of Toronto professor Sarah Kaplan has argued that the business case for diversity can also set unrealistic expectations of enhanced profits resulting from adding more underrepresented groups to the workforce. For example, an oft-cited Credit Suisse study found that companies, where women made up at least 15% of senior managers, had more than 50% higher profitability than those where female representation was less than 10%. A McKinsey study suggested that advancing women’s equality would add $12 billion to global growth. These significant profit and growth numbers can set high expectations.
Failure to meet these lofty goals can lead to disillusionment with the diversity policies, and Kaplan suggests that these effects are exacerbated when profits are down. In downturns, employees who subscribe to the business case for diversity may be more likely to see diversity efforts as unnecessary and ineffective.
Fortunately, there’s no need for organizations to offer any justification for diversity programs. As Georgeac and Rattan write about the implication of their research findings, “You don’t have to explain why you value innovation, resilience, or integrity. So why treat diversity any differently?”
Full article from Forbes here.
Lean Out: Employees Are Accepting Lower Pay In Order To Work Remotely
In 2020, office workers were liberated from their cubicle farms and nasty commutes, as companies embraced what was supposed to be a temporary experiment with remote work while the pandemic raged. Approaching three years later, more than a third of American workers say they’re still able to work from home full time, and almost a quarter say they can do so part time, according to a recent poll by McKinsey & Company. In total, almost six in ten of the 25,000 Americans polled said they could work from home at least one day a week.
Not surprisingly, 87 percent of workers whose employers offered “at least some remote work” have seized the opportunity, spending an average of three days of the workweek doing their jobs remotely. And who can blame them? No more rush-hour traffic. Comfy pajamas instead of annoying business wear. A greater ability to balance work and family. The opportunity to stay and live in places much further away from the office. What a jackpot.
While some companies have been plotting and scheming to get their employees’ butts back into company-owned chairs, others have spotted an opportunity. These companies recognize remote work has tremendous appeal: a big, delicious cookie they can use to lure and retain workers. It’s so scrumptious that offering it to workers can be as good as cold, hard cash. And the best part for business executives: this cookie is cheap!
In a new study, economists Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov surveyed more than 500 American companies, asking them how they are using remote work. They find that many companies are capitalizing on remote work by using it as a substitute for giving workers raises, so much so that it’s helping to moderate inflation.
The Shiny Perk Of Remote Work
Barrero, Bloom, Davis, Meyer, and Mihaylov find that 38 percent of all the companies they surveyed said they expanded opportunities for remote work over the last year “to keep employees happy and to moderate wage-growth pressures.” A similar percentage of companies say they anticipate doing the same over the next year.
The economists find that the practice is even more prevalent for certain types of companies and industries. A majority of large companies (those with more than 250 employees) and companies in finance and insurance, real estate, information, and professional and business services say they’re using remote-work policies as a tool to appease workers and tamp down demands for raises.
You’ve heard about Lean In. This is like Lean Out, when employees accept lower pay for the opportunity to work outside company doors.
What This Means For Inflation
Over the last year, the average American worker has gotten poorer because the cost of everything has surged. Average real earnings — that is, the value of worker paychecks after taking inflation into account — have fallen by 3 percent. Some economists, like Olivier Blanchard, argue that workers will now want their wages to “catch up” to higher prices. And that, Blanchard says, could fuel more inflation.
Here’s how that dynamic could work: As the price of stuff rises, workers ask for raises to pay for their higher cost of living. These pay raises increase the cost of doing business, and businesses then raise the price of stuff they sell, contributing to higher inflation. It’s possible this inflationary cycle could keep spinning, with higher prices leading to higher wages leading to even higher prices and so on. Economists call this nightmare scenario a “wage-price spiral,” and it’s the job of the U.S. Federal Reserve to try and stop the spiral.
[Editor’s note: This is an excerpt of Planet Money‘s newsletter. You can sign up here.]
Barrero, Bloom, Davis, Meyer, and Mihaylov argue that remote work may be helping the Fed in this mission. They estimate that using remote work opportunities as a substitute for cash raises has lowered wage-growth pressures by almost a full percentage point over the last year. They predict it will continue to lower wage-growth pressures by another percentage point over the next year. “This moderation shrinks the real-wage catchup effect on near-term inflation pressures highlighted [by] Blanchard by more than half,” they write.
The economists add that remote work is likely lowering business costs and overall inflation in other ways. Offering remote work, for example, could be a way for companies to prevent people from quitting, lowering turnover costs. Similarly, remote work can be used to recruit highly qualified applicants on the cheap. Let’s not forget lower costs for office space, supplies, and energy (costs that companies are shifting to workers).
“We conclude that the recent rise of remote work materially lessens wage-growth pressures,” Barrero, Bloom, Davis, Meyer, and Mihaylov write. “In doing so, the rise of remote work eases the challenge confronting monetary policy makers in their efforts to bring the inflation rate down to acceptable levels without stalling economic growth.”
In addition to tamping down on inflation, the economists argue that remote work may help explain why income inequality has fallen over the last year. A recent study by David Autor and Arin Dube finds that, between 2020 and 2022, the top ten percent of earners saw their incomes fall while the bottom ten percent of earners saw their incomes rise. The economists estimate that inequality between the two groups fell by more than 10 percentage points. Barrero, Bloom, Davis, Meyer, and Mihaylov point out that top earners are much more likely than bottom earners to work remotely. The economists suggest that rich workers may be embracing the perk of remote work instead of fighting for higher pay, while poor workers, forced to work face-to-face, may be getting compensated for the inability to work remotely (and the greater threat of getting sick as a result).
With inflation surging and the Fed being forced to jack up interest rates to combat it, it’s clear that remote work is not a cure-all. But it’s also clear that the radical experiment of widespread remote working unleashed by the pandemic continues to reshape our economic lives in profound ways.
Full article from NPR here.
