BiGS Actionable intelligence: Most companies use the “business case” to justify diversity, equity and inclusion (DEI) initiatives. New research out of Harvard Business School, however, shows that this message doesn’t work and can backfire. To learn why and what actually works, read our two-part series today and tomorrow.

BOSTON—August 16, 2023—More than three in four Fortune 500 companies justify their workforce diversity, equity and inclusion (DEI) efforts by making the business case. It sounds like this: By making our workforce more diverse, we’re building a more innovative and competitive company.

The problem? There’s a significant disconnect between a company’s stated argument for diversity and the psychological reality of decision-making.

That’s according to sociologist and Georgetown University law professor Jamillah Bowman Williams, whose research into DEI messaging is attracting fresh attention in the post-George Floyd era. Her findings are also timely given the Supreme Court’s June 29 ruling on affirmative action in college admissions, which is prompting companies to re-examine their DEI initiatives. Conservative groups are further challenging programs at Amazon, Comcast and other companies, the Wall Street Journal reports.

Many, including Williams, argue that the stakes have never been higher for CEOs and other leaders to double down on DEI initiatives—as long as they’re rooted in research-backed reality. In an exclusive interview with HBS’s The BiGS Fix recently, Williams shared her advice for CEOs and other leaders:

“Don’t be distracted or deterred by those who use fear tactics by saying ‘Stop being so woke.’ This simply means—protect the status quo and preserve racial inequalities,” said Williams, who is a visiting fellow at HBS’s Institute for the Study of Business in Global Society (BiGS).

“Your employees, future employees, customers and investors are watching,” she said. “They're looking for more than just a press release or a DEI report. They want change.”

The ‘business case’ for diversity backfires, new research shows

Plenty of studies have shown positive correlations between diversity and the bottom line, and others have pointed to ways that diversity can improve problem-solving and creativity—which likely should boost performance. At the same time, more than 40 years of corporate diversity efforts have failed to make a difference. Women, Black, Asian and Latinx employees have made only small gains in their share of management positions over the past 20 years, Frank Dobbin and Alexandra Kalev wrote in Harvard Business Review in 2016.

What Williams’ research reveals is that using the “business case message” as a rationale for hiring and promoting diverse employees tends to backfire by triggering resistance, backlash and biases, particularly among White decision-makers.

In one of Williams’ studies, White participants who watched a video that included common research findings about the benefits of diversity were less likely to appoint a Black teammate to a leadership position, compared with those who weren’t exposed to this research. Those hearing the business case were also less likely to agree that racially diverse teams perform better. In another study, a multiracial sample of managers exposed to the business case were less inclined to promote a Black candidate than those who weren’t exposed to this messaging.

So, making the business case not only harms feelings of belonging for historically excluded talent—as found by Oriane Georgeac and Aneeta Rattan—it also makes people treat Black employees more harshly.

Superficial doesn’t stick

When a company relies on the business case to motivate its DEI efforts, the typical result is too superficial to address the core systems and cultural issues that cause disparities in the first place. What this means is that a company might communicate that it is committed to diversity, but its efforts and programs may be short-lived or be the first program to get dropped amidst competing priorities, competing incentives or adversity.

“They're focused so much on the surface-level benefits—just bringing people in and getting a market jump or a profit jump. That's not going to solve the deeper issues that organizations need to be facing,” Williams said.

In 1996, Harvard Business School professors Robin Ely and David Thomas were among the first scholars to point out that seeking benefits of diversity in superficial ways can alienate employees and deprive companies of the insights and talents of employees from historically marginalized groups.

Research identifies “principle-practice gap”

In her qualitative research on what she calls the “principle-practice gap,” Williams finds that leaders who think about diversity initiatives in terms of the “bottom line” are the least likely to follow their commitments with action. Conversely, leaders who take steps to boost diversity tend to be people who acknowledge the underlying inequality and believe that increasing diversity is the moral thing to do.

“It's about the fact that there are barriers to inclusion and there has been a history of exclusion and continuing race and gender hierarchies,” Williams said. “It's not a rational issue. Unfortunately, you can still profit while marginalizing groups of workers.”

Dear readers: What actually inspires more concrete and sustained action? Come back to The BiGS Fix tomorrow for Part 2 of our series to find out.

If you have comments or good examples from your own company, we’d like to hear from you. Just email Harvard Business School’s BiGS Fix Editor Barbara DeLollis at bdelollis@hbs.edu, and join our LinkedIn community for more curated research-backed insights.