Why Diversity Data Alone Can’t Measure Commitment To Diversity, Equity And Inclusion

UNSPECIFIED – JANUARY 19: In this screengrab, Rep. Joyce Beatty speaks during the “We Are One” … [+]

On March 18, 2021, the U.S. House Committee on Financial Services, Subcommittee on Diversity and Inclusion, held a virtual hearing titled “By the Numbers: How Diversity Data Can Measure Commitment to Diversity, Equity and Inclusion.” This virtual hearing was part of the discussion for proposed legislation that would require certain public companies and government entities to disclose diversity data annually, and would establish other criteria to foster greater progress on diversity, equity and inclusion in corporate America.

The meeting, chaired by Congresswoman Joyce Beatty, featured opening remarks by Congresswoman Maxine Waters (who chairs the House Committee on Financial Services) and Ranking Member Ann Wagner. The Subcommittee had called five witnesses: Thomas DiNapoli, New York State Comptroller; Daniel Garcia-Diaz, Managing Director of the Financial Markets and Community Investment Team at the U.S. Government Accountability Office (GAO); Carolynn Johnson, CEO of DiversityINC; Anne Simpson, Managing Investment Director of Sustainable Investments at CalPERS; and Rick Wade, Senior Vice President of Strategic Alliances and Outreach at the U.S. Chamber of Commerce.

In addition to the content of the meeting itself, which was recorded and can be viewed as webcast, my co-founder and I were invited to submit a statement to be included in the public record. Since the statement touches on a number of topics I have written for this blog, I thought my readers would enjoy reading the statement we submitted, which is included below in its entirety.

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Aleria submits this statement for the record concerning the virtual hearing titled By the Numbers: How Diversity Data Can Measure Commitment to Diversity, Equity and Inclusion, before the U.S. House Committee on Financial Services, Subcommittee on Diversity and Inclusion, held on March 18, 2021.

As co-founders of Aleria, we strongly support the Subcommittee’s efforts to establish meaningful metrics for corporate diversity and inclusion (D&I), and to consider legislation to require mandatory disclosure of D&I data. It should be clear to any government or corporate leader that it’s impossible to control what is not being measured.

However, we encourage the Subcommittee to consider expanding the required measurement beyond simple demographic representation, focusing also on measuring inclusion.

While, superficially, this may seem challenging, and while the companies and federal agencies impacted by the proposed legislation may initially believe this to create an additional burden, we believe that measuring inclusion will actually be easier, it will provide much clearer guidance on what initiatives can really move the needle, and it will create a more actionable and granular set of metrics to measure progress.

To provide some context for our comments, Aleria is a Public Benefit Corporation whose mission is to create a more inclusive and equitable world. We leverage science and technology to impact the way people think about diversity, equity and inclusion in the workplace, and more importantly, what they do about it. While Aleria’s work is focused entirely on workplace D&I, our co-founders are also actively involved with ARC, a nonprofit conducting charitable research activities on how D&I impacts other aspects of society, and with New York University’s Stern School of Business and the NYU Office of Global Inclusion, Diversity and Strategic Innovation.

Our combined work is rooted in two decades of academic and applied research that combines behavioral science and computer simulations to explore and quantify the link between individuals and their societal context. In particular, our approach elucidates how a particular societal context—be it a company, a school, a city, a country or an entire society—influences the lived experiences of individuals, and how, in turn, the individual behaviors and interactions ultimately give shape to the emergent behaviors that we observe at the macroscopic level.

This approach is invaluable in the study of diversity and inclusion because, on the one hand it helps us to understand how systemic biases and discrimination translate into differential experiences at the individual level, while on the other hand it helps us understand how individual attitudes and behaviors lead to the genesis of systemic biases. In other words, our approach has the potential to identify and replicate the causal links that create and sustain systemic biases in the workplace, or, for that matter, in any aspect of society. Furthermore, being able to identify the causal links between workplace biases and individual behaviors can also guide the design of interventions and forecast their impact at the macroscopic level.

For example our team has been able to show that a simple bias that favors the promotion of men over women leads to the kind of gender imbalance that is so common in corporate America, with decreasing representation of women in more senior levels of the company. More importantly, our research revealed the limited impact of a general intervention such as conducting unconscious bias training: even under the assumption that such training could completely remove all promotion biases, our simulations show that the gender imbalances caused in just five years by promotion biases, can take three decades to unravel after the bias is completely removed.

Through our research, we have identified a significant gap in the collective approach to D&I, which we call the D&I Disconnect: while the terms “diversity” and “inclusion” have become nearly inseparable, the vast majority of studies and initiatives focus largely—if not entirely—on diversity alone. The D&I Disconnect is evident even in today’s hearing and in the report published by the House Financial Services Committee in 2020: even the title of today’s hearing speaks about diversity data, and although this hearing’s Memorandum and the 2020 report refer extensively to “Diversity & Inclusion” or “Diversity, Equity and Inclusion,” every reference to data requirements focus exclusively on diversity, with only qualitative statements about inclusion and equity.

The narrow focus on measuring diversity alone, in our opinion, is potentially harmful and can actually undermine efforts to support workplace diversity, equity and inclusion. First, diversity alone is an inadequate measure of progress because it is a lagging and indirect indicator of progress: it is a lagging indicator because it can take a long time to implement sufficient staff changes to be able to see the measurable impact of D&I initiatives; it is an indirect indicator because changes in diversity depend on who leaves the company and who is hired, but both of these depend not only on our D&I initiatives, but on numerous other factors, many of which are outside our control.

Second, the focus on diversity as the sole measure of progress creates a number of undesirable side effects. Among them, measuring diversity forces people to be bucketed, encouraging the creation of stereotypes; it emphasizes differences rather than highlighting similarities; and it encourages a “zero-sum-game” mindset, e.g., giving a job to a member of an underprivileged group is taking a way a job from a white man.

A primary reason for the nearly exclusive focus on diversity is that, at least superficially, diversity is relatively to define and measure. In reality, anyone who has tried to develop a survey or intake form asking for demographic information has grappled with the challenges of asking diversity questions in a way that does not alienate or offend specific affinity groups. The form EEO-1, which is required to be filed with the U.S. Equal Employment Opportunity Commission by any company with 100 or more employees (or 50 or more employees for companies receiving federal funds), was created by President Johnson as part of the Civil Rights Act, and has stood virtually unchanged since then. Stephanie Lampkin, CEO of Blendoor, a diversity, equity, and inclusion (DEI) analytics and hiring software company that specializes in mitigating unconscious bias, points out that, since its introduction more than five decades ago, the EEO-1 form “has not been updated for the evolution of job categories, nor have we been more nuanced in the ways in which we talk about race and ethnicity in this country.”

Through our research, we have demonstrated that inclusion is a crucial ingredient to the success of any organization, and it is a required ingredient to support the organization’s diversity. More importantly, we have developed a simple, intuitive way to measure inclusion. To understand how we can measure inclusion, it is useful to consider an analogy with health. Just as we tend not to notice our health unless we are sick or injured, we don’t actually notice inclusion, but rather, we notice experiences in which we feel excluded. Extending this analogy, when we go see a doctor, they don’t simply ask how our health is in general; rather, we are asked about a myriad symptoms, which allow the doctors to notice patterns that are indicative of a specific illness.

In a very similar fashion, through years of research and client projects, we have identified certain Categories of Inclusion, which represent clusters of experiences that make individuals feel excluded. Examples of Categories of Inclusion are Compensation and Benefits, Respect, Work-Life Balance and Career Opportunities. In practice, to measure inclusion, one should ask their employees (ideally in a neutral and anonymous way) to share specific experiences that have made them feel excluded, and then to specify the Category in which their experience belongs. For example, someone may have experienced being passed over for promotion by a more junior colleague, and categorize this under “Career Opportunities,” or they may share an experience in which they were asked to get coffee during a meeting, which they would categorize under “Respect.”

By collecting this kind of data across an organization, and combining it with demographic information, one immediately sees not only what sorts of experiences may cause employees to feel excluded, but also how these experiences vary across different groups.

The ability to identify and quantify inclusion in this fashion has an extremely important benefit: just as a very healthy individual may not be familiar with symptoms or remedies for specific diseases, a privileged individual will be unfamiliar with symptoms or remedies for exclusion. Put another way, inclusion is invisible to those who enjoy it most. Hence, while a cis-gender, heterosexual, fully abled, white, male CEO may be able to “see” diversity in his company, he will likely be completely blind to inclusion.

Aleria is not the only company that has realized the value and importance of measuring inclusion as well as diversity. We already mentioned Blendoor, whose CEO, Stephanie Lampkin, eloquently points out that “Capturing diversity statistics is necessary, but insufficient governance of corporate social accountability. Our equity and inclusion data shed a much brighter light on the actual behavior contributing to or inhibiting the benefits of diversity. Without a wider lens, sharing diversity data alone has the danger of reinforcing the status quo.” Other firms that have realized the importance of measuring the experiences of individuals, rather than solely their demographic traits, include Kanarys, Tequitable, Eskalera and Pluto.

We want to conclude our statement by proposing a different way for corporate and government leaders to understand the strategic value of considering inclusion, along with diversity. Imagine a team of ten people that is performing at its absolute peak: each team member individually performs at their peak, and they collaborate perfectly with one another. If one of the team members becomes unable to perform at their peak, it is clear that the team’s overall performance will decline. If a second team member also becomes unable to perform at their peak, we may start to see ripple effects as the other team members need to pick up the slack and may become frustrated. Hence, decreasing the performance of any team member can have a compounding, negative impact on the performance of the entire team. This simple thought experiment leads to an inevitable conclusion: any organization that causes any of their employees to feel excluded and thus underperform because of their personal traits, will see a negative impact on the performance of the entire organization.

Put in a more positive light, anything that an organization can do to make sure that all of their employees—regardless of race, ethnicity, gender identity, sexual orientation, visible or invisible disability, religious beliefs, age—always feel included, will see its performance increase, as well as seeing an increase in the satisfaction and loyalty of its employees.

These observations should also make it clear why, in addition to measuring diversity, it is of paramount importance that organizations also learn to measure inclusion, and use it as a guide to make superior decisions that will help them to sustain an increasingly diverse workforce, at the same time that they will be increasing their performance. We hope that the members of this Subcommittee will approve all of the legislation under consideration, and they will further consider expanding their focus to include measuring inclusion, and not just diversity.

Respectfully,

Paolo Gaudiano, Chief Scientist, and Lisa Magill, CEO

Aleria PBC

My work is rooted in the belief that Diversity & Inclusion research can be leveraged to make our society as more inclusive and equitable. I do this through a

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