The Business Case for Diversity Backfires: Detrimental Effects of Organizations’ Instrumental Diversity Rhetoric for Underrepresented Group Members’ Sense of Belonging

Introduction

As organizations become more aware of the importance of diversity as a tool to attract and retain employees, more of them are actively choosing to communicate why they celebrate diversity. Companies frequently express their commitment to diversity by outlining the reasons why diversity is important through their organizational diversity cases. There are two general forms of diversity cases: the ‘business case’ and the ‘fairness case.’ The ‘business case’ utilizes instrumental rhetoric and argues that diversity is crucial because it enhances organizational performance and ultimately boosts profits. The ‘fairness case’ uses non-instrumental rhetoric and maintains that diversity is inherently valuable and does not need to be tied to a company’s financial gain.

Despite the positive messaging on diversity that is highlighted by the business case, in practice it may actually convey a form of social identity threat (the concern that one will be devalued based on one’s identity) to its audience. Most notably, this occurs among job-seekers from underrepresented backgrounds. When reading the business case message for diversity, individuals might be more likely to believe that they will be devalued, as their contributions at the organization will be interpreted and evaluated through the lens of their identity. Yet, among the Fortune 500 companies who have an organizational diversity case, about 80% of them adopt the business case rather than the fairness case. It is therefore important to further examine the value of organizational diversity rhetoric using a theory-driven empirical approach. 

Dr. Oriane A. M. Georgeac is an Assistant Professor of Organizational Behavior at the Yale School of Management where she conducts research on how people respond to organizations’ messages about diversity. Dr. Aneeta Rattan is an Associate Professor of Organizational Behavior at London Business School where she investigates how to improve belonging, achievement, and equity in organizations.

Methods and Findings

The authors conduct several experiments to test their hypotheses that: (1) exposure to the business case for diversity lowers underrepresented job seekers’ sense of belonging and (2) a lower expected sense of belonging will lead to lower interest in joining an organization. These hypotheses are tested using a between-subjects experimental design with groups who are marginalized due to their sexual orientation, gender, and race. The main findings in the study are as follows:

• Being presented with a business case for diversity results in lower expectations of inclusion among LGBTQ+ professionals compared to when a fairness case for diversity is deployed within the organization.
• Exposure to a business case of diversity instead of a fairness case leads to both a lower anticipated feeling of belonging and a greater anticipation of rejection among female job searchers in STEM fields. 
• African American students perceive greater social identity threat and more profound feelings of being depersonalized when they read a business case for diversity rather than a fairness case.

The results confirm the authors’ initial theory that organizations who employ business cases for diversity actually undermine their own goals of recruiting employees from underrepresented backgrounds. Across several distinct categories of job seekers, the business case caused significantly more detriment to their views of the organization in question.

Conclusions

There are several theoretical implications of the study. Previous research on social identity threat has generally focused on negative cues (such as the presence of negative stereotypes), but diversity cases – both business and fairness cases – are ostensibly positive cues. As a result, there is potential for future exploration of other positive phenomena that yield negative effects. Additionally, traditional research on social identity threat has focused on deeply entrenched structures, systems, and norms as its root causes. This study shows, however, that the presence of a diversity case, also identified as a cause of social identity threat, is more immediate and susceptible to change. There may be more opportunities to analyze and resolve similar sources of social identity threat. 

Practically, the findings of this study indicate that organizations ought to reject the use of the business case when explaining their commitment to diversity. Instead, the authors suggest that organizations should emphasize the importance of diversity without any justification, signaling that diversity is inherently embedded within the organization’s core values.