How can we ensure racial justice and equity in our workplaces? After the killing of George Floyd and the protests that have followed, I have worked with leaders of companies and organizations searching for answers. As an employment lawyer, it is clear to me that increasing attention to diversity, equity and inclusion is not only a good thing to do, legally and morally, but makes business sense as well.
First, the business case. Diverse workplaces are more profitable. A 2015 study by McKinsey & Company showed a “diversity dividend.” Companies in the top quarter for racial and ethnic diversity are 35% more likely to financially outperform the national industry median. And when senior management is racially and ethnically diverse, the diversity dividend is even more pronounced.
Second, a focus on diversity, equity and inclusion reduces legal and business risk. Almost every week this summer, another nationally known institution has been hit with allegations of long simmering racial or gender inequities. Employees who are unhappy are less productive, are prone to higher turnover, and more likely to sue. Even if poor treatment is not unlawful discrimination, its effects damage the bottom line.
The big question then, is how can companies increase equity at work?
The most basic step is education, especially for an organization’s executives. Lasting change comes from the top. Leaders should learn about the history of racism and sexism in the United States and how they have impacted every institution in it.
Next are policies and training. California law requires companies with five or more employees to have anti-discrimination policies and train employees to prevent sexual harassment and abusive conduct.
While studies suggest that sexual harassment training alone cannot change institutional culture, additional training may help. Implicit bias training can help employees to recognize that we all have hidden biases.
The San Diego-based National Conflict Resolution Center and other organizations also teach bystanders to intervene before incivility escalates into harassment. Lawyers Club of San Diego, for which I am a vice president, is working with NCRC and the San Diego Union-Tribune to encourage San Diego companies to combat workplace harassment and ensure equal pay through the Workplace Equity & Civility Initiative.
Looking at the numbers can be revealing. Does executive leadership reflect the diversity of the lower-level employees? Does the company’s gender and racial makeup reflect the communities it serves? These hard numbers can help a company identify weaknesses and track progress over time.
Employers willing to change can also retain outside counsel to conduct a privileged pay audit to uncover pay inequities attributable to race or gender. The results can be used to support pay increases, raise morale, and improve the company’s reputation. Salesforce, for example, has received significant positive attention for its efforts, reporting in 2019 that it paid employees an additional $1.6 million to fix pay inequality based on race and gender, affecting 5% of its 35,000 employees.
Beyond that, employers can review (possibly with assistance from outside counsel) practices and policies to ensure that they are non-discriminatory and anti-racist. One practice gaining popularity in the legal profession is the Mansfield Rule, under which employers commit that when choosing leadership and governance positions, at least 30% of candidates will be women, people of color, LGBTQ+, or persons with disabilities. Data show that having a large percentage of diverse candidates increases the odds that a diverse candidate will be hired.
These are just a few proven practices to increase diversity, equity and inclusion in the workplace. As more employers embrace these practices, I am hopeful for happier, more equitable workplaces in the future.
Arlene Yang is a partner at Brown Law Group, a San Diego-based law firm that represents companies in employment law and business litigation all over Southern California.