Critique of the Business Case for Diversity and Inclusion - Sample Essay

This critique examines the business case presented for diversity, equity, and inclusion in organisations today. Employers today embrace the idea of diversity in the workplace because of the belief that hiring and retaining more people from underrepresented identity groups will contribute to their bottom line. The problem is that this business case for orientation is likely to hurt the same gains firms purport to seek when embracing diversity. Instead, there is a need to focus on a fairness case for diversity, which orients organisations toward incremental learning to create an inclusive work atmosphere for everyone.

The best starting point is understanding the connection between human resource management (HRM) and diversity efforts in organisations. All organisations need people to run their operations. The people that employers bring on board require effective personnel management strategies often implemented by HR professionals. According to Armstrong (2016, p.7), HRM refers to a “strategic, integrated, and coherent approach to the employment, development, and well-being of people working in organisations.” Diversity is an HR issue because it involves the inclusion of diverse people, including women, people of color, LGBTQ+ individuals, people with disabilities, and ethnic minorities (Grissom, 2018). HRM encompasses various processes, including hiring diverse people, onboarding and training them, providing adequate compensation, and pursuing policies that impact them (Armstrong, 2016; Rubery et al., 2002; Davis, Frolova, & Callahan, 2016). Key employer-employee interfaces in which decisions most visibly embody equal employment opportunity in operation are hiring, reward systems, recognition, development opportunities, and career-pathing (Davis, Frolova, & Callahan, 2016; Winters, 2013; Guillaume et al.,2017). The implication is that HRM impacts all aspects of the representation and treatment of diverse people in the workforce.

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Organisations have a long history of non-inclusive work practices. Socially constructed ideas shape the world in which firms operate. As a result, many of the human resource management (HRM) policies employers have embraced over the years tend to reflect the prevailing social ideas of their time. The implication is that when society discriminates against certain individuals because of their identity, firms do the same. Workplaces illuminate the prevailing social order in terms of its evolution, emerging challenges, and the concerns people need to address (Kalleberg, 2009). It took decades for organisations to see that thriving globally means leveraging everyone’s unique experiences. HR experts had to articulate the benefits of a heterogeneous workforce to show employers that there are crucial incentives for embracing diversity and inclusion.

There have been notable milestones in creating a diverse UK workforce, but opportunities for improvement exist. For instance, the employment gap between males and females is at its lowest since the data was first documented in 1971 (The Chartered Institute of Personnel Development (CIPD), 2019). This trend shows that the workforce is increasingly becoming gender-diverse (CIPD, 2019). However, the Chief Executive Officers in the Financial Times Stock Exchange (FTSE) 100 Index in 2018 were more likely to be male, which shows that male and female progression trajectories are far from equal (CIPD, 2019). Gender is only a single aspect of diversity (CIPD, 2019). Research shows that if firms maintain the current status quo, FTSE 100 firms will only meet targets set for Black, Asian, and Minority Ethnic (BAME) board representation in 2066 (CIPD, 2019). This information is indicative of the barriers individuals continue to encounter.

The lived experience of underrepresented people in UK workplaces is far from ideal. One recent study demonstrates that 25-31 per cent of UK employees report experiencing discrimination at work (Waugh, 2022). Historically excluded persons bear the disproportionate burden of discriminatory practices. Up to 47 per cent of LGBTQ+ employees have undergone workplace discrimination, and this rate rises to 49 per cent among ethnic minorities (Waugh, 2022). Just 55 per cent of employees from ethnic minorities feel comfortable at work, whereas 81 per cent of male employees overall feel comfortable in their places of work (Waugh, 2022). Essity (2022) conducted an online survey involving 10,000 adult workers from 10 countries, including Mexico, the Republic of Ireland, France, Sweden, the United States, the UK, Spain, Italy, the Netherlands, and Germany. The findings revealed that the UK lagged behind all its peers in the research as regards providing for a truly diverse workforce (Essity, 2022). UK personnel find it difficult to progress through organisational ranks on an impartial and non-discriminatory basis (Essity, 2022). This detailed study illuminates how the UK fares in creating an inclusive workforce for diverse individuals. It echoes concerns about the trajectory of inclusion efforts in today’s organisations.

It is the role of HRM professionals to create a truly diverse workplace, which remains elusive in many workplaces. As a result, the HRM profession is “ripe for radical critique” (Thompson, 2011) because it risks losing legitimacy among key stakeholders (Kochan, 2007). If personnel management does not deliver diversity advantages, its main stakeholders will lose faith in it. This means that the HR function extends to evaluating ongoing inclusion measures (pursued within the workplace and the profession as a whole) to identify opportunities for organisational learning that impacts diversity and inclusion.

The main reasoning underlying inclusion strategies today is that diversity contributes to companies’ profitability. The business case of pursuing diversity is a longstanding theme in HRM and workplaces. Zanoni & Janssens (2004) studied how scholars in the field framed diversity. Their scrutiny found that most texts discuss the possible economic benefits of engendering a diverse workforce and the best practices employers can use to profit (Zanoni & Janssens, 2004). Historically, the business case seemed to be the most potent way to get employers’ buy-in. Many organisations today embrace diversity because it is “good for business” (Elsesser, 2022, para. 1). Multiple studies attest to the positive financial impact of having a truly diverse workforce (Ely & Thomas, 2020; Davis, Frolova & Callahan, 2016). When underrepresented people like women and people of color are at the table, the discussion becomes richer, which improves the decision-making process (Ely & Thomas, 2020; Hays-Thomas, 2016; Roberts, 2021). The improved performance companies experience because of engendering diversity raises their competitive advantage (Davis, Frolova, & Callahan, 2016; Guillaume et al., 2017). Employees with a voice in their organisations show greater loyalty and commitment (Dundon et al., 2004). The business case for diversity places emphasis on its direct contribution to profitability. Its proponents focus on how diversity enhances the bottom line by raising organisational effectiveness, employee motivation, and productivity (Elsesser, 2022; Davis, Frolova, & Callahan, 2016; Winter, 2022; Roberts, 2021). The narrative seems harmless for a cursory observer because enterprises exist to make profits.

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The problem with framing diversity as ‘good for business’ is that it may not elicit the outcomes organisations expect, as recent data indicates. Emerging evidence shows that connecting diversity and inclusion efforts to company profits can be off-putting for the underrepresented persons organisations seek to attract (Elsesser, 2022). The findings emerged from an extensive six-stage study by Oriane Georgeac & Aneeta Rattan. In the first phase of their study, Georgeac & Rattan (2023) examined 410 Fortune 500 firms and found that 404 of them referred to the business case to rationalise their diversity efforts. The companies’ websites indicated that they pursued diversity because it benefitted their bottom line (Georgeac & Rattan, 2023). The researchers used the social identity threat theory to hypothesise that the business case (versus the fairness and control case) hurts underrepresented people’s expected sense of belonging to the organisation and their interest in joining the firm (Georgeac & Rattan, 2023). The ensuing stages of the research included 151 LGBTQ+ professionals, 371 female job seekers in Science, Technology, Engineering, and Math (STEM), and 480 African American learners (Georgeac & Rattan, 2023). Finally, the researchers conducted additional studies with 509 female professionals in STEM and 1019 African American learners (Georgeac & Rattan, 2023).

The far-reaching study provides insight into the implications of embracing the business case for diversity. Findings from all the stages affirmed the researchers’ hypothesis that the business case for rationalizing diversity can cause underrepresented individuals to expect less belonging to companies. In turn, this anticipation of a less inclusive environment dissuades them from joining the organisation (Elsesser, 2022). The individuals exposed to the business case indicated that they were unlikely to feel a sense of belonging to the organisation, feared being stereotyped and thought the company would consider them as substitutable with others in their underrepresented groups (Georgeac & Rattan, 2023). On the other hand, the participants who read the fairness case for pursuing diversity felt that the company humanised and valued them and were more likely to say that they would join its workforce (Georgeac & Rattan, 2023). Such findings imply that subscribing to the business case for diversity may hurt the diversity gains organisations desire.

It is important to scrutinise the way companies do inclusion. Ensuring that diversity achieves desired goals means going beyond the common tendency to “add diversity and stir” (Georgeac & Rattan, 2023, para. 5). The “add-diversity-and-stir” approach is a “simplistic and empirically unsubstantiated” variant informed by the business case (Ely & Thomas, 2020). The business case orientation causes firms to ignore an area substantiated by multiple studies: having more underrepresented people in a workforce will not automatically elicit benefits (Ely & Thomas, 2020). Companies must ingrain fairness in all aspects of work. Davis, Frolova, & Callahan (2016) note that employers must ensure equal employment opportunities are integral to their routine business activities. The implication is that HRM needs to offer equal employment opportunities in the entire employee work life-cycle to potential and existing personnel (Davis, Frolova, & Callahan, 2016). This mandate means treating everyone equally and fairly regardless of their immutable traits (Davis, Frolova, & Callahan, 2016). Ely & Thomas (2020) proposed the learning-and-effectiveness paradigm to guide diversity efforts. This paradigm is instructive on what firms today need to do to glean the real and complete benefits of engendering a diverse workforce (Ely & Thomas, 2020). Firms must go beyond recruiting and retaining more individuals from underrepresented groups (Ely & Thomas, 2020). Instead, the focus should be on tapping into their identity-centred knowledge and experiences as valuable resources for understanding how the firm can perform its core functions better (Ely & Thomas, 2020). Research shows that businesses that embrace this approach have more effective teams than their peers with either homogenous workforces or diverse teams that fail to learn from their employees’ differences (Ely & Thomas, 2020). Creating a diverse workforce means continuously adapting work policies to ensure members from underrepresented groups feel valued, supported, and accepted. It is striking that organisations have skirted away from the learning orientation, which can enable them to actualise the changes that lead to an inclusive workplace.

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The preceding analysis canvasses the evolution of arguments regarding diversity and inclusion in the workplace. There has been notable progress in undoing the HR practices that excluded the members of underrepresented groups. There is a wide acceptance of the positive implications of a truly diverse workforce. The issue lies in how most companies embrace the business case for diversity instead of the fairness case. The former says that diversity is crucial because it contributes to profits, whereas the latter frames diversity as a fairness and inclusion issue. Issues with the business case arise because it depersonalises the members of underrepresented groups and causes firms to think it suffices to “add diversity and stir.” Emerging evidence shows that employees and potential hires dealing with firms that tout the business case for diversity report fears about stereotyping and encountering harsh work atmospheres that hurt their sense of belonging. Historically marginalised people are more responsive to HRM rhetoric that humanises them and policies that achieve full inclusion in the workplace. The fairness case for creating a diverse workforce is more appealing and likely to orient firms toward organisational learning that engenders an inclusive work atmosphere.

References

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