Considering a workforce reduction? Don't undo your gains in diversity now

Even companies that upheld diversity as an imperative will risk harming it when downsizing their workforce. 

The reason is simple. In an effort to be fair and transparent, companies often resort to formal rules to decide which roles are eliminated and which remain. The problem is that because these considerations heavily factor position and tenure, organizations can "wipe out most or all of the gains they’ve made in diversity" over the last several years, according to Alexandra Kalev, PhD, professor of sociology with Tel-Aviv University, in an article for Harvard Business Review

As part of her study of more than 800 U.S. companies, Dr. Kalev found organizations end up with an immediate nine to 22 percent drop in the proportion of white and Hispanic women and black, Hispanic, and Asian men on their management teams when they cut positions rather than evaluate individuals. When companies approach layoffs with the philosophy of "last hired, first fired," they lose almost 19 percent of their share of white women in management and 14 percent of their share of Asian men.

Dr. Kalev recommends the following approach to avoid compromising diversity during a workforce reduction: 

  • Consider laying off managers with the poorest performance. Companies that do so experience no reductions in diversity. "This individualized approach has the added benefit of keeping strong performers regardless of what positions they currently hold or how long they’ve been with the firm," wrote Dr. Kalev.
  • While bias in appraisals and performance reviews is a real concern, Dr. Kalev says these rituals are perceived differently as part of a workforce reduction. "It appears that within the context of downsizing, the process of evaluating each manager on their merits creates awareness and accountability among executives, motivating them to think deeply about who they should keep."
  • Look at diversity numbers before proceeding with layoffs. "Looking at the numbers reminds executives that they can use tools such as repositioning and retraining to maintain managerial diversity after they’ve made performance-based cuts," advised Dr. Kalev.

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