While there have been growing efforts to increase the racial diversity of workforces in recent years, it’s fair to say that those efforts haven’t always run smoothly. Research from Boston University shows that when firms are transparent about those difficulties, they’re perceived as more trustworthy and committed to the job.
“We suspect that many companies fear that revealing lagging diversity numbers will undermine their reputation and credibility, so they don’t disclose that information, but that strategy may be misplaced,” the authors explain. “Our research found that disclosing a lack of progress is a more effective way to signal that the company truly cares about diversity than suppressing this information.”
Increasing diversity
After the tragic death of George Floyd and the rise of the Black Lives Matter movement, many companies promised to hire more diverse employees. But not many of them actually shared numbers about their workforce diversity.
The researchers looked at data from 30 big companies that chose to share their racial diversity numbers in reports to the U.S. Equal Employment Opportunity Commission. These companies included well-known names like Apple, Facebook, eBay, and Verizon.
The reports had some concerning findings. They showed that these companies had very few Black and Hispanic/Latino employees in senior management positions. Only 3% of top management positions were held by Black employees, and just 4% by Hispanic/Latino employees. Also, the data revealed that there wasn’t much progress in improving diversity from the previous year.
Being open
In one part of the study, 2,000 people online were asked to think about one of these 30 companies. They were told that the company had publicly promised to hire more people from racial and ethnic groups that were not well-represented in their workforce over the next year. Half of the people were given the actual diversity reports from these companies, which showed that their diversity numbers weren’t great. The other half were told that the companies had restated their commitment to diversity, but they didn’t see the diversity reports.
Surprisingly, the people who read the diversity reports thought these companies were more open, trustworthy, and genuinely dedicated to diversity compared to those who didn’t see the reports. This was true even when the diversity data in the reports was mostly negative. People believed that these companies had made significant progress in promoting diversity when they were honest about their not-so-good data, instead of keeping it secret.
It’s important to note that the race of the people in the study didn’t have a big impact on the results, except that Black participants were slightly less likely to see transparency as a sign of a company’s real commitment to racial diversity.
Transparency matters
Three more experiments in the study showed the same thing: there was never a situation where it was better for a company to hide its bad diversity data instead of sharing it.
What’s interesting is that prior research from 2021 found that nearly 95% of the largest companies in the United States hadn’t shared information about the diversity of their workforce with the public. This shows that we need more transparency and accountability from companies when it comes to promoting racial diversity in their workforce.
“Companies’ concerns about their reputation are legitimate, but our findings suggest that their intuition that transparency will harm their reputation may be incorrect and that the opposite may be true,” the researchers conclude.
