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Ideas for Leaders #781

How Diversity Social Norms Let Companies Off the Hook

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Key Concept

Research shows that when faced with negative attention for their lack of diversity, companies strive to reach the level of diversity found in similar companies. Once they reach this threshold, however, they are satisfied and cease their diversity efforts. The result is an invisible cap on diversity imposed by social norms thresholds.

Idea Summary

The world of business, and society at large, accepts the need for greater diversity at the highest levels of business, government and other domains. This general consensus, however, has not translated into full-scale change. Research into the influence of descriptive social norms on the behaviour of corporate decision makers offers some new understanding into why diversity efforts fall short.

“Descriptive social norms” refer to the average observed behaviour of individuals or groups in a population. They give individuals or groups reference points on what is acceptable behaviour. In ambiguous situations, when the accepted behaviour is unclear, descriptive social norms offer safety in numbers, as reflected in the phrase, “What is everyone else doing?” Thus, in the domain of diversity, companies who don’t want to receive negative attention for their lack of diversity will make an effort to conform to the standards or norms set by other companies of the same size or industry.

Research into the influence of social norms in the area of corporate diversity by a team of academics from Wharton, NYU and Columbia yields three important insights:

  1. Scrutiny will push companies to strive to match descriptive social norms.
  2. Visibility increases the scrutiny that companies face.
  3. Once the descriptive social norms are met, the companies are satisfied and end or reduce their efforts.

In sum, the research, based on an extensive field study and four laboratory experiments, reveals that descriptive social norms are not the impetus to change: companies are not motivated to increase the number of women on their executive teams, for example, because other companies in the industry have a greater number of women executives. Instead, companies are motivated to diversify because they are under scrutiny—and the greater their visibility (i.e., the larger their presence on the social radar), the more scrutiny they face. 

In addition, the research reveals the motivational downside of social norms: once the social norm level is reached, companies believe they don’t have to make any effort to push their diversity efforts further. For example, the research, which included an analysis of the board composition for 1500 S&P companies, showed that most corporations have two women on their boards — i.e. the descriptive social norm is two female board members, which the researchers labelled as “twokenism.”

The insidious negative by-product of social descriptive norms has on increasing diversity in the world of business is clear. Twokenism is not much better than tokenism and violates the spirit of diversity, which is to offer more opportunities to underrepresented categories of individuals and to bring a greater range of perspectives and experiences to the decision-making ranks of companies, which results in better decisions and performance.

In addition to the field data from the S&P 1500, the researchers proved their conclusions through a number of laboratory experiments in which they manipulated visibility, scrutiny and social norms.

Business Application

The research shows that visibility and scrutiny can be powerful levers to incentivize change. These levers can be pulled not just by policymakers and the media — who can increase the visibility and scrutiny of companies and industries — but by progressive business leaders and CEOs as well. If as a business leader, you want to effect change in your company, serve notice to your executives, including functional and business unit leaders, that you will be paying close attention to their diversity efforts and results. The impact of these levers is not limited to your company. As an industry leader, highlighting in the press and through other communication, the diversity that exists within your company puts the pressure on other companies in your industry (or beyond your industry) to match your standards.

As a business leader, you can also battle the demotivating influence of social descriptive norms. Twokenism, for example, is allowed to persist because those who scrutinize companies accept the lower thresholds that conforming to social descriptive norms engenders. Refuse to accept social descriptive norms as a goal for and in your company or industry. Insist on the decision-makers in your company, for example, that their goal is to surpass the social norms established by their peers. The result will be the positive scrutiny of your organization or company as a pioneer in the field of diversity.

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Authors

Institutions

Source

Idea conceived

  • March 2019

Idea posted

  • December 2020

DOI number

10.13007/781

Subject

Real Time Analytics