Justifying the hiring of underrepresented groups because of "business case" reasons can backfire, according to a new study by the American Psychological Association.
Members of the LGBTQIA+ community, women in science, technology, engineering, and math (STEM) fields, and Black students may feel that they are being judged because of their social identity if they join the company.
The term "bottom line" in business is the company's net income or corporate profit. "Business case" explanations justify why companies value diversity by saying that it helps companies better serve their customers and improve their bottom line. Meanwhile, "fairness case" explanations show that companies value diversity because it's the right thing to do.
The study explained that business case justifications are very popular but do more harm than good.
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The researchers gathered the online diversity statements of every company on the Fortune 500 list. They used artificial intelligence-based language analysis to evaluate whether each diversity statement presented a business case justification or a fairness case justification.
Researchers found that about 80% of companies in the Fortune 500 offered a business case justification, while less than 5% offered a fairness case justification. The rest of the companies did not put out a diversity statement or offer any explanation.
Next, the team sought to find out how much “belonging” a member of the LGBTQIA+, female STEM-field seekers, and Black students would feel based on the business case justification and fairness case justification they would read.
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Reading business case justifications undermined respondents' anticipated sense of belonging in the company compared with reading fairness case justification statements.
One explanation why business case justification affected these respondents' sense of belonging was that it increased respondents' "social identity threat" or their concern that the company would judge them and their work based solely on their social identity.