Let’s Fix the DEI Terminology

You can say DEI stands for whatever you want — certainly the definitions out there are all over the place. I prefer a clean and simple structure, because then we can make concrete actions and decisions from there:

• Diversity is about the richness of the mix of people you have; essentially giving people a chance to be on the team. Diversity is also influenced by population and talent demographics — you can only hire people that actually exist.
• Equity is about providing fairness in compensation, rewards and resources; essentially treating them like they are the team. Equity is assessed at hiring point, but also on an ongoing basis, and in that way is influenced by Inclusion.
• Inclusion is about letting and even making them play; getting people suited-up and on to the field, game-time. Often “diversity of thought” is put under diversity, but as I’ll illustrate in a moment, inclusion is the true driver of new and different perspectives that we associate with that idea.

So using this model, Diversity is a “point event” that happens somewhat rarely, when a candidate is made an offer to join the team. In a purely technical sense, as long as they stay, you have succeeded in altering the diversity of your organization. Letting people go also has a similar impact. But these happen rarely in the scale of things.

Equity in a meritocracy is something that is assessed at hire but also on an ongoing basis. The assessment at hire is fraught with challenges and inequities that influence later assessments. The ongoing assessment is really more like a set of work “tests” or “trials”, where the person’s performance over time shapes the perceived need for improved equity. Both the opportunity to participate in trials and the assessment of the performance are challenges.

The First Force: In-Group-Out-Group Bias

In-Group-Out-Group bias is something that we all have and it is largely innate and automatic: we are good at categorizing, making distinctions and assigning meaning and value…regardless of whether we are right or wrong in those matters. People whom you perceive to be favorably similar to you are your de facto In-Group…and you consider them (and yourself) superior to those who are not in that group, the Out-Group.

So I ask you, “Since this bias is automatic and invisible, how well do you think managers assess people in terms of their skills and talents?” Most managers in meritocracies are horrible at it. Research shows that the single greatest factor in a hiring assessment or performance review is not the quality of the work done nor qualifications of the applicant, but the appraiser’s (personal) opinion of the person.

People who have higher skills, but are in perceived to be in the out-group will tend to be appraised as less-capable than those within the in-group that have lower skills. Here are a few examples both old and recent:

A business partner of mine a few decades ago would tell a story of how he needed 200 people ASAP to staff his technology program at an aerospace company. After a few months he had only hired about 20 people and his boss called him in. He asked Bill what the problem was, and Bill quickly pointed out that, “…there just aren’t enough good people out there.” Bill’s boss asked to see the resumes, and Bill brought a big stack of them in as proof that he was looking at a lot of candidates. Bill’s boss peeled the top 100 resumes off that stack, handed them to Bill and said, “Hire ’em, give’em a chance, and fire the ones who don’t work out.”

Bill’s boss knew on some level that he didn’t need 200 people from Bill’s in-group. The punchline is, of course, that almost all of those people in Bill’s out-group worked out just fine.

Our Persistent Under-estimation Bias

Here’s the subtle idea inside the Bill story: we’re even worse at judging how great a candidate won’t be. We underestimate people way worse than over-estimate them. Your lower expectation of the person translates into lower performance on their part, and once that happens, you will feel validated in your judgement. But your judgement was wrong, and you will never see that.

I’ll illustrate with an agency client story from a few years ago. Our new client was eager to do our team empowerment trainings, but there was one hold-up according to him: half of his 50 people were “the wrong people,” under-skilled and likely headed out the door. He asked, “Should we wait until we replace them all [this would take forever, of course], or what?”

You can see where this is going, right? So I kind of lied to him: I told him that he would be able to see better which people to let go after the training was done. I know he thought we were going to be providing him with rationale for why he could get rid of the “bad” half of his team. In reality, we were going to teach him that he had never been able to see how good they could be.

One year after our trainings, and following a big meeting with one of their clients, he wrote us, excited about “how awesome our team is now.” We shot back a note asking how many people had left or been exited. Only one person left, and that was because the person and their spouse decided to relocate because of the spouse’s new job.

So, 20–30 people who would have been let go for being sub-par, were actually pretty solid. But if that manager had let them go, he would have only “proven” that his (bad) judgement was correct.

This sort of carnage manifests in at least of 50% of the organizations we work with, and it often is accompanied by a blithe ignorance of the fact that the managers job is to actually elevate people, not denigrate them.

By the way, this was pretty much a racially homogeneous group. We’re just amazingly good at having very severe biases. Because gender and race create a stronger perceptual difference between the observer and observed, I’m pretty sure they amplify these already strong biases as well.

Equity: Paying Less is Forever

In the hiring process, the decision on compensation will have all these same bias problems of course. One of the biggest mistakes — and this is somewhat counter-intuitive — is to pay people as little as possible upon hire, to negotiate them down on their compensation. I can hear some of you saying, “…okay, but shouldn’t some people get paid more, after all, if they are more talented, and others less, because they are not as in-demand?” To which I would reply, “Um, yeah, but you’re probably a horrible judge of them…and re-read that section above.”

And yet an even better rationale exists. A fine body of research on women’s inequity in compensation has shown that the starting wage has an outsize effect on ongoing inequity. When women (and others) often start with a lower hiring wage, we delude ourselves with a meritorious equity myth: “If they really deserved more, they’ll close the gap with promotions.”

But what the research shows is that the person that was paid less at hiring rarely recovers to wage parity, even when skills and experience are equal. Think about it: because of that lower starting wage, that person has to be more spectacular than average to actually achieve average wage parity. The lower wage puts them on a path to always having lower wages.

But wait, it gets worse.

There is an ugly, secondary effect of In-Group bias that happens when someone perceives themselves to be part of an out-group: they then rate themselves as less capable than someone of equivalent skills in the in-group. In this way, the more we create (group) distinctions, the more opportunities for negative out-group bias effects from all participants.

Organizations like the management consultancies — which are also meritocracies — work hard to do a great job of measuring, because they know that it ensures that high-performers get seen, even when, and because, they are hard to see. Sadly, most organizations don’t have that sort of discipline.

Equity: Meritocracies are not fair

When I say meritocracy, I mean any organization that promotes the best (most meritorious) specialists into management. This often impacts compensation inequity because of the mistaken idea that managers should get paid more then deep specialists. It is in the nature of a meritocracy to make quite clear the in-group (managers), and more important, the out-group (everyone else).

Because the largest increases in equity/pay come from winning, and winning requires that get a chance to play, to lead, and show your stuff, the third driver for inequity is lack of opportunity or lack of inclusion.

Meritocracies can be thought of as a large team that chooses small squads on a project-by-project basis; to be chosen to be on a squad is to be given opportunity through inclusion. The selection of people to be in these squads is subject to massive in-group bias — we see it in agencies especially — where the same people, over and over, get chosen for the most challenging problems and opportunities. Sales pitches or new types of work are both good examples of this.

This creates a pecking order effect: those people chosen into the squads get better faster, because they have more opportunity, and they learn on harder problems. Their heightened skills then reinforce the initial perceptual bias with a genuine experience-level difference, increasing their chance of getting chosen next time.

These first team “starters” become the perennial squad members that will climb in the meritocratic hierarchy together, cementing their in-group tribe as only we humans can do — winners get the raises and the promotions while other just stand on the sidelines, wait and watch.

In many organizations we’ve worked with, this innate bias shows up as a large gap between how good the senior people are versus everyone else — it is an actual gap, perceptual, for sure, but also real. That gap finds has its roots in the effect of this assessment bias, repeated over and over. The agency example I gave above was just that. When we diminish the effect of bias upon inclusion, the other people got better faster…they became “awesome.”

Meritocracies typically possess a fire-fighter managerial class, one whose members are focused on being the smartest or best in the room. That class systematically neglects its true job of growing everyone else’s capabilities by excluding them, essentially non-inclusion. This has been a major subject of our coaching practice over the last several years. There are many subtle signals that one can use to diagnose this, but the most obvious one is when managers complain about the lack of capability in their teams. It is a difficult mindset shift for the former firefighter to realize that despite their success in climbing to the top, their job is to actually pull everyone else up with them, and lacking that, the model is broken for everyone else that got left behind.

In the winner-take-all meritocracy, that underpaid person whom nobody expects to become amazing, is locked in a spiral of non-inclusion, and lives down to what little is expected of them.

Inclusion: The keystone to DEI

Diversity gets you a fair mix of people onto the team. Equity requires that you structure and assess compensation and rewards methodically and quantitatively, avoiding appraisal biases. But these events happen rarely, at most a few times during the year. Inclusion is how you make diversity and equity work.

Inclusion is how everyone gets a chance to win and learn the hard stuff. It is about what we do every day, and the key mechanism for disabling the day-to day effects of innate biases, In-Group dynamics, and the pecking order effect. But how do you be inclusive? You need to make structural change.

Breaking the In-Group and pecking order spiral requires that we fight the manager’s blindness to people’s greatness by removing the method that implements their bias: the choosing. We require managers to assign squads with a methodical randomness, not by choosing based upon perception or preference.

Assigning squads without the safety of our biases can be frightening to a manager who feels that this project or pitch must go perfectly, or else. But it is rarely true that the team is the major factor — projects always have challenges, and pitches get lost for many reasons — but more important, the fairly-shared chance to play on the squad means that we are building a broader base of talent inside the organization, and more important, giving everyone a change to play, fail, learn and grow. Building a business with the shoulders of many, rather than on the backs of a few, makes for a stronger organization, and happier people.

Increased inclusion happens when we counter unconscious bias with an explicit and well-described model of behavior, in this case, a set of behaviors that empower everyone at the worker-level, and decrease (but not remove) the influence of the managerial class and its biases in selection.

Inclusion: Platitudes Don’t Work

Hopefully now, you have a better understanding of my opening paragraphs: I complained about people saying things but not defining the hard stuff, the specific changes in behaviors that will create different outcomes. Here’s a simplified example from my keynote presentations at the 4A’s Talent 2030 conference last year (slightly modified but you can see the original here.

Company A and Company B are both concerned with Inclusion. They both make posters with their message on it, send out an email to everyone, hold a somber 9a.m. town hall meeting, and form an Inclusion committee to advance their message, and then everyone else goes back to work.

• Company A’s slogan: “We are inclusive,” and, “I always include my fellow workers”
• Company B’ slogan: “Take turns and don’t be a jerk”

Which one actually changes behavior and creates more inclusion…and why?

I can tell you empirically that Company B’s slogan, the second one, works better, and in fact, Company A’s slogan does nothing more than make a few people in leadership feel like they “did something” and leaves most other people confused about what to do.

Taking turns and someone not being a jerk, though, are both “scripts” that we humans know well. We can tell if they are happening — that means we can measure them — and actually we all know how to do them. People follow scripts.

It turns out that unscripted behavior change doesn’t work. Just doesn’t.

Empowerment Requires Some Serious Attitude

Building a culture of empowerment and inclusion is a matter of re-shaping hundreds of behaviors through several key process moments, like the choosing of squad members example above. The behaviors are necessarily simple, like how to take turns, mentor, and, well, not be a jerk. It also requires re-engineering of how to work more side-by-side than over-and-under — which is a more structural change.

Most important, though, is the needed attitude of leadership. New processes and behaviors must be rooted so deeply in the greatness that we all possess, and the organization must stay so methodologically committed that it won’t drift back to its old and very human biases.