The Problem with Company Diversity Rankings
Company diversity rankings, although well-intentioned, may pose more harm than good.
DiversityInc, Thomson Reuters, GreatPlaceToWork (owned by Fortune Magazine); each of these media outlets produces its own annual list of the top companies for workplace diversity. The methodologies for these lists vary:
- DiversityInc — Rankings are based on voluntarily submitted employee survey information. Submitting the surveys is free for companies, and, according to DiversityInc, companies that do business with them do not receive favorable treatment in the ranking process. Companies that submit information for the list must have 1,000 US employees (meaning that they do not consider data for employees outside of the US) and attend the DiversityInc Top 50 Dinner, which is an event that DiversityInc uses to announce the year’s top 50 list and to discuss ongoing topics around inclusion and diversity. Tickets for the top 50 dinner range from $1,499 for a single dinner ticket to $35,000 for a premium table for 10 people.
- Thomson Reuters — Company diversity scores are based on 24 measures, each of which can be placed into one of the following 4 categories: Diversity, Inclusion, People Development, and Controversies. Only publicly traded companies are eligible, and the list includes firms based domestically and internationally. Information on each company is gathered through research by Thomson Reuters analysts. All information is from publicly available sources.
- GreatPlaceToWork — Rankings are partially based on anonymous employee feedback submitted through a 60-question survey. The rest of the ranking criteria is not as clearly defined but is said to come from company-reported workforce diversity statistics and “industry trends.” To be eligible to get on the Best Workplaces for Diversity list, companies must be GreatPlaceToWork certified. Certifications cost at least $995 for each company, with options to pay more for additional reports and benefits.
Looking at these three publications, there are a few important things to note:
1. None of the top 5 companies in any of the lists overlap. If one widens the criteria to look at the top 10, there are only four companies (Accenture, Marriott, Comcast, and Hilton Hotels) that appear on more than one list.
2. The companies in these lists are, by most standards, massive. For example, 9 of the top 10 companies in the Thomson Reuters list have a market cap of over $10B.
3. Both GreatPlaceToWork and DiversityINC require companies to pay, in some fashion, before they can be considered for either list.
The lack of overlap between these lists indicates that these firms may be selectively participating in rankings that allow them to be seen in the most favorable light possible. If one of the publications focuses on areas that a company believes it will stand out in, then a company is more likely to participate in that publication’s listing. Suppose that hypothetical company Coffee Inc. wants to be part of the GreatPlaceToWork list. Coffee Inc. could submit positive information on the high percentage of racially-diverse new hires that joined the company from 2016 to 2018 but omit negative information on the low retention rate of those same new hires. This is an example of how companies could potentially manipulate their submissions to appear more favorable to the publications creating the rankings in an attempt to obtain a hire spot.
Larger companies with higher revenues, and ultimately more money to spend on inclusion and diversity programs, are more likely to appear on these lists because they can afford to have dedicated resources whose job it is to develop an inclusive workplace. This is not a problem inherently, but it opens the possibility of leaving out companies that might have an inclusive workplace environment, but don’t have the resources to publicize their diversity initiatives. For example, Climb Credit is a fintech startup that aims to provide financial resources for college students. According to Comparably.com, diverse employees at Climb Credit (employees other than straight white males) give the company an average score of 93/100, putting it in the top 5% of companies with under 50 employees. Climb Credit would not qualify for Thomson Reuters’ or DiversityINC’s lists because of its size, and chances are that, as it is a small company, Climb Credit doesn’t have employees that are dedicated to marketing its diversity. Having to pay a fee, necessitating that companies have at least 1000 employees, and only considering publicly traded companies excludes smaller firms.
Finally, at its core, inclusion and diversity is meant to help all employees feel a sense of belonging and purpose at work. While numbers and data can help to visualize how a firm is doing in terms of I&D, the most important information can’t be captured with quantitative information. In general, rankings tend to categorize their subjects in a way that is counterintuitive to having a diverse workplace because they put the various aspects of a company culture into boxes. To illustrate, here are two questions that are part of the Thomson Reuters “Diversity” category:
- Does the company have a policy to drive diversity and equal opportunity?
- Has the company set targets or objectives to be achieved on diversity and equal opportunity?
In theory, all a company would need to do is add any sort of diversity program and institute an initiative to get to a certain number in terms of a specific minority group to receive a “Yes” for both of these questions. While it is great for a company to have both I&D programs and minority employee initiatives in place, the focus should be on the quality of these programs, not the mere fact that they exist. The Thomson Reuters list does not consider the effectiveness of company diversity programs. To improve these lists, more qualitative information should be considered when developing the rankings, and this same qualitative information should be available for anyone that is viewing the rankings.
As a Black man, I want to know that my company is focused on making sure that I feel valued as an employee. I don’t want to be a line on a checklist that gets crossed off when I am hired and forgotten about. Inclusion and diversity rankings are good because they shine spotlight on firms that are making an effort to improve the experiences of minority employees, but companies should make sure that their programs are created to actually help their employees, and not created simply so they can make some list.
