Is DEI (Diversity, Equity, and Inclusion) Compatible with Quality?
An analysis of where DEI came from, what it is, how it is practiced, and if – in the final analysis – it is compatible with Quality.
What is DEI and Where Did It Come From?
In his book, The Origins of Woke, Richard Hanania walks through a detailed history of civil rights law in this country and its impact on “the rise of the human resources profession, along with its more recent offshoot, the diversity, equity, and inclusion (DEI) industry…” He argues that through civil rights law, the government, whether intentionally or unintentionally, has created ambiguity that incentivizes organizations, for fear of reprisal, to dedicate substantial resources to signal that they are doing everything they can to avoid “discrimination.” This has manifested itself in the creation of human resource (HR) departments and subsequently their growth into what we now call DEI. The purpose of these departments is to develop and implement policies that protect the organization from possible discrimination lawsuits. Due to the ambiguous nature of the law, these policies vary substantially based on the organization.
Over the past decade, HR departments have slowly morphed into DEI departments, seemingly without anyone noticing. It is now common to see someone with a title like “Manager of HR & DEI” in almost every company, big or small. So, what is it? Let’s start with breaking down the acronym: the “D” stands for “diversity,” the “E” for “equity,” and the “I” for “inclusion.” These are broad concepts and can be defined (and applied) in various different ways. Is “diversity” referring to diversity of thought, diversity of experience, or simply diversity of race or sex? Is “equity” referring to equality of opportunity or equality of outcome? The answers to these questions are the subject of intense debate. Often people justify support of these concepts by applying the most idealistic definitions. For example, who can argue against the value of developing hiring practices to ensure intellectual diversity or diversity of thought? However, residual disparities with regards to race and sex that make an organization more vulnerable to discrimination lawsuits almost always persist, and as Hanania highlights, these departments exist for one reason: to avoid these lawsuits. Theoretically, the best way avoid disparity is to implement hiring practices that ensure racial and sexual equity; however, policies that explicitly ensure this, such as quotas, were determined to be illegal under the Civil Rights Act of 1964.
DEI, and HR bureaucracy, originally stems from the university and like with many things that stem from the university, there has been significant cultural debate on their merits. In an article published last year by The Free Press criticizing the concept, How DEI is Supplanting Truth as the Mission of American Universities, the author explains that the original mission of the university was to put truth forward as the highest ideal. It then draws the conclusion that if diversity, equity, and inclusion are instead considered higher or equal ideals, it necessarily stands in contradiction with this mission. Jonathan Haidt, the coauthor of The Coddling of the American Mind, is quoted extensively in the article, but most relevantly, he states with regards to the university’s ever-expanding DEI requirements, “It is morally wrong, but it’s also incompatible with scientific inquiry, which requires total fidelity to the truth.” If you are familiar with my Thoughts on Quality, you will know that I consider Quality to be synonymous with truth. DEI is not only infringing on truth as the highest ideal in universities and with regards to scientific research, but it has made its way out of the universities and is infringing on Quality as well.
DEI in Practice
As a hiring manager within an organization with an influential DEI department, I was consistently asked to consider the demographics of my group when making hiring decisions. I was told that if I was deciding between two candidates, one male and one female, that it would be preferrable to hire the female. This occurred within an organization that already had a disproportionate number of female engineers as compared to the industry. It was stated in companywide meetings that increasing the proportion of female employees was a goal of the organization. It was highlighted that, although the percentage of female employees overall was something to be proud of, the percentage of female members of the leadership team was still not at a preferred level. In one case, when participating in a candidate debrief for a leadership position, it was stated that the candidate recognized as the most competent was not preferrable because the person responsible for DEI “envisioned a woman in that role.” I think it is fair to say that, in this case, the “D” stood for diversity of sex and not diversity of thought.
This may not seem inherently problematic, so if you find yourself asking what the problem is, imagine for a moment that the roles were reversed. Imagine I was told that if I was deciding between two candidates, I should select the man, perhaps due to concerns about the woman potentially needing maternity leave at an inopportune time. What if a member of the leadership team had said, while opposing the hiring of a woman into leadership, that they, “envisioned a man in that role?” This sticks out to most people as discriminatory behavior and rightfully so. Sexual discrimination, whether towards women or men, is illegal and morally wrong, but it is also likely to create a competitive disadvantage. HR departments have historically protected the organization from discrimination lawsuits by ensuring competence of personnel. Competence is not only a neutral, race and sex blind metric, but ensuring competence also puts the business in the best position to succeed. With the growth of DEI, sexual and racial discrimination have been reintroduced to the business world at the expense of competence, but this time while simultaneously claiming the moral high ground.
The Rise of Credentialism
As stated previously, quotas were determined to be illegal under the Civil Rights Act of 1964. This means sexual disparities cannot simply be solved by a company having a hiring policy that mandates staffing 50% men and 50% women. That would be considered discrimination, but the company appearing to do nothing about the residual disparities would also subject them to potential discrimination lawsuits. According to Hanania, one way that companies previously assessed the competence of candidates for hire was to have them take intelligence quotient (IQ) tests. IQ tests, for all their flaws, provided a neutral way of assessing a candidate’s ability to think critically and address novel problems.
When IQ tests were not yielding the desired racial and sexual diversity results, HR departments began to replace them with softer assessment tools, like behavioral assessments or credential requirements. These tools are much easier to game if the goal is to eliminate unwanted disparities.
At the same organization that was focused on sex equity, they implemented a behavioral assessment tool, Predictive Index (PI), that every candidate was required to complete during the interview process. PI claims, as part of the value proposition, that the tool “supports clients’ legal compliance with the EEOC [(U.S. Equal Employment Opportunity Commission)]” (i.e. the government agency responsible for monitoring employment discrimination). This tool claims to be backed by “science,” but the methods they use are academically disputed and deviate from the model of normal personality that is widely accepted by the scientific community, the Five Factor Model (FFM). In theory, these tools help companies select the most qualified candidates, but in reality, they simply provide cover against discrimination lawsuits while enabling them to select whichever candidate fits the required demographic needed to eliminate disparities.
Although it is true that these soft behavioral assessments have been increasingly deployed as cover, the real impact of the growth of DEI has been making the measurement of competence taboo, which has given way to the rise of credentialism. Credentialism is the belief that a credential is an adequate substitute measure for competence. As if sitting through classes and passing tests proves one’s ability to think critically and solve novel problems. Companies have become increasingly dependent on credentials as a method of determining competence. The number of jobs that require a bachelor’s degree have skyrocketed and it is becoming more common to require a master’s degree to even be considered for any management or leadership position. Depending on the job, companies will also typically list out 3-5 certifications they prefer candidates to have.
Companies increasingly outsource the evaluation of candidate competence to third parties, like universities. If a candidate has all of the listed credentials, the “competence” box can be checked, and there can be no legal argument as to their qualifications. Since one’s credentials can only be loosely correlated to their ability to do a specific job well, this has led to a crisis of competence at every level. And whether or not it was the intention, if a company is intent of reducing racial or sexual disparity, one of the consequences is that they are now free to select the candidate that aligns with this goal without fear of being accused of discrimination.
The Argument for DEI
The concept of DEI is very similar to the idea of “stakeholder” or “conscious capitalism.” In his book, Woke, Inc., Vivek Ramaswamy offers a detailed explanation of these concepts and where they came from. He explains that “stakeholder capitalism” can, in principle, mean one of two things: (1) “that corporations should affirmatively take steps toward addressing important societal issues like…racism and workers’ rights” or (2) “the idea that executives should just account for the negative externalities, or unintended consequences, of their actions before making important business decisions.” The best argument for DEI, if there was one, is aligned with the second assertion.
Some people will insist, although never precisely clear how, that the implementation of DEI policies will improve the long-term value of the organization and that their organization implements DEI in the most idealistic way. They insist that the “D” is simply for intellectual diversity or diversity of thought. When pushed, they might concede that diversity of race or sex is a consideration but argue that it is simply the best way to accomplish intellectual diversity. They will also insist that the “E” stands for equality of opportunity and not equity or that there is no difference between the two (equity meaning, by definition, equality of outcome). When pushed, they might concede that equity is a consideration but argue that it is actually a net positive for the business.
The argument is, if racial or sexual disparities are allowed to persist, it will have a negative impact on the company, since diversity is commonly understood to improve resilience in an ever-changing environment, like the market. Often, it is argued that a diverse employee make-up will allow the company to appeal to a more diverse customer base, therefore increasing the potential market. If racial or sexual equity will potentially make the company more profitable, or potentially more resilient to change in the long-term, it is simply rational to ask decision makers to tip the scale a little in the short-term.
This is the best argument for DEI, but when we look at how it is practiced in the real world, it is not the most likely explanation for its existence. It is much more likely that an organization, for fear of discrimination lawsuits, or simply due to ideologically motivated leaders, is affirmatively taking steps to address the perceived injustice of racial and sexual disparity. Ramaswamy argues that “wokeness,” another term for DEI, “sacrifices true diversity, diversity of thought, so that skin-deep symbols of diversity like race and gender can thrive.” This certainly resonates with my experience in the industry over the past few years, as I sit in rooms increasingly full of “skin-deep” diversity where novel perspectives (or willingness to share them) become rarer by the day.
Quality or DEI: Pick One
Ramaswamy concedes that, “On its face, the idea that corporations shouldn’t just make products and provide services for profit but should also address other social and cultural issues sounds pretty benign,” but makes the argument that the limited liability protections granted to corporations came with a legal mandate to focus on profits alone, rather than social or moral issues. He argues that a leadership team’s fiduciary responsibility to its shareholders makes the promotion of, or apathy towards, company policies like DEI that put cultural issues before profit, illegal. I would argue that this mandate is also a mandate for Quality.
As I explain in Quality = Profit x Time, I consider Quality actions to be anything that facilitates prosperity or is profitable, when measured over an eternal time horizon and accounting for all externalities. Quality, as I define it, is similar to the moral version of “stakeholder capitalism” discussed above, except, given its parameters, requires accountability to the decisions made and not just good intentions. DEI however, which is an outgrowth of the immoral interpretation of “stakeholder capitalism,” is deterministic as practiced. It mandates that organizations affirmatively take steps to address disparities in race and sex, regardless of the impact to profitability, on the promise that it is making the world a better place.
Productivity within an organization is known to follow the pareto principle, which means that the top 20% of performers produce approximately 80% of the output. Ensuring competence in personnel is the best way to maximize productivity and not doing so is likely to have a significant disproportionate effect on profitability. Therefore, the prioritization of diversity (equity or inclusion) over competence stands in opposition to the concept of Quality.
Haidt talks about scientific inquiry requiring “total fidelity to the truth.” I would argue something similar with regards to success in business. To reframe Haidt’s assertion: DEI is incompatible with organizational success, which requires total fidelity to Quality.
As I hope is clear by now, it is not the underlying concepts of “diversity,” “equity,” and “inclusion,” that stand in opposition to Quality, but the misguided actions of DEI departments and the incentives that drive them. All three of these concepts, can be understood and implemented in ways that provide value and facilitate the prosperity of an organization. It is incompatible with the success of an organization however, to consider any of these concepts as a higher priority than Quality. If an organization creates an incentive structure that prioritizes diversity (equity or inclusion) over competence, a degradation of competence will occur, and this is not only morally wrong, but it is incompatible with Quality.
If you are a decision maker within your organization, regardless of if you have a “Q” in your title, it is worth asking yourself what “resource management” means within your quality system. Are you responsible for fixing all of the unjust inequality in the world or are you responsible for ensuring that your organization has the best resources possible to maximize profit and facilitate prosperity?