Episode Transcript
Speaker 1 00:00:11 Hi, everyone. Happy July 4th. I hope you're having a nice holiday. I want to talk about the Supreme Court. The affirmative action rollback that took place this week is sort of a time bomb that's gone off. And even though we can't predict the implications entirely, I think they're gonna have a lot of implications in business. So let me give you some perspectives. First of all, personally, I have lived in a very highly diverse community for many, many years. I grew up, I went to a mostly black high school and have been very aware of the inequities in the United States in pay and income, in and educational opportunities and careers in wealth amongst black and white Americans. The statistics show that black families have about one fifth or less of the wealth of white families and all sorts of other disparities in earnings and career opportunities, largely historically driven through slavery and bias and just lots of discrimination.
Speaker 1 00:01:14 That's happened over many, many years. And we in the business community have realized and learned that that is a problem, and that in fact, study after study has shown, and we have research to prove this, including the study called Elevating equity, that companies that are more diverse, outperform those that are not boards that are more diverse, have stronger stock performance teams that are more diverse or have higher performance of operations and innovation management that's more diverse, creates a more inclusive, psychologically safe environment. Inclusion creates innovation and growth and creation of new products and services and companies that are diverse sell to more diverse customers. They have a more diverse set of supply chain partners. So they're more robust. They do business in more diverse communities. They're just better companies. Not better from the standpoint of philosophy, but they just run better. So we as employers mostly know this.
Speaker 1 00:02:15 And in fact, there was an amicus brief filed at the Supreme Court, which I'll send you a link to, where 60 companies tried an impassioned plea to the Supreme Court not to do what they just did. And there's lots of good evidence in there about diversity that you can read through that you might find helpful in your own internal discussions. Well, what we discovered in our research, elevating equity, by the way, it's available to members. And there's also a really great course on elevating equity. It's one of our best courses in the academy with lots of videos of different companies talking about what they did is that, you know, equity or diversity or inclusion is a business strategy. It is not a benefit program or a social program that companies do because they wanna be good citizens. Now, that's part of it, but the main reason is it does have a big return on investment.
Speaker 1 00:03:05 And as a result of the rollback of affirmative action, it's gonna be harder to do this. Now, there's a bunch of arguments from the legal right wing people that claim that once we roll this back, there will be more diversity because it'll be more meritocracy and blah, blah, blah. The statistics show, and I'm gonna point you to the data in the outline, that in the states and locations where they have rolled back affirmative action, including in California, by the way, uc, Berkeley, and UCLA have statistics on this. The percentage of students who are from minorities or black or other disaffected or rather minority groups went way down. Why? Because those people have had less education. They've been discriminated in other ways. They have lower wealth. You know, their parents maybe didn't read to them when they were young. There were all sorts of things that happened that made them less prepared for college.
Speaker 1 00:03:58 And college is a pedigree, whether you believe it or not, or like it or not, it still is. It's a gateway to the future, to a career, to expanding your horizons and opportunities. So this, this decision is going to really affect business, but it's bigger than just the pipeline of candidates. It's actually worse because according to Keith Erling, who was with us last week from the E O C, and a lot of the articles that have been coming out most recently, now the right wing politicians are going to come out against corporate diversity in general. And they've been looking for an excuse to do that and watch. It'll happen during, if you remember, during the Trump administration, they actually banned, or there was some sort of presidential order against diversity training. So what's gonna happen? There's gonna be a lot of pressure from political parties and others on you and your CEOs and others to roll back these programs because they're unfair.
Speaker 1 00:04:53 So let's talk about this idea of fairness. Okay? Let's assume what affirmative action does is it creates unfairness because it takes somebody and it promotes them into some position college or where work or whatever it may be, where they might be a little bit less qualified than somebody else. So if they get the job or they get the opportunity to go to college, somebody else didn't. So this poor person who's comes from a blue blood family and has all sorts of money just fell behind, well, that may or may not be true. I, I don't know if that's anybody's ever proven that that actually happens. I suppose that was what the lawsuit was all about. But the reality of it is, that's actually a good thing because by creating more opportunity for everyone, we all benefit. If you have a scarcity mentality that every seat at Harvard has been taken away by somebody else, you're living in a limited view of the world.
Speaker 1 00:05:46 The real to me perspective is that by making a more inclusive and diverse workforce, we all have more opportunities because the company, the country itself, will grow at a faster rate and there will be more innovation. And if you're one of the ones that feels left behind, remember that, at least in the United States, everybody here except for American Indians is an immigrant. We were all immigrants at one point in our family ancestry. And at that point, one of your ancestors came to the United States and had to claw their way into the system here, get a job, find people that they could work with, build a community, and so forth. So affirmative action in some sense is a part of the American system to allow all immigrants, including transgender people, people who come to the country for other reasons, to make their way into this system in an inclusive way.
Speaker 1 00:06:42 Because if we don't do that, we end up with whole groups of people in the country that are left behind, which is where we are. I mean, you know what the problems are here with income inequality, homelessness, black, white income disparities, et cetera. So yes, we believe in the rugged individual model of society in the United States. That's great. That's the reason we have a open capitalistic system. But there are situations where people are left behind. And in the universities, particularly the top ones, because they're so expensive and so hard to get into, we're essentially creating a charm school where we're saying, if you're not already beautiful, we're not gonna let you into beauty school. We only accept into beauty school. People are beautiful. So therefore, the graduates of our beauty school are guaranteed to be successful because we only let in the people that we knew would be successful.
Speaker 1 00:07:36 And if you look at the statistic on legacy admissions, which by the way came out in some of these documentation from the Supreme Court, it's very high, very high percentage of, um, admissions, at least to the Ivy's, are from legacies who are people who don't necessarily have the qualifications, but they're let in because their parents went or they gave a lot of money. So that is the problem we're dealing with. Now, on the political level, my problem with taking away a affirmative action is very simple. I think the education institutions, the United States are a national service. They are heavily subsidized by tax benefits and grants and enormous public investments in them. Remember, they don't pay taxes and they make a ton of money. They're very, very profitable businesses, both the private ones and the public ones. Public ones are different, but the private universities are basically multi-billion dollar enterprises, and they can do whatever they want without money, and they don't pay a penny of taxes, including the money you donate to them.
Speaker 1 00:08:36 That means that they don't get to do whatever they want. And it's okay for the government to put a few little boundaries around them and make sure they're acting in everybody's interest. I don't think the Supreme Court was thinking about that in this particular decision. I think they were going back to originalists thinking and you know, maybe trying to look at what the forefathers thought about back in the days of slavery. I'm not, you know, gonna read it in any more detail. But the real issue is this issue of meritocracy versus fairness and equality. And we can have both. Now let me give you one more example from my life and then I'll talk a little bit about what we've discovered in the areas of diversity. I, as many of you know, spent 10 years at IBM in the 1980s. My wife worked for Pacific Bell and at and t these were the big companies that were kind of the highly regarded enterprises of their day.
Speaker 1 00:09:24 IBM had a really strong affirmative action program, as did at and t and Pact Bell. It was, it was very prominent in most big companies. My first boss, for the first five years, four or five years I worked there, was an African-American man who ran the systems engineering group. He was great. I had a good time with him. He helped me a lot with my career. Our branch manager, who ran a hundred million dollar or more business in the East Bay, was a Middle Eastern woman who did very well, and then later became a very successful executive in Silicon Valley. Our regional manager had a multi-billion dollar business who I spent a little bit of time working for, was handicapped. He had no hands, he was a veteran. He had two mechanical clauses, hands and actually was a very, very highly regarded executive at ibm.
Speaker 1 00:10:08 Did very well. I don't know where he went later, but, so I kind of grew up in companies where this was there, and I knew that as a white Jewish guy, I wasn't gonna get maybe exactly the same treatment as, uh, an African-American person in the affirmative action side. But I didn't worry about it. It didn't bother me at all because it was a meritocracy and the company was very fair, and all they were trying to do was give people opportunities. And I knew that when the opportunities were made available to others, they were also made available to me, which they were. I had a very, very rich and successful and really developmental experience for 10 years there. It was good. So those of you that think for some reason affirmative action is bad and it's creating all these bad effects, I don't really have any evidence to prove that, and I would sort of challenge you to find it.
Speaker 1 00:10:57 So what do we do about it in the corporate side? Let's get out of the politics for a minute. So we've got a lot of research here. We've done a lot of case studies. We have a detailed case study on Chevron and Sodexo and Target and a lot of others. And what you find is, first of all, you're gonna have to, you know, kind of take a step back and reinvigorate your D e I program because all of these issues are gonna get called to the forefront. There's an article I'm putting a link to about Salesforce and how they're reinforcing their commitment to this. I think you should do the same, because if soling is correct, the politicians are gonna make a lot of noise about doing away with corporate diversity in general for the same reasons that they're trying to do it away with affirmative action, by the way.
Speaker 1 00:11:37 And we've gotta remind them that this is not about entitlement. This is about performance of our companies. We're not doing this just to be nice. We're doing this because we know it's the right thing to do from a business standpoint as well as from a human standpoint. And what we learned, and and you'll see from the elevating equity research is that the, the head of D E I is a very difficult job. And if the c e O and C F O and other senior business leaders don't understand the reasons for diversity and the reasons for inclusion and the reasons for representation, and the reasons to look at pay equity across intersections, between different diversity groups and fairness, that you can't do it alone. It can't be an HR program, it has to be a corporate strategy. And if you read the stories of what we've discovered, you look at Target or Chevron and others, they realized that being diverse and being inclusive allows them to hire better people.
Speaker 1 00:12:36 It allows them to build a more sustainable supply chain. It allows them to promote more interesting people into leadership, to have higher performing teams, to go into countries and communities and opportunities and business areas and markets that are diverse with better products and services and better people, and to grow the company more sustainably and more consistently. By the way, the, the flip side of diversity is inclusion. You could argue that inclusion creates diversity not the other way around. And so if you don't have an inclusive culture, if people are biased, if there is microaggression kind of behavior going on, you're shutting people down. There are people who are quieting down, not giving you their best work, not giving you their best ideas, not able to contribute to make your company more successful. So you are hurting yourself. And that's what the research finds. And if you go through the research, I'm gonna send you some links, you're gonna find that this isn't something can be only owned by hr.
Speaker 1 00:13:35 Now, many of you I know do have huge HR focus on this and lots of processes on recruiting and pay reviews and looking at leadership decisions and having diversity councils and ESGs and all of those things. They are all good and they are all important, and I think they all make a difference. But I also think you have to make sure that the business leaders are behind this too, because if they don't understand the reason for it and they don't see the business roi, they're not gonna push back when the politicians start making a bunch of noise about this. I mean, I actually think the Disney case is actually, a good example of this is what happened in Florida. I, I'm not sure if Disney was trying to take a social position. They were simply saying when the governor of Florida was trying to make different decisions about woke capitalism in their community, that they didn't wanna live that way and it wasn't good for Disney and therefore was also wast good for the state of Florida because Disney is, I believe, the largest employer in the state of Florida.
Speaker 1 00:14:41 We all have that type of power because we all are employers and therefore we pay taxes. We have a brand, we have a reputation. People choose to come work for us, and we can take positions on these issues as long as we have a business framework around them. Final thing I'll leave you with is I actually believe you're up for the task. I don't know what we're gonna do about the Supreme Court. Only 28% of Americans trust it these days. But put that aside, we and you and HR have the authority, have the power, have the influence, have the understanding on how to push this issue and to move this needle. If we start getting fewer minority candidates out of colleges, which I guess we will, we're just gonna have to do more career pathway work, we're gonna have to do more skills-based hiring. We're gonna have to do more training, we're gonna have to do more pay equity analysis.
Speaker 1 00:15:29 You've seen the research we've done on that, and we're gonna have to use data and AI and all the tools we have to make sure we're ever more inclusive in our hiring and our promotion and our pay and our opportunities for everybody inside of the company. I do tend to believe that in the United States, at least the business community will push, in many cases the social community in the right direction. I don't know what to say about the Supreme Court and why we've ended up with these particular set of decisions, but put that aside. You have more power than you realize. And so get your teams together, talk about this over the next couple of weeks, get your D E I program clearly understood by your business leaders and communicate it and stick with it because I believe that there will be a lot of pushback on these issues. Yes, the politicians are gonna come back and talk about it, but if you feel strongly about it and your company and you have business justification for the programs you're doing, which I know all of you do, you're gonna have a lot of influence on this too. Okay, enough lecturing, <laugh> for July 4th. Have a great week, weekend and enjoy the time and I'll talk to you guys again next week. Thank you.
