Your Promotion Decisions are Illogical and Probably Illegal
There are many things in life that baffle me, but none so much as the illogical lack of progress and action to correct diversity in workplaces. You don’t have to search far to find compelling and sound research calculating that organizations do far better once they make moves to increase the representation of women and people of color in their leadership ranks. Organizations are more productive and profitable, have a stronger market valuation, produce better quality goods and services, employee engagement grows and talent is retained. These seem like good things, particularly when most executives are not sleeping at night due to stalled growth and a leaky talent pipeline. It appears that diversity is not only a race or women’s issue, but a strategic imperative for all organizations. That would be logical, right?
When comparing the representation of women and other groups in the leadership pipeline over the past 4 years, it’s hard to believe organizations have paid attention to this solution to their problems. Since 2015, little progress has been made in diversity in leadership roles. In first-line management and subsequent roles, the representation of women declines, with women of color the least represented, behind white men, men of color, and white women. In the last 12 months, emphasis on gender diversity in organizations has also declined, with 6% fewer organizations naming diversity a priority and 11% fewer employees saying their organizations are taking steps to improve gender diversity. If the calculations in this study are correct, at the current rate of change, women will be holding only 1% more management positions in 2028 than they do today.
The genesis of the issue, and arguably the solution, is hiring and promoting women into entry-level management roles. With EEO laws in place for decades, minority groups and protected classes have benefited from scrutiny in hiring practices. Most organizations take careful steps in hiring to ensure adverse impact is monitored, and processes are, for the most part, effective, fair and legal. However, more recently, in the response to the war on talent, organizations are turning to internal development and promotion of their existing talent to supplement their talent pipeline. Managers are being called on to find and grow emerging leaders in their current teams, starting from entry-level positions up to the executive level, and then to provide them with the training, coaching, and experiences those high-potential employees need to advance to the next level. But these practices to identify, grow and promote leaders have not undergone adequate inquiry into their logic or legality.
When it comes to the identification of employees for managerial advancement who might be considered high potential, many companies still rely on manager ratings and rankings as the primary input for deciding who should be invested in or placed in emerging leader programs. This is despite the fact that manager ratings are known to be mostly reflective of the personal characteristics of the boss themselves, laden with biases and discrimination, rather than capturing the employee’s actual performance. In this study, over 50% of the variance in performance ratings were explained by the raters own idiosyncrasies, and less than 30% of variance was explained by the true work performance of the ratee, suggesting that performance ratings completed by managers should be considered an unreliable source of input for business decisions about the talent bench. Furthermore, in regard to identifying potential and performance indicators, studies have shown that women outperform men in both areas. Pinsight’s own studies conclude that women generally outperform men on the objective ratings of leadership skills most predictive of success in leadership positions. Other studies show that women tend to possess more of the traits better suited to leading a team. In reality, only seventy-nine women for every one hundred men are promoted to first-line manager positions. Clearly women have just as much if not more of what it takes to lead business to success, so where are the promotion decisions breaking down?
In the case of manager nominations for promotion and high-potential programs, managers are likely to argue that they are subject matter experts on what it takes to succeed in their own companies in managerial roles, and that they are in the best position to pick the best people to take the helm, regardless of race or gender. In our society, one that demands equal opportunity for all, we are supposed to believe that the process and ourselves are fair and democratic. But when raters were asked to evaluate candidates on their fit for certain roles, instead of making stereotypical judgments about the (identical) competence of the male and female candidates, raters reconstructed the success criteria for the role to fit the candidate they perceived to be more successful. The decision makers rewrote the story of what it took to be successful in the role for each candidate, scripting the criteria for success based on the personal characteristics of their favored applicant. The authors observe a “novel and pernicious” form of discrimination, that by reconstructing the job criteria, decision makers were able to “both discriminate [on the basis of gender] and to maintain the personal illusion of objectivity.”
It seems illogical that manager ratings and nominations are considered in the identification and growth of emerging leaders or in promotion decisions. At best, incompetent individuals take on roles, teams, and projects that they are ill equipped for while real talent dies on the vine or moves to greener pastures; at worst, the process is discriminatory and potentially illegal. Earlier this year, a federal court ruled that when upper management exercises their “unfettered discretion” in making decisions about the future of their employees, it may qualify for certification in Title VII class action lawsuits. This decision is part of a growing body of case law that challenges traditional talent management practices (i.e., talent reviews, high-potential identification, and succession planning) turning them into an expensive and damaging legal risk for many corporations.
To level the playing for women and minority groups, and to improve the performance of their organizations, business leaders must move away from the proceduralized discrimination inherent in promotion decisions, performance reviews, and emerging leader identification. Instead, they should turn to objective measures of performance and potential, and weigh this against a clear set of success criteria that is defined at the beginning. Businesses must use better tools for evaluating talent for top roles or run the risk of losing profits and people and bringing on lawsuit.
Check out our research report Repairing the Broken Rung to learn more how promotion decisions are colored and the ways to approach and tackle those issues.
