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Mitigating diversity barriers in growth potential and promotability of employees

Carlsbergfondets internationaliseringsstipendier

What

To maximize their available pool of talent, companies today aspire to hire, retain and promote the most competent workers based on skills, performance, and growth potential, regardless of personal characteristics, such as gender, sexuality, ethnicity, disabilities, and age. However, holding experience and skills fixed, studies find that minorities face systematic discrimination during recruitment and promotion processes. One problem may be that while past performance is observable, the future performance of prospective candidates cannot be observed directly. As a consequence, managers’ ratings of growth potential are inherently more subjective and may be subject to implicit bias. This motivates our research question: Does perceived growth potential drive gender gaps in promotion, and can perceived potential be debiased without harming firm performance?

Why

If managers hold female candidates to higher standards, this may result in inefficient allocation of talent across organizations and unequal representation of women at higher rungs of the career ladder. Essentially this is bad for organizations and society at multiple levels. First of all, a lack of diversity may harm innovation and productivity. Second, if women are less frequently observed in managerial roles, it becomes more difficult to imagine that women have the necessary skills or appetite for leadership. Finally, girls and young women lack role models if women are underrepresented in the C-suite.

How

To answer this question, we propose to conduct a lab experiment on a field sample of employees and managers from large Danish firms. The experiment provides an ideal stylized setting for studying how managers’ forecasts of growth potential impact their decision to promote certain workers, when future performance is uncertain. Specifically, we test the hypothesis that gender gaps in promotions reflect biased assessments of individual growth potential. Moreover, the experimental setting allows us to test multiple strategies to mitigate bias taking into account both their effect on gender gaps in promotion and on related firm costs. This allows us to derive policy-advice to firms aspiring to the diversity agenda.

SSR

This research aims at uncovering gender-based relationships amenable to managerial action.