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Diversity messages may backfire when companies focus on diversity’s benefits for bottom line

Companies that justify their diversity efforts by saying that a diverse workforce will improve their bottom line risk alienating the diverse employees that they hope to attract, according to research published by the American Psychological Association.

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Companies that justify their diversity efforts by saying that a diverse workforce will improve their bottom line risk alienating the diverse employees that they hope to attract, according to research published by the American Psychological Association.

That’s because such “business case” justifications for diversity can backfire, by making members of underrepresented groups – such as LGBTQ professionals, women in STEM (science, technology, engineering and math) fields and Black students – feel that they will be judged based on their social identity if they join the company.

“These business-case justifications are extremely popular,” said lead author Oriane Georgeac, PhD, a professor at the Yale School of Management. “But our findings suggest that they do more harm than good.”

Many companies offer either a “business case” explanation for why they value diversity (e.g., “we value diversity because it will help us better serve our customers and improve our bottom line”), or a “fairness case” explanation (e.g., “we value diversity because it’s the right thing to do”). Georgeac and co-author Aneeta Rattan, PhD, a professor at London Business School, sought to explore how common these two justifications are and how they affect potential employees’ impressions of what it would be like to work at a given company.

First, the researchers gathered the online diversity statements of every company on the Fortune 500 list and used artificial-intelligence-based language analysis to analyze whether each statement presented primarily a business case or a fairness case for diversity. Overall, they found that about 80% of the companies offered a business-case justification for valuing diversity, while less than 5% offered a fairness-case explanation; the rest made no public diversity statements or did not offer any justification.

Next, the researchers conducted five online experiments in which they asked job seekers from three underrepresented social identities – LGBTQ professionals, female STEM-job seekers and Black students – to read business-case or fairness-case diversity statements from fictional companies and to answer questions about how much belonging they anticipated feeling there, and how much they would want to work there.

On average, the researchers found that among the LGBTQ professionals, female STEM-job seekers and Black students, reading business-case diversity statements undermined participants’ anticipated sense of belonging to the company, and in turn, their desire to join the company, compared with reading fairness-based diversity statements or diversity statements that provided no explanation.

Further analyses found that one explanation for why the business-case justifications affected these participants was that it increased participants’ “social identity threat,” or their concern that the company would see and judge them, as well as their work, in light of their social identity.

“On the surface, this rhetoric may sound positive,” Georgeac said. “However, we argue that by uniquely tying specific social identities to specific workplace contributions, business-case justifications for diversity justify the fact that organizations may attend to individuals’ social identities when forming expectations about, and evaluating, their work. In other words, business-case justifications confirm to women and underrepresented group members that they must worry about their social identities being a lens through which their contributions will be judged. And this is threatening to these groups.”

Some of the experiments in the study also compared the responses of members of underrepresented groups to those of well-represented groups. The researchers found that the business case may sometimes also threaten members of some well-represented groups.

“Men in STEM showed no differences in their responses to the different types of diversity justifications they read, but white Americans after the murder of George Floyd did appear to be threatened by the business case, relative to the fairness case or no case. This seeming discrepancy across well-represented groups is fascinating and calls for further investigation,” Georgeac said.

“The Business Case for Diversity Backfires: Detrimental Effects of Organizations Instrumental Diversity Rhetoric for Underrepresented Group Members Sense of Belonging,” by Oriane Georgeac, PhD, Yale School of Management, and Aneeta Rattan, PhD, London Business School, appeared in the Journal of Personality and Social Psychology

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Modern slavery is a business decision – not an accident

Many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

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Modern slavery persists because the way global supply chains are designed allows it to remain hidden, according to new research led by Professor Glenn Parry from the University of Surrey and Dr Mike Rogerson at the University of Sussex.  The findings argue that exploitation often stems from business decisions that cut costs by pushing work further down the supply chain, leaving companies with little direct contact with workers and less visibility over how they are treated. 

Around 27 million people worldwide are estimated to be living in conditions of modern slavery, embedded within the production of everyday goods and services. While governments have introduced laws to force companies to report on risks, the research suggests that disclosure alone is not changing behaviour in a meaningful way. 

Instead, firms often maintain distance from the most vulnerable parts of their supply chains. This distance can be geographical, organisational or even digital, such as the use of algorithms that control workers without direct oversight. As a result, companies rely on indirect signals rather than engaging directly with workers, leaving serious gaps in knowledge and accountability. 

The special issue on “Modern Slavery and Supply Chain Management”, published in Supply Chain Management, brings together insights from multiple international studies across sectors including construction, social care, logistics and global manufacturing. Drawing on interviews with practitioners, workers and experts, as well as analysis of corporate reports and policy frameworks, the work examines how governance, partnerships and digital systems shape labour conditions across complex supply networks. 

Glenn Parry, co-editor of the issue and Professor of Digital Transformation at the University of Surrey, said: “Modern slavery is a problem buried in supply chain structures and it is often the result of how those chains are built and managed. When companies prioritise cost and efficiency above all else, they create the conditions where exploitation can thrive.”

The research found that many organisations focus on compliance, reporting and audits, yet fail to build the relationships and trust needed to identify and tackle exploitation. In some cases, competitive pressures and mistrust between firms actively prevent collaboration that could reduce risks. 

It also finds that partnerships between businesses, governments and NGOs can help, but only when they are built on genuine understanding and shared goals. Superficial collaboration risks becoming a tick-box exercise rather than a driver of real change. 

A major recommendation is to shift focus from reporting to knowledge. Companies need to invest in understanding their supply chains in depth, including listening directly to workers. Bringing “upstream voices” into decision making is seen as critical to designing effective anti-slavery measures. 

Professor Glenn Parry added: “If we are serious about tackling modern slavery, we need to stop treating supply chain complexity as an excuse. It is often a choice. That means it can be changed.” 

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Long-serving CEOs may weaken innovation, study finds

Companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

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A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards.

The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock”, which is the research, expertise and technological capability built through investment in innovation.

The study published in the journal Corporate Governance found that CEOs who remain in office for many years often become more cautious and less willing to back risky research and development projects. These companies were more likely to reduce investment in innovation and long-term technological growth.

Firms with higher numbers of independent directors were more likely to continue building innovation capacity with experienced CEOs and independent directors forming an effective partnership, to combine deep company knowledge with outside challenge.

However, both experienced CEOs and independent directors become more cautious and less willing to back risky research and development projects when the company fails to meet performance aspirations, suggesting that independent directors do not have stable risk preferences.

The findings suggest that innovation is shaped not only by technology and finance, but also by leadership culture and corporate governance structures.

Author Dr Igbekele Sunday Osinubi, of the Royal Docks School of Business and Law, said: “Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking. Our findings show that independent directors play an important role in encouraging companies to continue investing in innovation, especially during difficult periods when firms may otherwise retreat from long-term research and development.”

He added: “This matters beyond individual companies. Innovation drives productivity, competitiveness and economic growth. The study highlights how governance structures can influence whether firms continue building the knowledge and technologies that shape future industries.”

The paper argues that regulators and policymakers should consider governance reforms and incentives that encourage long-term innovation strategies, particularly in firms led by long-serving executives. The findings may also influence how boards think about CEO succession planning, oversight and the balance between short-term financial pressures and long-term investment.

Osinubi’s research, “Long CEO tenure, independent directors and R&D knowledge stock: the moderating effect of performance shortfalls”, was published in the Corporate Governance: The International Journal of Business in Society

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Office owners or managers, take note: Increased risk of bullying in open-plan offices

In traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

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Open-plan offices entail a clearly increased risk of workplace bullying compared with employees having their own office or sharing with just a few colleagues. This is shown in research from Linköping University, Sweden. 

“Increased bullying is a tangible negative consequence of how you choose to organise the workplace. It’s important to highlight this, as it hasn’t previously been examined,” says Michael Rosander, professor at the Division of Psychology at Linköping University.

Open-plan offices, where many employees share the same space, have become increasingly common. Employers often justify this development as a way to use premises more efficiently and to encourage creative interactions between employees. However, research has shown that open-plan offices do not promote health, job satisfaction or productivity.  

Until now, it has been unclear whether open-plan offices also affect the risk of bullying and employees’ motivation to look for another job. Through surveys of more than 3,300 randomly selected individuals in employment in Sweden, Michael Rosander has now provided an answer. The results are published in the journal Occupational Health Science. 

Thirty per cent of those with some form of office-based work reported that they worked in a traditional open-plan office with no access to private space. Thirteen per cent worked in so-called activity-based offices, where employees spend part of their time in an open-plan environment but also have access to designated rooms for tasks requiring peace and quiet. The remainder had their own office or shared one with only a few colleagues.

For traditional open-plan offices, the survey responses showed a clearly increased risk of bullying compared with those who had their own office or shared an office with only a few colleagues. The difference remained regardless of factors such as personality traits and the extent of remote working. This suggests that the problems are indeed caused by the work environment in the office.  

The researchers’ explanation is that in traditional open-plan offices it is easier to notice colleagues’ shortcomings and become irritated by them. If someone gets frustrated and takes it upon themselves to “do something about” a colleague’s behaviour, and there are no clear guidelines for handling such situations, there is a risk that it may escalate into bullying. Those who are subjected to bullying lack access to a private space for retreat. 

Activity-based open-plan offices, by contrast, showed no increased risk of bullying, likely due to the availability of private spaces. However, in both types of open-plan office, employees were more likely to consider changing jobs. One possible explanation is that activity-based offices also involve more distractions, according to Michael Rosander.

For employers who have introduced, or are planning to introduce, open-plan offices, there are some lessons to be learned. One is to be prepared to deal with irritation and conflicts before they escalate. Another is the importance of providing rooms where employees can work undisturbed. Placing individuals with similar needs and tasks near one another may also reduce the risk of disruption.

“Traditional open-plan offices are in themselves negative for the individual, for productivity, and make people more likely to leave their job. Social interaction also suffers. So it’s worth considering how to handle it,” says Michael Rosander.

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