2 June 2020
How organisations hire, promote, allocate roles, compensate employees, and are structured perpetuates inequality in society. That's the conclusion I reached in a paper with colleagues from the Hertie School of Governance and Cambridge University after we analysed over 300 articles, books, and reports from think-tanks and government policy units.
Aligned with each of these supposedly neutral and rational practices is a set of mechanisms that reproduce inequality.
We found access into particular professions and careers is often determined by factors other than ability. For example, an Oxbridge graduate who works as a recruiter at a London-based consulting firm admitted that 30-40% of recruits are also Oxbridge gradates. As he put it: "I find it easier to interview them because I can relate to what they have done at college".
The speed with which people move through organisations is also often determined by identity characteristics. There's ample evidence, for example, that being female and lower-class seriously diminishes opportunities for promotion in professional services firms.
We found that success in organisations is often predicated on perceived ability to meet organisational demands. For example, there remains a belief that workers with outside commitments such as family obligations are less valuable and are often relegated to lower ranks and lower pay.
Remuneration structures in organisations and the existence of exploitative and discriminatory practices are important in determining who benefits from work in organisations. For example, women's starting salaries are typically 15% less than those of men.
Cultures of organisations, professions, and disciplines are important in who is advantaged and disadvantaged. Hierarchies and bureaucracies within organisations often work to help some groups advance while preventing others.
So why have these practices remained in place? As we reviewed the literature we found three institutionalised myths that were prevalent and have acted to legitimise existing practices.
The belief that everything done in organisations is done to maximise or improve efficient production. For example, it's common for managers to hire people like themselves in the belief that having similar outlooks is more efficient. Yet we know that a homogenous workplace actually reduces performance.
The principle that people's success is based on their talents and abilities. However, when we look at the literature, we see advancement and rewards often based on identity characteristics.
The idea that globalisation is a rising tide that lifts all boats, and that the spread of practices from the global north and the closer integration of countries is inherently positive. We can see that many practices associated with globalisation actually enhance inequality. For example, big global manufacturers and retailers take advantage of low wages and weak employment laws, while senior managers in northern offices are much better compensated and have clearly defined career paths that are at odds with those working elsewhere in the supply chain.
The debate about how economies rebuild and reinvent themselves in the wake of COVID-19 provides an opportunity to move the needle on inequality.
Organisations should do more to consider how they can close the gaps in wages, gender, class, and race. And there's an important role for business schools: we need to get better at explaining how the existing management practices that we teach often reinforce inequality. We could also consider how we bring the perspectives of frontline workers into our students' learning, not just relying on guest lectures from senior managers.
Burning issues such as ethics and climate change have moved up the agenda within our teaching and research. It's time the same thing happened for inequality.
John Amis is Professor of Strategic Management at the University of Edinburgh Business School.
The paper, 'The Organizational Reproduction of Inequality', was published in the Academy of Management Annals.