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Leaders who justify their diversity efforts by focusing on the impact it can have on the company’s bottom line risk alienating the very employees they hope to attract, according to research published by the American Psychological Association.

That’s because such “business case” justifications for diversity can cause members of underrepresented groups to 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.”

The research was published in APA’s Journal of Personality and Social Psychology.

The study notes that 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.

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

The researchers then conducted five online experiments in which they asked job seekers from three underrepresented social identities—LGBTQ professionals, women seeking STEM-related (science, technology, engineering and math) jobs 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 business-case diversity statements were more likely to undermine participants’ anticipated sense of belonging as well as their desire to join a company. The participants were concerned 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.”

The researchers found that fairness-case justifications for diversity may also induce some social identity threat among members of underrepresented groups—though only about half as much as business-case justifications do.

“We have more research to do here, but the possibility that no justification is the best justification for diversity is incredibly interesting,” Rattan said.