September 4, 2015

Workforce Diversity Amid Adversity

The economy can pose challenges to firms' commitment to diversity. Here's how some are responding.

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Hiring

The race or ethnicity of a manager says a lot about who gets hired, according to a University of Miami professor whose research was published in October in the Journal of Labor Economics.

Laura Giuliano, an assistant professor of economics at the UM School of Business, and researchers from the University of California, Berkeley, studied two years of personnel data from an unidentified U.S. retail chain.

They found:

» In areas where Hispanics made up at least 30% of the population, as is the case in many areas of Florida, Hispanic managers hired more Hispanics and fewer whites.

» Replacing a black manager with a white, Asian or Hispanic manager in a store in the South caused the share of newly hired African-Americans to fall from 29% to 21%. The effect was less pronounced outside the South, but the African-American share of new hires still fell from 21% to 17%.

» When a black manager replaced a white manager, white employee turnover increased 15%.

Why the differences? All managers, regardless of race or ethnicity, hire those who live close to them. A black manager in a predominantly black neighborhood will have a predominantly black hiring network. That manager also might have fewer white employees because whites self-select out of taking jobs with black managers.

Giuliano and her co-researchers say dismissal and promotion-rate data suggest some form of managerial discrimination is at work.

Tags: Business Services, Education

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