BUSN 4650 TEST 2

Off-ramps and on-ramps

From the class of 1981, 57% of stanford women graduates have left the workforce, Only 38% of female graduates from the harvard business school end up in full time careers, ⅓ of women holding an MBA are not working full time, 37% of highly qualified women leave the workforce at some point, whereas only 24% of men have taken off ramps, This creates a brain drain problem

3 sources of CI:

Head: what is the difficulty with asking people directly when entering a new culture about their practices... one must devise learning strategies , Body: your actions and demeanor must follow; it is not merely sufficient to know the forgeign culture, Heart: overcoming obstacles and being persistent

Corporate culture before the shakeup: Executive team:

His brother, scott plank was a high ranking executive, His friends and associates filled the executive rank, including good friends from the university of maryland, kip fulks

IBM

History of progressiveness and promoting equal rights, But Gerstner of IBM felt that IBM's senior executive team, like a lot of companies, did not reflect the diversity of its customers or even workplace, IBM's model had long been to promote diversity by ignoring differences, The corporate world when Gerstner took over was even more homogeneous than today ( e.g., female executives have increased 370%)

Performance?

IPOs were 11.5% less successful if partners shred an educational background. Shared ethnicity reduced an investments' success by 26.4% to 32.2%

How does a venture capitalist (VC) firm operate?

In essence, VCs give money to companies for stock/shares/ ownership in the invested company. A venture capitalist then works with the invested firm to improve their model, change products, etc, to bolster the company's profitability. Those who make decisions in VCs tend to be equity partners, meaning they make a share of what the VC firm earns. Everyone benefits from profitable investments. Difference between endowed traits and acquired traits?

Challenges

Individuals can struggle in the traditional hiring process, E.g., lack of eye contact during interviews, overly honest during interviews, Or even confidence issues derived from prior interview situations, Individuals can differ from the conventional notion of a "good employee", E.g., "solid communication skills, team orientation, persuasiveness, networkability, conformation to workplace culture", Companies seek to scale, which poses problems, The effect is the neurodiverse people can struggle to find employment in situations where they make the superior employee, Identification of candidates, Supervision

The issue

Initially, anecdotal evidence emerged of hosts discriminating against travelers based upon race, they simply refused to book them, A study comparing identical profiles with the variables being race and name demonstrated that black individuals were 16% less likely to be accepted, Black hosts were also less likely to be patronized by users, It would later be found that disabled individuals, those with arabic sounding names, same sex couples, and others were similarly discriminated against

Fenty

Introduced by Rihanna in 2016, Innovated 40 shades of foundation to span the range of skin tones, now 50, Fenty belongs to the parent company, LVMH, Named one of the most important inventions by time magazine

Why is this so?

Investments seemed as successful at the moment of investment

Companies can embody distinctive cultures, influenced by the larger culture and region in which they exist

It is common for people when joining a company to spend time learning the company's culture

Behavioral economics mixes economic theory and psychological theory

It suggests that people act irrationally in predictable ways

Halo effect:

Judging others similarly on all traits, assuming that because someone is good or bad at one thing they will be equally good or bad at another

According to the author of Neurodiveristy as a Competitive Advantage, which of the following is a reason why many companies have not sought to promote the advantages of neurodiversity:

Managers are unsure of how to manage neurodiverse employees. Companies are unsure of how to scale business models involving neurodiverse employees. Companies are unaware of the advantages of neurodiversity.

Lost reentry

Many women who off ramp have every intention of reentering the workforce, Only 74% of off ramped women reenter the workforce, And those who do reenter, Women lose 18% of their earning power, The disparity becomes greater as women climb the ladder until hitting a class ceiling (by the age of 40-44, women earn only 71% of male wages), 16% of off ramped women work part time

Industry effects

Most of the heritage brand have since introduced more lines based on a greater diversity of skin shades, Companies have also changed their social media content and advertising to mimic fenty's emphasis of different skin shade, Change the longstanding belief that darker skinned customers spent less on beauty care, Sephora and other retailers carry more shades as well

Neurodiversity:

Neurodiversity is the idea that neurological differences like autism and ADHD are the result of normal, natural variation in the human genome, Companies have begun to increase neurodiversity within their ranks, including autism, ADHD, dyslexia, and others, This involves official programs within hiring, training and employment processes, A primary goal is to achieve benefits of diversity that companies have so far missed out on, Affected individuals often need accommodations, as well

VCs diversity problems

Only 8% are women, 2% are hispanic/latino, 1% are black/african american

Anchoring bias:

Over-relying on the first piece of information obtained and using it as the baseline for comparison

Fundamental attribution error:

Overemphasizing personal factors and under-estimating situational factors when explaining people's behavior

Confirmation bias:

Paying more attention to information that reinforces previously held beliefs and ignoring evidence to the contrary

Other principles:

People respond to incentives, Transactions costs affect behavior

Ingroup preference bias:

People tend to divide themselves into groups, and then attribute positive attributes to their own group

Benefits

People with types of neurological disorders can demonstrate certain strengths in rates greater than the general population, Ability to detect patterns and solve puzzles, Memory, Mathematics, It has increased diversity and understanding across spheres beyond neurodiversity, E.G., australian defense department: examination of logs and data

Zero risk bias:

Preferring the choice that provides certainty of a smaller benefit as opposed to an alternative with more risk and greater potential benefit

Exodus from the workforce,Push v. pull factors

Pull: Childcare. 43% of highly qualified women will leave the workforce for childcare, Elderly parent: 24%, Personal health: 9%

How do VCs choose their partners (e.g. invested company)?

Shared race/gender: sharing a race increased propensity of working together by 39%. Shared educational backgrounds (increases propensity by 34.4%)

On the job

Small grounds , Half days, Lowkey training system, Support circles

System 1 and stem II thinking:

System 1 involves quick, automatic, intuitive and reflexive thinking (95% of thinking). System II is when one is actively considering and deliberating decision

Executives and workforce

The CEO acknowledged that he had not considered how their startup might interact with biases. He also pinned part of this landscape due to the lack of diversity in the founders:, He stated that AirBnB "may have beel slow to address concerns about discrimination because the company's employees are not sufficiently diverse."

Other issues involving race:

The company employs a smaller percentage of latino and black individuals than the general public, When the company endured layoffs, it also affected latino and black employees disproportionally, Sued for discrimination (specifically, violating oregon's public accommodation laws, but most individuals must arbitrate)

UNDER ARMOUR The struggle...

The company's stock was valued as high as $40/share a few years ago, but has declined to $20/share, 3% decline in sales, The company is now operating at a loss of millions in revenue whereas competitors are making profits, Under armour was once second internationally and domestically, but has been surpassed on both fronts

Corporate hierarchy

The founder is kevin plank, Former CEO and current executive chairman, and brand chief, Owns 15% of the company

Social consequences:

This tends to force women to scale back their ambitions, In the business sector, fewer young women own up to being highly ambitious, The cycle: "as a woman's ambitious stalls, they are perceived as less committed, receive worse assignments, and lowers ambitious further"

Challenges:

Unexpected events, Social interactions, Perfectionist tendencies

Autism spectrum disorder

Up to 80% unemployment, Rampant underemployment

Initial timeline, Four questions:

What is necessary for your constituency to feel welcome and valued at IBM, What can the company do to maximize your productivity, What can the company do to influence your constituency's buying decisions?, Which external organizations should IBM partner with to understand the needs of the constituency?, Determine vital issues, Creation of network groups below the executive level

Before the new program detailed in Diversity as Strategy, IBM's non-discrimination strategy can be described as

a color blind strategy

The Diversity Task Forces established by IBM were comprised of

almost entirely of executives

Social diversity:

avoid tactics such as referrals and similar hiring strategies likely to reproduce a company's profile

The Caste System involves a type of:

class, ethnic, and national origin discrimination

The economics of rationality

do not purport to explain every single individual decision, but that, on balance, groups of people are predictable

The majority of women who leave the work force ("off ramping"):

expect to reenter the workforce

If an executive in charge of hiring fails to hire a more diverse staff because others in the company do not value diversity, this would be best explained by:

group think

Under Armour's business:

has traditionally profited and grown until about 2016 when it began to stall and decline

An example of cultural intelligence mentioned in the article would entail:

observing and replicating the manner in which others in the company greet each other and show respect

Challenges of business culture:

" human actions, gestures, and speech patterns a person encounters in foreign business setting are subject to an ever wider range of interpretations, including ones that can make misunderstandings likely and cooperation impossible"

Goleman: one must exhibit a propensity to suspend judgement to think before acting

"But occasionally an outsider has seemingly natural ability to interpret someone's unfamiliar and ambiguous gestures in just the way that the person's compatriots and colleagues would, even to mirror them" What is the difficulty with respect to CI if one is socially accepted among their peers in their culture?

Start early-engrain diversity goals in the firm's development

"Homogenous firms become more homogenous as they scale up", Focus on objective hiring measures, A company must be more intentional than a hollow policy

Cultural intelligence relates to emotional intelligence:

"a person with high cultural intelligence grasps what makes us human and at the same time what makes each of us different from another. A person with high cultural intelligence can tease out of a group's behavior from those features that would be true for all groups, those peculiar to this group"

According to Diversity Dividend, it is best for a firm to diversify:

(B) As early as possible

Profile options

1. Status quo: emphasize pictures and profiles to foster a sense of community and build trust, 2. Something in the middle, Make pictures less salient, provide online courses on discrimination and bias, and help victims of bias find alternative lodging, Nudged people to instant book by making it the default, In terms of hosts, removed pictures, Prevent hosts from booking stays if they've already rejected a guest's application during the same time period, 3. Eliminate pictures and names ( which helped mortgage lending processes years ago)- akin to competitors like expedia

Push:

17% job not satisfying or meaningful: lack of stimulation worse than overworked, In contrast, men often ramp to switch careers, obtain extra training, Or starting a business (ex. Strategic repositioning)

Plans to change

3-year turnaround plan, Change the nature of the clothes, Host focus groups and try on event, Better understand the language used by women rather than gender neutral language--"we've been working behind the scenes on updating our fit communication to use relatable and understandable language specifically for her-- translating technical language into conversational language that tells her what our products actually do for you", Hired several women for top executive positions, Hired other outside executive

What is the stakeholder model popularized in europe?

A corporation can act in the best interest of the community members, partners, and other actors who rely on the corporation even if not in the corporation's best interest, This is the implication for promoting diversity in and outside the corporation

Bandwagon effect:

A person is more likely to go along with a belief if there are many others who hold that belief. Other names for this are herd mentality or groupthink

Discrimination is an economic puzzle

A study of bank loans found prevalent discrimination, but this made little sense. If a bank's goal is to make money, why would it refuse profitable loans based on race, gender, etc? In heart of atlanta, the hotel sued to maintain segregation, which caused the hotel to sacrifice profitable transactions

Why was this market missed?

According to a nielsen report, "african american consumers spend more than 9 times more on hair products than any other groups", In 2018, black consumers spent 54.4 of the 63.5 million that was spent on ethinc hair and beauty aids. In 2019 they were in the 79th percentile of mass cosmetic consumers compared to white consumers, who were in the 16th percentile, Black people are about 13 to 15 percent of the US population, according to US census data and other sources. But they spend more than that proportionally in categories like fragrances, bath products, men's toiletries, and ethnic hair and beauty aids, according to a 2019 Nielsen reponst. The black hair care industry alone is worth now more than 2.5 billion, Heritage brands have now followed suit

The sharing economy:

Airbnb is a platform connecting owners of houses/condos/ apartments with those who wish to rent one on a short term basis, Airbnb sets many of the terms of the deal, It takes a percentage of each rental, The matching process typically occurs when a person requests the stay at the host's who, based in part on one's profile, free range whether to rent the house

Who runs a corporation?

All corporate power is located in the board of directors, Shareholders, owners of the company, possess very little power to control a company, In whose best interest must the board operate a company? In the interest of shareholders, The corporation: a board has fiduciary duties which they can be sued if they breach, Specifically the long time belief is that the board must serve the shareholders' best interest, the shareholder model, This would seemingly prevent corporations from serving social justice missions unrelated or even detrimental to creating shareholder value

Ostrich effect:

Avoiding bad news about a decision by ignoring data that might be negative

Empirical analysis

Black users are 16% less likely to be accepted as a guest, "We estimate that a host incurs a cost of roughly $65-$100 in foregone revenue by rejecting an african american guest.", The cost occurs if the host refuses to rent and is unable to re-rent the location, "37.9-59.4% of hosts found a replacement guest', Hosts pay 3% to AIRBNB while users pay a service fee to AIRBNB up to 14.2% , AIRBNB conducted a 90-day study with the help of eric holder and the former ACLU director to confirm discrimination of the platform

Sephora

Commissioned a study that specifically found ingrained racism in the retail experience, This occurred after public events of allege racism occurred in its stores, The 15%pledge of carrying 15% of its products from black owned companies, New marketing that includes greater diversity/inclusivity, Better educate beauty advisors about diversity retailing, Reduce presence of third party security guards, Zero-tolerance policy

Recruitment;

Companies have teamed with social partners, Government or non profit organizations committed to helping those with disabilities, Help companies navigate local laws, Suggest candidates, Assist in screening, Arrange public funding, Provide mentorship and training, Interviews can take the form of the hangout- non formal setting to demonstrate abilities

According to economic theory:

people act rationally in the aggregate

Traditionally, a corporation's board of directors and executives had a fiduciary duty to promote the interests of:

shareholders

Which was is NOT one of the three sources of Culture Intelligence?

soul

It appears that

the negative value occurred during the process of improving the underlying company's equity

According to economic theory, the cost for a company to change course is called

transaction cost

Mentorship programs:

while might foster diversity, hierarchical and could embellish divisions

Other remedies:

Creates a 12-person team of engineers, data scientists, and designers to understand bias on the platform, Pledged to increase the number of US based employees from underrepresented populations

AirBnB aftermath:

Donated $500,000 to the NAACP and other organizations dedicated to racial equality/justice, "I'm proud of what we've done here", CEO:"if we're bold right now, we're going to not look bold by history standards. We're going to look like, oh, you just barely did enough"

Subcultures may differ within a company.

E.g sales team v. engineers

Lasting initiatives,

EXITE , Inclusive marketing , Government contracts involving disabilities, Management is expressly graded on their ability to foster diversity, Successes: after an executive became a tasks force sponsor, his or her division make significant progress

Structure:

Each task force was comprised of 15-20 senior managers from a certain demographic... members had to be an executive and belong to the demographic... three groups- people with disabilities, native americans, and LGBTQ- drew from midlevel management due to the lack of people in the executive rank, Each group had two or more cochairs as well as an executive sponsor to serve as a liaison with top management, and especially Gertsner, This executive sponsor was typically not from the group , Each group was assigned a small HR team and a lawyer

Economic theory

Economics predicts behavior in the aggregate based on the assumption that people act rationally- the rational actor, Part of rationality is that actors can determine their best utility, money, or anything that one values, and select the best strategy to accomplish it

At times, our brains process information is ways that makes little economic sense:

Eg. the sunk cost fallacy, Prospect theory, Groupthink, Hot hand fallacy

The initiative

Eight task forces focused on different groups , The purpose... to uncover and understand differences among the groups and find ways to appeal to a broader set of employees and customers... it was market based: "it is about understanding our markets, which are diverse and multicultural", Examples of initiatives:... the fostering of small and midsize businesses, which involves more women and minorities than large corporations, The disabilities task force created an initiative of making products more inclusive, which enabled to score more government contracts-- assumed to make more than a billion dollars in the next five years

The beauty industry historically

Emphasized euro-centric visions of beauty, Creating shades of foundation for primarily lighter skins, Created numerous products meant to lighten skin, Ad campaigns prioritizing certain types of features and people, According to the author, the "biscuit experience"..." if the moment you try the darkest shade, in a foundation range and realize with a crushing sense of rejection that the brand was not created with you in mind", None of the largest brands have hired a level of diversity representative of the american public

Reverse the brain drain:

Employers can't treat women as men, Women tend to have to take more time off than men, Or demand a job with reduced hours, Additional flexibility (can be as important as compensation), Remove the stigma

The issues tend to arise at the arc of a woman's career

Especially in up or out careers: the difficulty of the relentless winnowing process, This can cause women, at best, to be reassigned to a staff position, The solution may still slow the process, Stop burning bridges: 5%

Corporate culture:

Executives could charge adult entertainment to the company, Social events in which women were invited based upon perceived attractiveness , "Male dominated" , Nepotism

Why did under armour languish?

Failure to capitalize on the athleisure trend, Sexist practices, strip club on company dollar, lack of women in company

Fenty's success

Fenty beauty connected emotionally with women who had long been treated as though they did not exist by the beauty industry , The darkest shades of fenty sold out first, demonstrating the beauty industries failure to serve this market, Generated 100 million in first 40 days, Key was authenticity:" not only did fenty preach for inclusivity through their product line, but they practiced it in their advertising and social media engagement- especially visible in their twitter and instagram growth strategies", The numbers don't lie, while most beauty brands have a one percent fan engagement average, fenty beauty's instagram account was able to reach 10.41%, and generated almost 80K influential posts within the first month, Their youtube channel has 132 million views