“Diversity” at Google

“Diversity” at Google
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The brouhaha at Google regarding corporate “diversity” reminds me how confused I seem to be about this whole issue. In a nutshell, there are four things I find to be particularly perplexing.

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First, if it our belief that people should not be judged according to criterion like race and gender, then why are we judging them that way? Why is diversity defined in terms of variables that supposedly don’t matter?

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Second, in response to the first question, one possibility is that certain groups bring unique perspective to the corporate enterprise that helps promote the company’s success. However, even assuming that is so why should the criterion by which groups are defined be variables like race and gender? If the goal is to incorporate different viewpoints, I have found far more differentiation in perspective between fundamentalists and atheists than between men and women? That finding, if true, implies that diversity should be defined along religious lines. The same could even be said of political beliefs. It seems clear, however, that opening the door to corporate political “diversity” would be a nightmare.

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Third, what is wrong with the simple criteria that all people be treated fairly in terms of their ability to do the job? In that case, all a company has to do is make sure that variables like race and gender do not affect hiring, evaluation and promotion. Companies should not be in the business of making social policy (just as I argued early they should not be in the business of making climate policy) because they lack both the training and the standing. Those are issues best left to governments. Companies can benefit society by offering the best products and services they can at competitive prices not by deciding what social groups, if any, require special treatment.

Fourth, if there is a group that has been discriminated against so that their compensation and promotion fails to reflect their marginal product that is a great business opportunity. When Jeff Bezos concluded that traditional retailers were not taking full advantage of the internet his solution was to start Amazon, not lobby Walmart. In the same fashion, if good people can be hired at a bargain prices because of bias there is an opportunity to create value by hiring them in droves.

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Bradford Cornell is an emeritus Professor of Financial Economics at the Anderson School of Management at UCLA. Prof. Cornell has taught courses on Applied Corporate Finance, Investment Banking, and Corporate Valuation. He is currently developing a new course on Climate Change, Energy and Finance. Professor Cornell has published more than 125 articles and four books on a wide variety of topics in applied finance. Professor Cornell is also a managing director at BRG where he heads the practice on Climate Change, Energy and Finance. In addition, he is a senior advisor to the Cornell Capital Group and to Rayliant Global Advisors. In both capacities, he provides advice on fundamental investment valuation.
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