The Downsides of Diversity Quotas

Diversity, equity, and inclusion (DEI) programs have fast become a norm at most organizations with courageous executives attempting to right the wrongs of the past, all while trying to generate shareholder returns and keep sweat-shop whistleblowers quiet.

These programs aim to address past discrimination and systemic injustices by providing opportunities to historically disadvantaged groups.

Diversity quotas are a key tool of the trade of DEI practitioners. Such quotas target fair representation across gender, racial, ethnic, and sexual orientation lines, often seeking 50/50 gender parity at the board and senior executive level.

On the face of it, such initiatives make sense.

Diversity quotas can level the playing field, create a more equitable society, improve economic outcomes for marginalized groups, and encourage talent and skill development for individuals from all backgrounds.

But at what cost? And for how long?

In this think-piece, I explore some of the downstream consequences and how they might far outweigh the short-term alleged benefits.

Diversity Quotas Perpetuate Stereotypes

Diversity quotas perpetuate prejudice and unfair stereotypes by suggesting that people from certain groups can only get aspirational roles with a leg up.

This can stigmatize hires as colleagues might think that they were selected because of their race, gender, or sexual orientation as opposed to their abilities.

This has been a moot point for recent Hollywood period pieces featuring Black actors portraying white characters or in the all-female reboot of Ghostbusters — which generated a net loss of $75 million.

Diversity Quotas May Be a Form of Reverse Discrimination

Diversity quotas can be perceived as a form of reverse discrimination where perfectly qualified or ideal candidates may be overlooked in favor of less qualified candidates who belong to the desired group.

This can often occur while downplaying or dismissing the relative lack of privilege that the ideal candidate might have, by assessing them purely based purely on their genitalia or skin pigment.

For example, one-quarter of white Americans live in poverty, and this number has been trending up since 2019.

Is there no difference between the white first-generation American son of Yugoslavian migrants who went to public school and whose non-English speaking parents spent their lives working in factories, and the sixth-generation white Anglo-Saxon protestant American who went to an elite private school and whose parents work for Goldman Sachs?

Judging people purely based on color or gender ignores such (inconvenient for some) realities.

Check out my conversation with Josh Szeps on affirmative action in the workplace, above.

Check out my conversation with Josh Szeps on affirmative action in the workplace, above.

Check out my conversation with Josh Szeps on affirmative action in the workplace, above.

Diversity Quotas Compromise Merit

Diversity quotas compromise merit-based systems and can create a culture where conscientiousness and hard work play second fiddle to entitlement. This can create bad incentives and have devastating consequences on organizational performance and outcomes.

Lee Kuan Yew, the founding father of modern Singapore, understood the importance of merit-based systems in building an economically prosperous society.

When Singapore gained independence in 1965, it was a small, resource-poor country with a largely unskilled workforce. LKY recognized that in order to transform Singapore into a prosperous nation, it was essential to prioritize merit and hard work above all else.

He implemented policies to promote education and skills training and established a system of meritocracy where individuals were promoted based on their abilities rather than their connections or social status.

He was quoted as saying that “The acid test of any country is whether it can nurture a meritocracy in its public life, where the best and brightest, regardless of race, language, or religion, can rise to the top in the public service, and later on in the political leadership.”

When we throw out this concept, we move one step closer to the economic outcomes of the Soviet Union or the German Democratic Republic, where citizens would often wait in line for several hours for cabbage and a potato.

Negative Organizational and Societal Outcomes

Speaking of performance, when you elevate lesser candidates to positions of authority, is true that they might grow into the role. Humans have a tendency to rise to expectations. But we are also susceptible to drowning when thrown into the deep end, and in the case of executive leadership, making bad decisions.

This can affect organizational outcomes, shareholder returns, and headcount growth.

When organizational performance lags, we cut back on hiring, and start firing.

This not only means fewer jobs are created for diverse people to assume, but it also means negative downstream societal and economic consequences.

And the communities that are hit the hardest during economic slowdowns tend to be the poorest, as was the case during the pandemic of 2020 and the GFC of 2008 - the same communities that diversity quotas are said to serve.

Presidential candidate, Ron DeSantis speculated that the recent downfall of Silicon Valley Bank had to do with its diversity quotas. “They’re so concerned with DEI and politics…I think that really diverted them from focusing on their core mission”, he said.

Diversity Quotas Create Resentment and Toxic Workplace Culture

Diversity quotas can create resentment, not just amongst historical power brokers such as straight wine men, but also people of color and women who got to the top by virtue of hard work and merit.

This can create negative cultural outcomes such as passive aggressiveness and glass barriers internally, as well as silent majorities who bicker behind closed doors. This can also pre-empt a brain drain, as high-performing talent who don’t belong to groups favored by DEI programs look elsewhere for more merit-based workplaces.

Diversity Quotas can be a Distraction

Diversity quotas risk becoming a distraction — a band-aid on a broken leg, and don’t address the root cause of societal discrepancies such as economic, social, and cultural circumstances that lead certain groups to lead more or less prosperous lives.

Diversity Quotas Ignore Diversity of Thought

Focusing purely on skin-deep factors ignores diversity of thought, which is perhaps the most important type of diversity when it comes to creativity and decision-making.

For example, the white conservative midwestern farmer is probably going to have more in common ideologically and experientially with his black neighbor than a white liberal entrepreneur on the west coast. Judging people purely based on color or gender ignores such diversity.

Diversity Quotas Ignore Biological and Cultural Realities

Diversity quotas can often ignore biological and cultural predispositions, such as the fact that men are predisposed to working with things, whereas women are more predisposed to working with people.

This partly explains why we find more men in tech and in mechanic shops, and more women in nursing and human resources.

Of course, there are systemic barriers in place that have kept perfectly qualified women marginalized when it comes to say, tech roles, but aiming for 50/50 parity ignores the fact that the pipeline of suitable women may not be as large as men because most women simply don’t want to work in tech or in STEM, despite our urging them to.

Diversity Programs Ignore the Progress We’ve Made

Diversity programs ignore the incredible progress that we have made in the space of civil rights over the past century.

Are we simply going to pretend the following never happened?

  • The ratification of the 19th Amendment to the U.S. Constitution in 1920, which gave women the right to vote.
  • The Civil Rights Act of 1964, which prohibited discrimination on the basis of race, color, religion, sex, or national origin.
  • The Voting Rights Act of 1965, which removed barriers that prevented African Americans from voting.
  • The Americans with Disabilities Act of 1990, which provided protection against discrimination for people with disabilities in areas such as employment, public accommodations, and transportation.
  • The legalization of same-sex marriage in 2015, which recognized the right of same-sex couples to marry in all 50 states.
  • The appointment of the first African American President, Barack Obama, in 2008, and the first woman and woman of color Vice President, Kamala Harris, in 2021.

This says nothing of the rising tide of economic prosperity that has lifted not all but most ships.

It was a very different world at the dawn of the 20th Century, and one that few of us reading this would have liked to inhabit. If we did, we likely would have found ourselves deep in a dirty and hot coal-mine or sitting at a spinning jenny for 12 to 14 hours a day, six to seven days a week, for little more than 15 shillings (about a buck!).

By trying to arbitrarily fast-track the righting of past wrongs, we appear to be throwing the baby out with the bathwater and compromising everything that has gotten us to this point, and creating more harm than good.

Final Thoughts

Despite these concerns, it is important to address past discrimination and systemic injustices. One alternative to diversity quotas is to focus on hiring based on ability, regardless of race, gender, or other protected characteristics.

This requires getting better at identifying and selecting the best candidates for the job, while also promoting education and skills training to ensure that everyone has an equal opportunity to succeed.

The application of diversity quotas appears a simple ‘solution’ to the complex problem of hiring and implicit bias.

It is also important to address the root causes of societal discrepancies, such as economic, social, and cultural circumstances that may lead certain groups to lead more or less prosperous lives.

In conclusion, while diversity quotas may have some benefits, there are also valid concerns about their potential negative consequences. Ultimately, it is important to strive for equality — not equity, and fairness across all peoples, while also promoting merit-based systems and addressing the root causes of inequality.

This might sound difficult — because it is, but that's no reason to take the easy road, particularly with the foundations of western liberal democracies at stake.