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By Alex Mozell

White People

The market may be brutal, so goes the theory: thousands of people are laid off at a corporate whim, the price of HIV medication skyrockets, oil, arms, private prison, and tobacco companies bring global climate change, warfare, injustice, and lung cancer to the masses; colleagues backstab, bosses harass, and the CEO runs away with millions.  But, all this advances the greater good, continues the theory, for through the tumult, the market transforms selfish tendencies of humankind into productivity.  It seamlessly pursues output and growth.  What may appear on the surface to be cruel injustice is actually to be lauded, for suffering of a few is bounty for the rest.   This theory, informally termed, “Neoclassical Economics,” assumes market efficiency, where businesses cannot sin, for sin is inefficient, and inefficiency does not exist in the market.

John Kenneth Galbraith, in his book, The Culture of Contentment, wryly quips that an entrepreneur, and he includes corporate executives in this category, may fail, but they can do no wrong.  Or can they?  To do right, by Neoclassical standards, is to use resources to their most efficient ends.  To do wrong is to misuse them.  Firms spend a lot of money on their people.  How well do managers make hiring, firing, and promotional decisions?  Is it based on productivity?  Or is it based on other factors?  The answer, to a disgraceful extent, is that it is based on other factors.  Some of these are listed below, and range from the egregious to the absurd.

To begin with the egregious, we should understand, in economic terms, American racism and sexism, deeply ingrained in American culture.  A woman, as it is often quoted but never corrected, earns 77% the salary of a man.  Black men earn 76% as much as whites, and black women earn 64%.  For Hispanic men, the figure is 60%, and for Hispanic women, it is 56%.1  American Indian and Alaska Native median household income is just 68% of the national median.2

Sexism and racism are thriving, mass crimes, a national disgrace, and yet tacitly accepted by most Americans, who either ignore it, deny it, or justify it.  Those who ignore it bask in privilege, assuming their position the result of hard work, after climbing the long staircase to success, unaware that the steps along the way were the backs of the disenfranchised.

Those who deny it claim that racism and sexism are dead, their remnants deposed by the Civil Rights Movement decades ago.  They are blind to the statistics before their eyes (which I intend boldly to report).  One study3 showed, after submitting otherwise identical resumes to employers, that black applicants received a callback approximately two thirds as often as an equally qualified white competitor.  Racism and sexism follow us everywhere, hidden in plain sight, in the guest list to parties, one’s tone of voice, and expectations of competence.

Those who justify it argue, “It is due to human capital differences” (in this context, human capital mostly means education).  But in the above study, both applicants had completed exactly the same education: they attended the same university, with the same major, earned the same grades, as well as the same awards.  Preference for the latter applicant is racist, nothing more.

Following into the absurd, let us first consider physical appearance.  Each extra inch of height will earn a man over $500 a year.4  Obese men stand to lose more than $4,500 in earnings, and obese women over $8,500.5  As The Economist6 explains, “Overweight people…are judged incapable of controlling themselves, let alone others.”  This insulting quip is founded on exactly zero science, only the blind notion that managers make the right decisions, which is the very topic of this post.

Women who wear makeup earn an extra 30%,7 and according to the London Times, “64% of directors said that women who wore makeup looked more professional.”  Blonde women enjoy a 7% bump.8  Beauty, itself, offers 5% more, but unattractiveness penalizes women 12%.9  Note, however, that hiring managers for “masculine jobs” discriminate against women who are “too beautiful”.10  Women with children are offered $11,000 less in starting salary,11 and a male CEO, on average, will pay his female executives $46,500 less each year than her male colleagues.12

“Agreeableness” characterizes people who are compassionate, cooperative, trustworthy, helpful, and get along well with other people, and is a personality measure used in psychological research.  To test for this trait, a psychologist will ask, “Do you sympathize with others’ feelings?” “Do you feel others’ emotions?” or “Do you make people feel at ease?”  Disagreeable people, by contrast, “insult people,” are “not interested in other people’s problems,” and “feel little concern for others”.13

As you might have guessed, people who care about other people are butchered in the arena of corporate politics, women losing 5% in earnings, and men losing an obscene 18%.14  Perhaps men are expected to uphold gender normative standards when conducting themselves with colleagues.  Or perhaps women already are seen to have these qualities, accurate or inaccurate.  People who would foster a corporate culture of teamwork and transparency are skinned.

As above, cooperative women earn less, but so do the overly bold.  “Assertive” women’s “perceived competency” drops by 35% and their “perceived deserved compensation” by about $15,000 annually.15  Joseph Grenny and David Maxfield authored a white paper15 explaining to women, “A brief framing statement – that demonstrates deliberation, forethought and control” could mitigate their male boss’ consternation.

According to the authors, women might preface a bold statement with, “I’m going to express my opinion very directly; I’ll be as specific as possible,” “I see this as a matter of honesty and integrity, so it’s important for me to be clear about where I stand,” or finally, “I know it’s a risk for a woman to speak this assertively, but I’m going to express my opinion very directly.”  It is terrifying that they give such sexist advice.  And it is even more terrifying that it might actually work.

Being in the right club will get you more money: church attendance pays,16 as does drinking alcohol, the latter adding 8% for women and 21% for men.17  Married men earn 9% more.  Each letter in a person’s first name, after the fifth one, will cost them around $3,600 a year,18 making buying vowels on Wheel of Fortune look like a bargain.  The top-earning names are (for men) Tom, Rob, Dale, Doug, Wayne, (and for women) Lynne, Melissa, Cathy, Dana, and Christine.18  To be absolutely clear (and it should be by now), corporate culture (only a reflection of American culture) is discriminatory and superficial, which ultimately hurts its bottom line.

To illustrate my point furthest, consider the psychopath: sans empathy for others or remorse for their sins, possessing underlying sadism, meanwhile camouflaging into their environment, perceived by you and me as completely normal.  They are usually charming, often intelligent, manipulative, and strategizing.  Their only motive is personal gain: power, money, and sex, usually in that order.

It happens that psychopaths do well in business.  Paul Babiak and Robert Hare, pioneers in the field of psychopathy research, estimate that psychopaths are overrepresented as CEOs almost four fold.19  To get their way, according to Marcel Faggioni and Michael White,20 psychopaths may be dishonest and manipulative, publicly humiliate employees and colleagues, isolate colleagues from organizational resources, sabotage others’ work, steal credit, set subordinates up to fail, and invade privacy.  A psychopath will poison the work environment, creating animosity all ways.  On a personal note, I worked for fifteen months under a man I am very sure was a psychopath, and I could not have given you a better description of him than Faggioni and White depict, above.

To illustrate the extent to which psychopaths leech away profits, I will point to the work of Clive Boddy,21 who has studied psychopaths in the workplace.  According to his research, psychopathic managers are more likely to cause firms to become legally vulnerable, shareholders to lose money, employees to perform more poorly, job satisfaction to fall, staff to leave, or else to take more vacation time, and workplace conflict to bubble to the surface.  According to him, “The ethical standards of entire corporations are badly damaged with a psychopath in charge.”  Any business professor will tell you that all of these should fiercely be avoided.  But psychopaths bring it along with them.  And they are the ones with the golden parachutes.

Managers strive to increase shareholder value, yes, but they also fancy other ends.  They want their employees to look like themselves (white and male), to be attractive (tall, average weight, and with above-average complexion); they want good churchgoers and people who like to drink.  And of course people with not too many letters in their name.  Alternatively, some people “make it to the top,” even if they trample their colleagues along the way, damaging corporate culture and productivity.  Corporations with more women as board directors perform better than those without,22 but women are kept out of top spots.  Neoclassical economists should decry the emphasis on appearances over profits.  Such inefficiency!  But they do not.  Instead, they justify all manner of prejudice by myriad arguments and explanations, just as apologists for sexism, racism, and other forms of discrimination have done for centuries.

 

 

1 “Median Annual Earnings by Race and Sex,” infoplease, 2013

2 US Department of Health and Human Services, Office of Minority Health

3 Marianne Betrand & Sendril Mullainathan, “Are Emily and Greg More Employable than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination”

4 Timothy Judge, “The Effect of Physical Height on Workplace Success and Income: Preliminary test of a theoretical model”

5 C.L. Baum, “The wage effects of obesity: a longitudinal study”

6 The Economist. “The Look of a Leader.” (September, 2014)

7 Nancy L. Etcoff, Shannon Stock, Lauren E. Haley, Sarah A. Vickery, and David M. House, “Cosmetics as a Feature of the Extended Human Phenotype: Modulation of the Perception of Biologically Important Facial Signals”

David W. Johnston, “Physical Appearance and Wages: Do blondes have more fun?”

9 Daniel S. Hamermesh, Beauty Pays: Why attractive people are more successful, Yale University

10  Stefanie Johnson, Organizational Behavior and Human Decision Processes

11 Harvard Business Review Staff, “Women in the Workplace: A research roundup”

12 David Newton & Mikhail Simutin, “Of Age, Sex, and Money: Insights from corporate officer compensation on the wage inequality between genders”

13 Löckenhoff & Costa, “Big Five Personality Traits,” Encyclopedia of Social Psychology, 2007

14 Livingston, Judge, “Do Nice Guys – and Gals – Really Finish Last?”

15 “Women Judged More Harshly when Speaking Up Assertively,” VitalSmarts

16 Jonathan Gruber, “Religious Market Structure, Religious Participation, and Outcomes: Is religion good for you?”

17 Bethany Peters of Analysis Group and Edward Stringham of San Jose University, “No Booze?  You may Lose: Why drinkers earn more money than nondrinkers”

18 “On a first-name basis with success?  Your mom chose your name wisely.”  The Ladders

19 Babiak, Hare, “Snakes in Suits: When psychopaths go to work”

20 Faggioni and White, “Organizational Psychopaths: Who are they and how to protect your organization from them”

21 Boddy, “Corporate Psychopaths: Organizational destroyers”

22 Carter & Wagner, The Bottom Line: Corporate Performance and Women’s Representation on Boards