Race is predictor of corporate promotions, O.R. study suggests

December 10, 2000

A survey of black and white managers in a Fortune 500 financial service firm indicates that black managers report a slower rate of promotion and less psychosocial support than white managers, according to a study published in a journal of the Institute for Operations Research and the Management Sciences (INFORMS®).

Among African-American and white managers with equivalent education and training, white managers report double the promotion rate of their black counterparts, the study finds. As managers' training increases, the promotion rate rises for whites but not for blacks.

"The data suggest that blacks in this sample were treated differently than whites, and this differential treatment adversely affected important work-related experiences and outcomes," says the study's author, Erika Hayes James, Assistant Professor of Organization & Management at the Goizueta Business School, Emory University.

Examining Effects of Training and Ties
The study examines the career experiences of African-American and white managers. Two research questions guided the study: Are there work-related experiences and outcomes that differ between black and white managers? And if so, why do these differences exist?

In the past, two primary arguments have been offered to explain the disparity between blacks and whites in the workplace. On one hand, there is the belief that discrimination exists. On the other hand is the argument that factors other than race account for differences between blacks and whites. These factors include racial disparity in "human capital attainment" - education and training - and qualitative differences in one's "social capital" - social network characteristics such as demographic similarity and tie strength.

The author found that participation in company training significantly predicted reported promotion rates, but race remained a significant predictor. Contrary to predictions, social capital did not predict promotion rate, although black managers reported having less social capital than whites, and social capital, in turn, was related to the receipt of psychosocial support. No differences were found between blacks and whites in their receipt of career-related support.

Data was collected from managers in the headquarters of a firm in the financial services industry. The company granted the author permission to conduct the study on condition of anonymity.

Surveys were distributed through company mail to employees at manager-level and above. To obtain the maximum number of minority respondents, surveys were mailed to all 93 managers who were identified by the firm as African-American. From the entire population of white managers, a sample of 200 (representing 21% of all managers) was selected who held job titles at time of entry into the organization equivalent to those of the sample of black managers.

The samples were matched on this criterion to provide a comparison of promotion history for the two groups. Completed surveys were received from 127 respondents, 55 of whom were women and 44 of whom were black, for response rates of 47% for blacks and 40% for whites. The overall response rate was 42%.

Firm and Employees Suffer
The study's finding may have an impact both on employees and companies. "An important implication of these findings," says Prof. James, "is that organizations may be underutilizing a subsection of their work force."

Failure to promote qualified African-Americans means a company foregoes the contributions this group can make, which include, at a minimum, helping the organization to meet the needs and desires of a growing black consumer base, she says. Under-utilization can result in resentment, boredom, stress, and ultimately, unnecessary turnover among African-American employees, the study suggests. Moreover, as more blacks enter the workforce, and management positions in particular, the possibility of unfair practices assumes greater relevance, and such practices may open the door for future legal action against those engaging in them.
The study, "Race-Related Differences in Promotions and Support: Underlying Effects of Human and Social Capital," is by Erika Hayes James of the Goizueta Business School, Emory University. It appears in the current issue of Organization Science, an INFORMS publication. The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with over 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications. The INFORMS website is at http://www.informs.org.

Institute for Operations Research and the Management Sciences

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