Middle managers will decide diversity drive

Firms are at pains to promote diversity in their leadership and at the entry level. But what about the vast mass of employees in between? Socially minded investors need to have middle managers in their sights too.
The terms for middle management — “permafrost,” “the frozen middle” — are generally miserable. “Frontline managers” is often preferred. However they’re described, the divisional heads and group leaders who sit below an executive committee do much of the hiring, firing and promoting. They have the biggest day-to-day influence on employees’ working lives.
When the UK arm of auditor KPMG wanted to understand whether people from working-class backgrounds faced barriers at the firm, it found the most underrepresentation in its middle ranks. That exemplifies a wider issue with many efforts to diversify the workplace. Campus recruitment refreshes the bottom tier annually with a blank slate, and just a handful of board appointments can bring new perspectives to a company’s upper echelons. But it’s much harder to change the main body of an organisation.
At issue is the need for companies to pay just as much attention to attrition and promotion as they do to hiring. That may be more time-consuming and costly. But get it right, and the returns may be higher.
This currently appears to be a blind spot for leaders. A 2018 US survey by Boston Consulting Group found that older men (aged 45-plus) perceived recruitment to be where most obstacles to diversity lay, whereas women and ethnic-minority employees saw more obstacles in advancement.
“Firms have made progress on recruitment. What they haven’t done is figure out what’s going to happen once people have come in,” says BCG managing director and senior partner Matt Krentz.
A recent review by UK television and radio regulator Ofcom echoes this point. When it looked at the practices of British broadcasters, it found that not enough effort went into progression.
A high-quality pipeline of junior recruits can be weakened almost from the get-go. New starters need frank and constructive feedback on how to improve their performance to gain promotion. Might managers feel more comfortable giving that to those who match their particular demographic? Other obstacles can surface mid-career.

—Bloomberg