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Alphabet’s – Google’s Parent Co – Shareholders Don’t Think Workforce Diversity Increases Profits

One of the commonplaces de nos jours is that workforce diversity increases profits within a corporation. There are a couple of problems with this idea but the truly important point here is that it tends not to be the shareholders who think this. And they do own those companies. So, if they don’t believe it then it’s not something that they’re going to insist management does, is it? Which is the case we’ve got here at Alphabet, the company which owns Google:

Alphabet Inc’s shareholders, including top executives, voted down several proposals on Wednesday, defeating campaigns to tie pay to diversity goals and to get the Google parent to provide more data about efforts to moderate user-generated content.

Our first problem with the sort of diversity being talked about here is that no one actually does mean diversity. Diversity in points of view is most certainly important within an organisation. As it is across the economy itself of course. For that’s how we get that Wisdom of the Crowds and all that which is the very way that we zero in on what works. What is meant is that we must have diversity of melanin contents and gonadal accoutrements – both actual and desired. At the same time as it is insisted that people are no different whatever their melanin enhancement nor gonadal accoutrements. This is not a rational pair of views to hold. If there are group differences that have any validity concerning employment then we will not be surprised to find different concentrations in different industries or positions. And if there aren’t such differences then it doesn’t matter what the representation is, does it?

But, you know, logic and modern politics:

Alphabet Inc. shareholders today voted down several proposals that would tie pay to diversity goals in an effort to promote equal wages among females and people of color.

“At Alphabet, diversity and inclusion activities by individual contributors have been met with a disorganized array of responses, including formal reprimand,” said Google software engineer Irene Knapp during the meeting. “This chilling effect.. has impaired company culture.”

That may well be what Ms. Knapp believes but quite obviously it’s not what the balance of shareholders do.

Alphabet management, which effectively has voting control of the company, had moved against the recommendations which came from company staff.

Employees said that Google’s gender pay gap and lack of diversity could make it difficult for the company to hire and retain workers, posing a long-term risk to its ability to do new stuff.

The people paid to manage the company don’t think that this is a problem that management are going to have to contend with. Which, given the queue of people hoping to work at Google seems like a reasonable assumption on their part.

Google’s head of HR, Eileen Naughton, said the company is committed to reaching its goal of having a “market supply” representation of women and minorities by 2020.

That however seems like a reasonable enough goal. Companies like Google do indeed thrive by employing talent. Hiring from the available talent pool while being blind to melanin or gonads while doing so sounds like a pretty s**t hot management decision really. Rather than what the activists’ demand is, hiring to meet melanin and gonad targets regardless of the talent.

The specific issue voted upon was:

Shareholders request the Board Compensation Committee prepare a report assessing the feasibility of integrating sustainability metrics, including metrics regarding diversity among senior executives, into the performance measures of the CEO under the Company’s compensation incentive plans. For the purposes of this proposal, “sustainability” is defined as how environmental and social considerations, and related financial impacts, are integrated into long-term corporate strategy, and “diversity” refers to gender, racial, and ethnic diversity.

OK, so all can argue mightily about this. But here’s the thing – that company belongs to the shareholders. It is their property. And if they don’t want their company to do this that’s that. That’s what private property means. If they’re wrong then over time they’ll lose their money as the company goes bankrupt. If they’re right then they’ll sail on most profitably. That is, we’ve already got a system which deals with their beliefs, the rightness and or wrongness of them, that very market system in which the company swims.

Which is the real point here. It doesn’t matter who is right here. We’ve already got a system to determine that and punish those who are wrong. Nothing else needs to be done, does it?

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6 years ago

Regarding “both actual and desired” — Did the shareholder proposal of Ms. Knapp (who I imagine owns 5 shares jointly with the other members of her church group) specify what benefits would accrue to Alphabet by ensuring it had “diverse” levels of men pretending they are women?

6 years ago

My party membership card states “none shall be enslaved by conformity”, and I point it out whenever I bring my diversity of opinion to party meetings and keep reminding them about the foolishness of ignoring democracy.

6 years ago

If we’re talking ethnically diverse, Google is very diverse. However, the diversity police don’t consider much to be diverse. For example, a typical Silicon Valley workplace, in addition to recognized Asian, East Indian, Hispanic, or even the rare black minority, might also contain people born in Iran, Ukraine and other east European countries, Lebanon, Azerbaijan, and I even knows some Afghans. None of these legally add to your diversity stats, no matter some of the unusual odors emanating from the office microwave. However, if you are in a diverse environment (whether officially or effectively) it helps to make a strength… Read more »

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