How Outlawing Collegiate Affirmative Action Will Impact Corporate America

On June 29, 2023, the Supreme Court of the United States ruled 6-3 in favor of outlawing the use of race and ethnicity as factors in college admissions. This was a momentous decision that stands to have widespread societal and organizational implications. Although the scope of the ruling was limited to college admissions, we can draw upon existing data to forecast the impact on corporate America. The evidence clearly points to two key outcomes: First, collegiate patterns of racioethnic diversity will change fairly dramatically; and second, these changes will have considerable downstream consequences for workplace composition as well as patterns of racioethnic inequity across a host of other measures.

As tempting as it might be to view those conclusions as hyperbolic, research on three decades of state-level affirmative action bans strongly suggests otherwise. In fact, eradicating affirmative action has led to reductions in the proportions of underrepresented (Black and Hispanic) students in undergraduate and graduate programs, particularly in science, technology, engineering, and math; it has also led to fewer underrepresented students enrolled in and graduating from medical and law schools.1 These effects tend to be lasting — and, importantly, implementing alternative policies that don’t explicitly consider race and ethnicity has done little to counter them.2

Extending these state-level findings to the national level suggests that employers will have less racioethnically diverse college-educated talent to draw upon when filling their vacancies, particularly from premier institutions. Alternatively, the Black and Hispanic candidates within their applicant pools are less likely to be selected because they will be less credentialed as a result of having fewer degrees or having graduated from lower-ranked colleges, where they are more likely to apply and be accepted post-affirmative action. A somewhat less-intuitive consequence is that the White (and Asian) graduates of more prestigious colleges and universities will have had less exposure to people of other racioethnic backgrounds. This has implications for their multicultural competence — the ability to relate to those dissimilar from oneself — and may help account for why employers tend to pay higher starting salaries to graduates of more racioethnically diverse business schools and universities.3

The fallout within Black and Hispanic communities stands to be devastating. Most notably, there will be fewer minority professionals to help meet the needs of racioethnically similar minority clientele. Though this might seem to be more a matter of convenience, it is especially troubling in fields like medicine or law (which employs attorneys and members of law enforcement), where minority underrepresentation is often noted as a contributing factor to well-documented racioethnic health care and criminal justice disparities.4

Lower odds of graduating from a more prestigious school or graduating at all also have implications for racioethnic inequality within organizations. This begins with underrepresented minorities being less apt to obtain a job or more likely to land a lower-quality one. It goes on to influence outcomes spanning the entire human resources management landscape, from entry to exit, because initial placements have lasting consequences for things like compensation, promotions, training/development, retention/separation, and deployment. For instance, even Black and Hispanic professionals who gain access to employment opportunities may be more likely to find themselves facing the “last hired, first fired” phenomenon. Moreover, a low starting salary can affect the size of raises or competitive offers from other companies and has deleterious compounding effects on one’s retirement savings.

Those seeking even more concrete evidence that outlawing collegiate affirmative action can influence diversity in corporate America need look no further than recent research by Harvard Business School professor Letian Zhang.5 He examined affirmative action bans’ effect on whether people from different racial backgrounds became managers, using data from the Equal Employment Opportunity Commission on more than 11,000 private-sector U.S. businesses from 1985 to 2015. He anticipated that executives might interpret bans as a sort of license to discriminate and, therefore, be less likely to hire Black managers or promote Black candidates. The results showed that “after a state adopts the affirmative action ban, growth in the proportion of Black managers in establishments with corporate headquarters in that state slows down by more than 50% and this slowdown is mostly concentrated in firms with politically conservative CEOs.”

By widening the collegiate achievement gap, the ban on affirmative action in colleges actually kicks the proverbial can of equal opportunity further down the road by adding larger higher education differentials to existing racial differences in wealth and access to quality preschool and K-12 education that also disfavor underrepresented minorities. Ironically, this further enhances the need for workplace affirmative action strategies just to maintain the racial status quo. That said, any such efforts will almost certainly be challenged along legal grounds, and the Supreme Court (at least as currently constituted) has shown itself highly unlikely to view such efforts favorably.

In fact, in a form of preemptive strike, 13 state attorneys general recently informed companies such as Apple, Microsoft, and Uber that they should expect greater scrutiny of any policies perceived as promoting race-based preferences in employee selection. They went on to promise legal action against “violators,” signaling their intention to extend the parameters of the Supreme Court ruling to U.S. workplaces. This raises the question, what can organizations that remain committed to racial equal employment opportunity do to limit any losses they might suffer in this new, evolving employment landscape? Below, I provide four suggestions to help practitioners, managers, and organizations navigate this challenge.

Don’t Wait on the Sidelines

President Theodore Roosevelt is often credited with saying, “In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.” In the wake of the Supreme Court ruling, it is probably tempting to maintain business as usual, wait and see how things proceed, and adopt a reactionary approach as the dust settles. Doing so, however, promises to have considerable consequences. Namely, continuing to source applicants from the same schools while making no adjustments based on the predictable changes to student-body compositions leaves an organization entirely dependent on college admissions staffs to retool their strategies to solve a problem that few have been able to address in the past 30 years.

Accordingly, continuing to use degrees and degree-granting institutions as proxies for human capital, as many organizations historically have, will likely result in race differentials widening across virtually all employment outcomes, with cascading effects for nonemployment outcomes. For instance, a recent study showed that underrepresented minority youth tend to increase their engagement in risky behaviors (smoking cigarettes, alcohol use, and binge drinking) immediately following an affirmative action ban.6 In short, expect to have fewer underrepresented minority employees and greater racial inequity, including larger differentials in earnings and advancement.

Question Everything

Well, you might not have to question everything, but if an organization wants to get better at something, it will need to do some things differently and examine how they’ve been done in the past. For instance, an HR executive once told me that it was company policy to recruit only from the country’s top 10 engineering programs. An unintended consequence of this practice was that new recruits came from geographic regions that were quite dissimilar to the company’s locale, and new-hire turnover was unusually high for its industry. There was no qualitative difference between the No. 10 program and the No. 12 program, which was located within 100 miles. Why not recruit from the No. 12 program to reduce the chance of a new employee experiencing extreme culture shock and leaving within the first year?

Applying this logic in the current context, companies might need to broaden their search parameters to attract applicant pools that are demographically consistent with those of their recent past. Recruiting at historically Black colleges and universities and Hispanic-serving institutions is a good way of engaging in targeted recruitment — a strategy that is presently legally permissible. Placing online advertisements in places frequented by underrepresented minorities conveys that your organization is interested in receiving applications from members of these groups. Moreover, when it comes to selection and compensation, companies will need to reevaluate the implicit and explicit weights assigned to degree-granting institutions. The spoils of graduating from a premier institution are already distributed inconsistently, with larger benefits for White graduates than for Black degree holders.7 Why not make that benefit smaller for everyone and simultaneously open more employment opportunities to a larger group?

Lean Into the Data

To address the issues raised by questioning everything, organizations can turn to what their data reveals. For instance, though inertia and benchmarking against competitors may suggest that a job requires a college degree, does the data support that contention? Job requirements that are linked to racial differences, like degree attainment and earning degrees from highly prestigious schools, tend to have an adverse impact on underrepresented groups — a form of statistical discrimination. In the context of selection, adverse impact occurs when a particular decision-making tool advantages members of one racial group (or any other legally protected category) relative to members of another racial group. While such differences are not illegal if the difference is job relevant, data is needed to establish such relevance.

Requiring degrees, favoring graduates of elite schools, and using minimum GPA cutoffs can adversely impact underrepresented minorities when such requirements are not directly related to job performance. In the past several years, there’s been more discussion of eliminating these types of requirements, not only to enhance racial justice but also to simply tap a larger pool of high-potential candidates in a tight job market. Although some may interpret this as a form of “lowering standards” to enhance diversity, it should be noted that standards unrelated to performance are unnecessary and potentially illegal and may result in employee overqualification, which can have negative implications for hires’ attitudes, well-being, and performance.8 Use your data (and that of relevant others) to determine job relevance and get rid of barriers that aren’t boosting your bottom line.

Select for Potential, and Train for Performance

Though colleges invest considerable resources in preparing students for careers, there are inevitable shortfalls in the competency levels that graduates possess and employers desire. For instance, the National Association of Colleges and Employers indicates that employers are nearly unanimous in naming communication as the most important competency, and almost all students know this. Nevertheless, though 80% of students rate themselves extremely proficient at communication, only 47% of employers see students in this same light. The point is that more than half of employers see graduates as lacking the most important competency. Clearly, the 53% of employers that consider college graduates less than extremely proficient communicators are not leaving their vacancies unfilled. If they were, the unemployment rate for 2022 college graduates would not be 4%. Rather, many, if not most, employers recognize that they will need to invest in training to get new hires up to speed.

Identifying potential in a race-neutral yet valid way is certainly easier said than done. Generally speaking, the more closely the indicators used to select employees relate to what employees actually do, the better. This suggests that tools like high-fidelity simulations, work samples, and behaviorally anchored structured interviews may be particularly useful.9 Selection approaches should also focus on identifying trainability to ensure that organizations are able to maximize returns on their training investments. This could entail giving top candidates an opportunity to demonstrate their trainability by actively learning a new job-relevant competency and subsequently demonstrating their proficiency.

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Over the past half century, affirmative action and its progeny have helped transform the racioethnic landscape of American colleges, universities, and organizations. These programs have done so by providing opportunities to those who history suggests would otherwise have been unlikely (or at least considerably less likely) to receive them. The choice of word — opportunity — is both intentional and important, as many people often lose sight of the fact that these programs grant beneficiaries only the chance to show that they belong. Although the Supreme Court decision eliminated one means of helping to level the playing field, as Alexander Graham Bell once said, “When one door closes, another opens.” Though the path may seem somewhat less clear, innovative companies will create and maintain competitive advantages by finding, attracting, and selecting the most talented people from all racial and ethnic backgrounds.