Mandated Diversity Reporting and Perverse Incentives

How adding organizational hoops probably won't help anyone

It’s been a while since my last post. I’m afraid I was occupied earning a living. The thought of my tender children anxiously worrying about their next meal simply overcame me. Although, since my youngest is 17 and is perfectly capable of ordering Uber Eats on his own, I’ll acknowledge I wasn’t all that overcome.

“Earning a living” in this case, meant finishing up a video course for Pluralsight on “image segmentation using deep learning models” and responding to my publisher’s copy editor’s notes to my “The Complete Obsolete Guide to Generative AI” book.

Thanks for asking.

But bureaucrats and apparatchiks at various levels certainly haven’t been sitting idle. They’re all pushing back heroically against all ills, modern and ancient. As we’ll see though, they don’t seem to be making a lot of progress.

Consider the Canadian Securities Administrators (CSA) corporate diversity reporting rule.

Wait: there’s a legally binding corporate diversity reporting rule in Canada? Also, wait: the “Canadian Securities Administrators” is a real thing?

To answer both questions: not really.

The CSA does exist and it’s there to facilitate collaboration and information sharing among its members (Canada’s provincial and territorial securities regulators). But it's the individual regulators who have the legal authority to take enforcement action. So, breathless public claims to the contrary, the corporate diversity reporting “rule” actually appears to be nothing more than a suggestion.

Nevertheless, it’s a suggestion that carries risk. Checkbox-compliance requirements often distract company officers from their primary fiduciary and legal responsibilities. And there’s evidence that adding yet another file-and-forget process to the organizational workload won’t end up helping the intended populations anyway.

In fact, none of the diversity-is-our-strength efforts have led to consistent success in Canada’s employment market. As Statistics Canada data shows us, improvements in average annual incomes for visible minorities vs non minorities in Canada have been ambiguous.

As you can see below, the average individual belonging to a visible minority earned nearly 19% less than the average non minority in 2006. But by 2021, the disparity had dropped by only a couple of points.

You’d think that years of failure would inspire fresh and original thinking, not Olympic-scale doubling down.

I guess, for now at least, we can (sadly) forget about population-level progress. But perhaps even highly-touted individual successes are an illusion. As an example, take MediaCorp Canada’s Canada’s Best Diversity Employers list published annually through platforms like the Globe and Mail. Alongside MediaCorp’s other lists - like Top Employers and Family Friendly Employers - the Best Diversity list has, since 2008, been identifying Canadian employers whose policies and practices meet the highest employment diversity standards.

Or has it?

Which employers are considered for the competition? As it turns out, you need to submit a complicated 15-page application form and pay a $1,695 fee before they’ll even consider your organization. So the 48 winners of the 2024 competition might, for all we know, have been chosen from a pool of 49 self-selecting entrants. (Although to be fair, since a single application will qualify you for all of MediaCorp’s competitions - and since there were 100 winners of 2024’s Best Employer competition - there would have to have been at least 100 entrants.)

I’m not suggesting there’s anything improper with MediaCorp’s lists, but they’re clearly far more about paid marketing opportunities than reliably tracking social progress. I’m decidedly less impressed with the Globe and Mail’s editorial choices.