When Firms Fail to Learn: The Perpetuation of Discrimination in the Workplace
“When Firms Fail to Learn: The Perpetuation of Discrimination in the Workplace,” by Lynn Perry Wooten and Erika Hayes James, suggests that workplace diversity is on the rise, and illustrates ways in which firms may fail to learn how to manage diversity challenges. One such challenge is discrimination and the lawsuits that result from it.
Many firms have experienced multiple discrimination allegations in recent years, despite widespread attention on diversity issues by scholars and practitioners. And poor crisis management sometimes leads to recurring lawsuits, such as the $1.5 billion racial discrimination lawsuit filed in 2000 against Coca-Cola immediately following the firm’s settlement of a 1999 lawsuit.
Previous research has pointed out the complexity of managing a diverse workforce. In this article, the authors chose to deal specifically with discrimination lawsuits. The reasons are that lawsuits generally represent the consequences of poor diversity practices in a firm; they become an organizational crisis if mismanaged; and they demand a different skill set than managing routine diversity issues such as personnel staffing and development.
The article addresses organizational learning, or the idea that firms continuously adapt to a changing business environment. Adaptive learning means that a firm changes its dysfunctional routines, or policies and procedures, when they are associated with failure, and that they continue functional ones when they are associated with success.
However, companies are challenged to adapt when it comes to discrimination lawsuits. The authors look at three possible barriers to learning:
- dysfunctional routines
- history-dependent learning
- target orientation
Dysfunctional routines can include the lack of policies and procedures to deal with non-routine events such as a lawsuit. If the firm takes action to deal with the lawsuit without also questioning its fundamental assumptions or norms that may have led to the discrimination, reactive learning has occurred. This means that existing routines, which are probably inadequate to deal with the crisis, have been employed. Under these circumstances, firms are likely to face a similar challenge in the future. Another dysfunctional routine is organizational defensiveness. This occurs when the company blames others for its problems, offers excuses, and tries to cover up the negative information. Denials and justifications result in missed opportunities for learning. Leaders who hold a blame mentality fail to prepare appropriate routines for managing and preventing a discrimination lawsuit.
History-dependent learning is focused on activities of the past rather than expectations of the future. Organizational learning can happen when change is adopted in response to feedback from previous experience. Yet most organizations do not have a history of dealing with discrimination lawsuits. In a sample of almost fifty companies that had experienced a discrimination lawsuit within the past ten years, the authors found that less than one-third of them had experienced a large-scale suit before. Furthermore, when firms do have a memory of a prior experience, they do not always store the relevant information or retrieve and transfer that knowledge effectively.
Target orientation refers to the theory that organizations learn by associating behavior with a specific target or outcome. Thus evaluations of success or failure of firm behavior are important for determining future action. When outcomes fall short of anticipated targets, firms will likely adopt new behavior. Decision makers may have a difficult time, unfortunately, in identifying the appropriate target objective when dealing with discrimination issues. Management must consider, for example, the consequences of their actions on stakeholders and other constituencies, firm image, available resources, opportunity costs, and so on. The authors describe research that found that targets were usually firm specific, and included both settling the lawsuit quickly and fighting allegations. Many times, however, the firm is so focused on its target that it fails to think long term to prevent future lawsuits.
Despite the barriers, some firms do learn from crises. The study includes examples of how a few organizations were able to overcome obstacles and work toward changing their routines and beliefs as a result of failure. It is unfortunate that too often it takes a crisis, such as a discrimination lawsuit, to prompt companies to create inclusive work environments.
To request the complete journal article as published in the Journal of Management Inquiry, contact Erika at www.erikahayesjames.com/contact.