Quantifying which practices bring diversity in the workplace | Paolo Gaudiano | TEDxFultonStreet

Paolo Gaudiano, CEO of Aleria, Executive Director of QSDI, demonstrates through simulations what it means for an organization to be "color blind" or to engage in various inclusivity practices. The first formal study of its kind, this research provides valuable insight for employers. Paolo Gaudiano, PhD, is Founder and CEO of Aleria, a cloud-based platform that helps organizations plan, execute and measure the impact of Diversity & Inclusion initiatives. He is also the Executive Director of Quantitative Studies of Diversity and Inclusion (QSDI) at the City College of New York.

Paolo began his career in academia at Boston University in 1991, where he reached the level of tenured Associate Professor, teaching and doing research on computational neuroscience, robotics and machine learning. In 1999 he became Chief Scientist of Artificial Life, a company that applied machine learning to a variety of Internet usage and navigation problems.

In 2001 Paolo joined Icosystem Corporation, the applied R&D company from which Aleria was spun out in 2017. In his role as President and CTO, Paolo oversaw strategy, business development, research and software efforts to solve complex business and technology problems for leading corporations, government agencies, and foundations. This talk was given at a TEDx event using the TED conference format but independently organized by a local community. Learn more at https://www.ted.com/tedx

For the last 10 years or so
Bitcoin has done really well.

But would you put most
of your retirement savings into Bitcoin?

And how about marketing?

We've had televisions
for about a hundred years,

but would you put all of your ads
on TV like this?

And for more than a hundred years now,

white men have been
very successful business leaders.

But would you ever build a company

with the executive team
was mostly white and male?

The reason why we can immediately reject
the first two of those ideas

but not the third one,

is because in finance we have
portfolio management,

which helps us
to allocate financial assets

in a way that increases returns.

In advertising we have programmatic,

which helps us to allocate
marketing assets to increase sales.

But we don't have any tools

that can help us
to allocate human capital assets

in a way that maximizes
the performance of a company.

Which means that we don't know

whether a company
that is completely homogeneous,

like this one is actually ideal.

We don't know
whether adding the token person of color

is goning make it perform better or worse.

We don't whether hiring diverse people
from the bottom up

as so many companies are doing
is actually good idea.

And we don't even know
whether having a company

that reflects the heterogeneity
of society is a good idea.

That is a huge problem.

To put it in perspective

I am going to show you two numbers
in a moment.

The total amount of money
spent by companies

across the United States in one year
in advertising and in payroll.

And if you think
that advertising is bigger,

as many people do,

you're goning to be really surprised
because not only is payroll bigger,

it's 30 times bigger.

5.4 trillion dollars a year
in payroll alone.

Not labor cost, just payroll.

Which means
that if we cannot tell the difference

between which of these
is a better company,

we're leaving
a lot of money on the table.

But a lot of times
when I talk about this,

people say, wait a second.

You're talking
about personal characteristics.

But that has nothing to do
with the performance of a company.

We are colorblind.

We only hire the best.

Those kinds of sentences
are not only insensitive,

they're also insensible.

Let's think of a very simple example.

A company just hired two identical twins.

They were born on the same day,
went to the same school.

They had the same exact experience,
the same skills,

but they differ
because of some personal characteristic.

And two years later, one of those twins
is making more money than the other.

The only way that you can explain that

is that somehow the company
is doing something

that is creating a different experience
for an employee versus the other,

just on the basis
of personal characteristics.

This is the problem,

because the performance of a company

is nothing more than the collection
of what all of its employees are doing.

So, to the extent that any company
is doing something

that gives a lessor experience
to any person

for whatever personal reason,

they're shooting themselves in the foot.

If only we could quantify
how a company impacts its people

and how the people then contribute
to the success of the company,

we would be able to quantify the value
of diversity and inclusion.

And that's exactly
what I do with my colleagues.

We draw from a combination
of behavior sciences

to understand how people react
to different things

in the work environment,

and how they behave

and computer simulations
that capture the dynamics of what happens

within an organization
on a day to day basis

to understand how the individual people
contribute to the performance of the company.

Let me show you a very simple example.

Here is a company simulated
that has four layers,

from entry level
all the way to executives.

There are two kinds of employees.

Male in blue and female in yellow.

The company grows over time.

You will see this in a moment
when I start this simulation.

And as people leave the company
or the company grows,

when there is a vacancy,

people get promoted to higher levels as a
function of their seniority.

Let's see what that looks like.

Here's the people
doing their business.

You can see some people getting promoted
and moving up.

Some people are turning
gray and disappearing.

But in general,
if you start with a balanced company,

after five years of week by week simulations,

you find
that the company remains balanced.

I wanted to ask the question

of what is the impact
of gender bias in promotions.

So, we take the same exact simulations,

but now when
somebody's being promoted,

we inject a gender bias so that men
are slightly favored over women.

Let's run the same simulation again
for five years

and what you see
is that fairly quickly,

you begin to see a very familiar pattern

and within five years,

we find that the company is dominated by men
in a way that we see in real companies.

Even though the bias is uniform,

all of the men end up at the top,

even though the company
is still roughly 50/50 in terms of gender.

What if we take it a step further.

Oh, we see the problem.

Let's do unconscious bias training.

Let's remove all the biases.

Is that going to work?

Take the same simulation.

Begin with a company that is imbalanced.

Remove all the biases

and you find that after five years,
very little has changed.

You make a few changes in the middle,

but you still have
a male dominated leadership.

Now, this is clearly
a very simple example,

but it turns out that we can start
to make predictions,

such as the fact
that it can take more than 20 years

to undo the damage
that it took only five years to create.

The kind of methodology
that I've shown you here

is really great because
even though this is --

again, a simple example,

it can begin to capture
what I call the complexity of diversity.

And let me explain what I mean by that.

I believe that most companies,

in order to be successful,
need four pillars.

What I call the four pillars
of performance.

First of all, they need
to be able to attract talent.

Secondly, they need to be able
to retain the talent

that they've worked so hard to attract.

Third, they need to be able
to use that talent efficiently

within their operations,

and finally, they need to be able
to attract the marketplace.

Many times, when you hear people
talking about diversity,

there are descriptions that suggest
the diversity can impact each of these.

Oh, you need to have
a more diverse workforce

to match the society
that you're trying to sell to.

You need to be able to have
diverse HR people

so you can attract more talent.

What most people don't realize
is that these are linked very tightly.

Let's think of a very simple example.

Large Silicon Valley company decides
they want to diversify.

What do they do?

They hire a bunch of black programmers.

These programmers go in day one.

They realize that nobody
up in the leadership looks like them.

Their manager does not know how
to deal with them.

They go to the cafeteria for lunch,

and people get up
and move to a different table.

In six months, they leave.

When they leave, what's going to happen?

One, talent retention goes down.

Two, operational efficiency goes down

because now you have to rehire
and retrain people and it costs money.

Three, you get a bad reputation

and that can make it harder for you

to attract talent as well
as to attract customers.

Now, in addition to being able to address
these kinds of complexities,

the methodology that I showed you
has another very important benefit.

You see, when I began being interested
in diversity and inclusion,

I felt that I only had two choices.

I could either be an activist,

or I could do nothing.

And what I've realized is that
this kind of modeling and simulation

can actually help me and help all of us
to understand what each of us can do.

If you think about what I told you,

the company influences the employees.

What is a company?

It's not the building.

It's not like the building says, hey,
there's some black guys coming.

Let's lock the doors, right?

The company is the people
inside the company,

which means that every single person
from the CEO to the janitor

has an influence
on the experience of their colleagues.

And that means that what you do
in your professional life

can also have an influence
in making the place better.

For example, if you're going to a meeting
or to an event,

bring someone along with you
that is not like you.

If you're a manager,
make sure that you're allocating projects

and that you're giving your time equally,

not just to the people that you like
because they're similar to you.

Beyond the physical,
think about the digital world.

Go home tonight, look at your Twitter
and your LinkedIn accounts

and find out how many white men you follow

and ask yourself when was the last time
that you re-Tweeted or shared content

from a woman, a person with disabilities,
a person of color.

Finally, diversity is not just something
that you turn on and off at work.

It also impacts your personal life.

If you live in a place like New York,

go off to Harlem
and see a show at the Apollo.

This is Pride Month.

It just started yesterday.

Find, whatever city you're in,

find a Pride Parade and go to that.

Find books by minority authors
and read them,

because every time you expose yourself
to diversity in your personal life,

you become more comfortable
with people that are different from you

and that will make you act
more inclusively, even at work.

So in conclusion,
if you want to make a difference,

not just in your personal life,
but in your work life,

and make your company
a better place to be,

you don't need to be an activist.

You just need to be active.

Thank you.

(Applause)