How a Phx CEO found systemic racism in his own company. Are you willing to investigate your own?

I thought I led a ‘woke’ furniture company. Turns out, we contribute to systemic racism

Article from AZ Central by Adam Goodman

I didn’t believe it at first. How could we be a part of such a loathsome practice? “I am not a racist!” I exclaimed, echoing the defense of every racist, ever.

In the phrase “systemic racism,” the word “systemic” does the heavy lifting, implicating every economic, social and political institution in the country. As a CEO of a company with 180 employees, I was compelled to find out if we practiced discrimination inside my company.

I was confident we were an exception. After all, our vision statement declares, in part, that our purpose is “to seek justice for the marginalized.” Goodmans Interior Structures is a 66-year-old office furniture distributor and a specialty contractor of prefabricated architectural interiors. 

This ambition inspired us to “ban the box,” helping the formerly incarcerated find employment. We contribute to social justice organizations and honor Juneteenth as a paid holiday. Heck, we even posted a “Black Lives Matter” square on Facebook!

How could such a woke company contribute to the scourge of systemic racism?

Our leaders, office workers are mostly white

To find the answer, I compared our racial statistics against regional metrics, looking for bias in four areas: hiring, leadership, occupational sorting and wages.

In terms of hiring, our employee demographics look similar to the overall composition of Arizona.

If I stopped my research here, I would have incorrectly concluded that because we look like the local population, we do not have any discrimination. Indeed, many CEOs I speak with proudly offer this data point as evidence of how progressive their companies are.

Looking deeper, our employees are 56% white, yet our leadership team is 77% white. That imbalance does a disservice to the company and is something I need to rectify.

Next, I analyzed “occupational sorting” – the practice of steering certain genders and races into jobs that are unconsciously associated with those groups.

This is a little understood form of discrimination that can have profound consequences for a person’s lifetime earnings potential. An oversimplified example is “women are nurses and men are doctors.”

I was alarmed to see that although 68% of our operations team is Hispanic, only 9% of our salespeople and designers are Hispanic.

Are we unconsciously funneling Hispanic job applicants to operations and ushering the white applicants to the higher wage jobs in sales and design?

Clearly our recruiting outreach is not the problem, since we employ more Hispanics than the region’s population would suggest. We already have a talented cadre of Hispanics who know our industry. The evidence indicates we don’t do a good job of showing how a career path can cross the chasm from the field into the office. This barrier to opportunity will come down.

Office workers of color make much less

Finally, I looked at wage gaps. In the United States, for every dollar earned by a white person, Black workers earn $0.73 and Hispanics earn $0.68.

I can slice my company’s data to tell a good story. For field-based employees, Hispanics earn $1.06 for every $1.00 a white person earns (we have no Black people in this department).

But don’t let us off the hook that easily. For office-based jobs, our Hispanic workers earn only $0.89 and our Black employees earn a shameful $0.79 for every dollar earned by a white person. This discrepancy has our immediate attention.

It is important to note that my wage analysis was done without regard to education, experience, tenure, performance or responsibility.

If two people started on the same day, and one was a senior leader and the other in an entry-level role, my rudimentary analysis compares them only by race, without regard to their station. My intent was to zoom out for a big picture perspective.

On a micro level, each year a third-party company evaluates all our promotions, terminations and compensation to look for patterns of discrimination based on age, gender, or ethnicity. Our report card is always clean.

My challenge: Do this review at your place

The paradox of inequity on a macro level against fairness on the micro level speaks to the insidious mechanism by which systemic racism operates.

I am not a racist, and we do not tolerate racial discrimination in our company. Yet our unconscious prejudices and implicit biases combine to build a system that, in aggregate, is discriminatory.

Now that we are aware of our failings, our leadership team will fix these problems by creating new opportunities.

The market will reward our inclusionary practices and our competitors will be forced to emulate us. This is the beauty of capitalism; it can be our most powerful tool for solving society’s problems.

As the Harvard Business Review said in May, “when the private sector pivots to serve the greater good, its reach and power is immense.”

I challenge every company in Arizona to assess their contribution to systemic racism and share it with your stakeholders. Invite all employees to hold leadership accountable for maintaining congruity between your social media proclamations and the under-the-covers truth. Systemic racism is calcified in all our institutions … including your company.

Prove me wrong.

Leave a Comment