Why companies go woke
Conn Carroll
When President Joe Biden attacked Georgia’s Election Integrity Act of 2021 as “Jim Crow on steroids,” corporate America swiftly swung into action. Bank of America, BlackRock, CitiGroup, Coca-Cola, Delta, Facebook, Home Depot, Merck, and Microsoft all issued statements condemning Georgia‘s law. Major League Baseball caved under this corporate pressure, even moving its All-Star Game from Atlanta to Denver in protest.
But of course, none of what Biden said about the bill was true. Wait times for voting went down in 2022 as a result of the reforms. Voters reported that they were exceedingly pleased with the new system, and literally 0% of black voters in Georgia told pollsters they had trouble voting.
So how did corporate America get this so wrong? Why did corporate America get so stupidly, blindly woke?
Economists Nicolai Foss of the Copenhagen Business School and Peter Klein of Baylor University think they have the answer: middle managers.
Foss and Klein first note that there is no evidence that executives or the broader public have suddenly signed on to the woke agenda. Nor is there any evidence that woke corporations outperform unwoke corporations. In fact, there is some evidence the opposite is true.
But middle managers, particularly human resources managers, are “particularly likely to possess the ability, opportunity, and motivation” to push companies toward wokeness. Woke agendas, especially so-called “Diversity, Equity, and Inclusion” initiatives, are natural HR functions that can expand the authority of HR professionals and entrench their power.
Chief executives may be incentivized to go along with the woke policies because: 1.) they don’t have the expertise to push back, 2.) it is safer to go along with the woke agenda than oppose it, and 3.) because the woke agenda has no direct connection to business performance, CEOs can easily inflate claims of their own performance by implementing new woke performance standards and claiming to have met them.
There are some possible long-term costs, however, for companies going woke. Foss and Klein point to Google engineer James Damore, who was fired for posting a memo that objected to the company’s DEI policies. By driving out skilled employees with diverse views, firms risk sacrificing their own creativity and productivity.
Then, there is the cost of compliance with all the new DEI training. No one likes being lectured to by HR about anything, especially if it is just some cultural studies major fresh out of college telling you how evil you are because of the color of your skin.
Fortunately, there are some signs the woke window is closing. Big Tech firms have fired thousands of the DEI employees they hired after the George Floyd riots. Sanity may someday return to corporate America.
But just to be safe, let’s fire the HR departments entirely.