• The Meritocracy Stress Test does for equality what the bank stress test did for liquidity.

• Despite claiming to be meritocracies, many workplaces do not measure up.

• Asking key questions can highlight your company's current shortcomings.

After the global financial crisis of 2007-2009, bank regulators in the United States and other countries implemented what is known as the bank stress test to ensure that banks had enough capital to withstand an economic or financial crisis. It provides a snapshot into the hypothetical health of a financial institution and its ability to prevent failure, maintain trust and provide protection to consumers. The annual test outlines categories in a few key areas for evaluation, including level of capital, credit risk, market risk and liquidity risk. It provides a way for banks to go beyond saying they are financially sound to proving that they truly are.

I propose a similar test for any organization that considers itself a meritocracy. I call it the Meritocracy Stress Test. It is an exercise for a company to discover whether it is at risk of not being the diverse, inclusive, fair and equitable workplace it purports to be. To date, every organization I have worked with proclaims it is a meritocracy – the bedrock for values, mission statements and self-perception.

But to prove that shining assertion, the first question is to ask: Does everyone in the organization think his or her experiences at the company are based on merit? Few people who make it to the top say, “I got here because I was subtly advantaged.” Their view is usually that they climbed the ladder because only the best get promoted, and they were the best.

For each of the following propositions, rate your company 1-5; with a 1 meaning you haven’t focused on this issue, and 5 meaning your organization is completely cognizant of the dynamic and acting upon it.

1. Engaging in focus groups or surveys with specific members of the company. I did that with one US company, examining the viewpoints of four groups: white American men, women, American people of colour, and non-Americans. After the results were analyzed, we told the senior leadership that there was good news. One of the groups thought the organization was a meritocracy. But the other three did not. You can probably guess which group provided the “good” news: white American men. The rest said they had been subject to various company processes, personnel issues, personal comments and behaviours that showed unequal treatment in the organization.

2. Analysis of your data. McKinsey reports that women and other underrepresented groups get promoted, just at a slower rate than their white male counterparts. Is that true in your company? HR will have the data, so ask them to show you what the speed of promotion looks like for different segments of the company. How many women and people of colour are just “not ready” to be promoted?

Study data on pay gaps and bonus gaps. What does that tell you? Check gender gap reports, such as the World Economic Forum Gender Gap Report. It can give you a sense of your country rank and potentially be a reflection of corporate performance overall.

Another area to examine is personnel evaluations: Are women more likely to be criticized for their communication styles than men? One study found that 76% of women’s evaluations critiqued them as aggressive and sharp-elbowed, compared to only 2% of men’s evaluations. What does your data show? As you assess, don’t confuse your efforts around diversity and inclusion with company outcomes.

Greater workplace diversity clearly correlates with increased revenue.
Greater workplace diversity clearly correlates with increased revenue.
Image: BCG

3. “De-bias” processes at your organization. It may be difficult to overcome biases in people whether they are implicit, unconscious or conscious, but processes can be de-biased. For example, look at how your company hires and promotes its staff. Check entry job requirements, review past interviews and consider how you’re measuring the culture fit for potential hires. Go back and look at those that were not given a job offer or a promotion. If the issue of culture fit came up, it might mean there is a bias towards those who are like you and perhaps less diverse as a result.

Ask yourself whether confidence is being equated to competence. Research shows that 71% of men believe they are above average, regardless of their abilities, inherently putting them at an advantage when those hiring or promoting conflate confidence and competence. Evaluate job performance reviews or hiring results, and see if there is a gender correlation between observed traits of confidence and promotion (or hiring).

4. Checking your myths and mindsets at the door. As you read through the following, reflect on how the organization might believe them and what the implications of that might be for different employees:

• My company is a meritocracy. Only the best rise to the top, getting the promotions and opportunities they deserve.

• We have developed and continue to develop programmes to help underrepresented groups including employee resource groups, have specialized training, a designated person for diversity, equity and inclusion efforts and highly touted inclusivity statements by senior leaders. Therefore, we must be a fair and meritocratic organization.

• If people only worked harder and asked for what they needed, they would be successful. Everyone gets feedback on their performance and support when they need it.

• Some of the challenges people from underrepresented groups complain about have happened to me in my career, but I overcame them.

• Much more support is being provided to underrepresented groups, and it is now putting white males at a disadvantage.

• Privilege does not exist in a merit-based organization; the playing field is level.

• Confident people are more competent. The person who always speaks up with their ideas is the person who shows leadership.

• The numbers tell the story about results whether people feel included or not.

What's the World Economic Forum doing about diversity, equity and inclusion?

The COVID-19 pandemic and recent social and political unrest have created a profound sense of urgency for companies to actively work to tackle racial injustice and inequality. In response, the Forum's Platform for Shaping the Future of the New Economy and Society has established a high-level community of Chief Diversity and Inclusion Officers. The community will develop a vision, strategies and tools to proactively embed equity into the post-pandemic recovery and shape long-term inclusive change in our economies and societies.

As businesses emerge from the COVID-19 crisis, they have a unique opportunity to ensure that equity, inclusion and justice define the "new normal" and tackle exclusion, bias and discrimination related to race, gender, ability, sexual orientation and all other forms of human diversity. It is increasingly clear that new workplace technologies and practices can be leveraged to significantly improve diversity, equity and inclusion outcomes.

The World Economic Forum has developed a Diversity, Equity and Inclusion Toolkit, to outline the practical opportunities that this new technology represents for diversity, equity and inclusion efforts, while describing the challenges that come with it.

The toolkit explores how technology can help reduce bias from recruitment processes, diversify talent pools and benchmark diversity and inclusion across organisations. The toolkit also cites research that suggests well-managed diverse teams significantly outperform homogenous ones over time, across profitability, innovation, decision-making and employee engagement.

The Diversity, Equity, and Inclusion Toolkit is available here.

Wanting to be a meritocracy and actually being one are different. The first is an aspiration; the second requires a series of questions and myth-busting that can initially lead to answers a company doesn’t want to hear, but that ultimately spur real change. Did your organization meet the Meritocracy Stress Test and score 20 points?