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Minorities, women often hit hard during layoffs: study

Minorities, women often hit hard during layoffs: study

A new study says that when companies slash jobs, it is often women and minorities who disproportionately get the axe.

The research, which is published in the July/August edition of the Harvard Business Review, analyzed data from more than 800 U.S. companies spanning three decades and also used interviews with hundreds of managers and executives.

It found that when firms downsize based on position, rather than the performance of individual workers, there is an immediate nine to 22 per cent drop among the ranks of white and Hispanic women, as well as Hispanic, black and Asian men on their management teams.

The study also found that when companies laid off employees based off seniority, or the “last hired, first fired” method, they let go of nearly 19 per cent of white women in management and 14 per cent of Asian men.

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One of the paper’s authors and professor at Tel Aviv University in Israel, Alexandra Kalev said in an article in the Harvard Business Review that her previous research has shown that women and minorities are often in roles that companies in a “cutting mode” see as expendable.

She said if they’ve attained a management position they’re often between junior or midlevel, recently appointed, or working in areas such as human resources, legal departments and public relations. These are roles she said are “beneficial, but aren’t usually perceived as core to the business.”

“When women and minorities are in line positions (or jobs that are responsible for achieving major company goals) they often work on small, non-essential product lines that can be jettisoned fairly easily,” wrote Kalev.

True, companies axe the positions they don’t absolutely need, but because of this segregation along demographic lines, those positions usually are their most diverse one.

The new study said that its findings show are exacerbated by the fact that downsizing methods based on seniority or position have grown in popularity. 

According to its results, two-thirds of the companies that conducted major layoffs used the aforementioned methods.

“It helps depersonalize a painful process and makes it more efficient,” said Kalev.

“But that method gets rid of strong employees, often people the company worked hard to recruit in the first place.”

Kalev said companies are also downsizing more frequently than in the past, often to revive lagging sales, boost share prices or to reduce redundancy after mergers.   

Kalev said in order to avoid losing workplace diversity, companies should lay off managers based on performance. She said the study’s results showed “no reduction in diversity” when this method was employed and also allowed firms to retain good workers regardless of what position they held or their tenure.

While Kalev admitted that studies have shown women and minorities often receive lower scores on performance evaluations than white men based on the same work, she said, within the context of downsizing, executive are more aware and accountable, and they think more “deeply” about who they should retain.

She also advised executives to look at their company’s diversity before downsizing and to consider that they can reposition and retrain employees if they make performance-based cuts.