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 MANAGEMENT
FALL 2017: INEQUALITY

Canadian Prime Minister Justin Trudeau,

a self-proclaimed feminist, visited the
Rotman School in June to discuss
Canada-U.S. relations with The New York
Times’ Toronto Bureau Chief Catherine
Porter, at left, and Chief White House
correspondent Peter Baker, at right.

PHOTO: YANA KAZ

“Getting more women to succeed in
business is not just the right thing to do,”
he told the crowd. “It’s the smart thing
to do for economic growth.”

Features

6 20 28
Because It’s 2017: The Challenge of the Century: The New Urban Crisis:
Gender Equality as an Inclusive Growth and Development Putting an End to
Innovation Challenge by R. Samans, J. Blanke, G. Corrigan Winner-Takes-All Urbanism
by Sarah Kaplan and M. Drzeniek Hanouz by Richard Florida
Instead of focusing on building In rich and poor countries alike, Our cities are increasing
a ‘business case’ for gender social inclusion is a burning political inequality, deepening segregation
equality, we should be tackling it issue. Here’s what to do about it. and failing the middle class.
as an innovation challenge. Seven principles can help.
 32
Diversity’s New Frontier:
Diversity of Thought
by Anesa Parker, Carmen Medina
and Elizabeth Schill
Advances in neurological
research can help operationalize
diversity of thought and change
how we harness human capital.
50
Updating the Image
of the Ideal Worker
by Erin Reid
Regardless of gender, today’s
workers are pushing back
against 24/7 availability.
70
The Myth of a Classless Society
by András Tilcsik
Despite the progress made to date,
an individual’s social class of origin
continues to play an enduring role
in shaping life and economic
trajectories.
40
CEO Spotlight: CIBC’s
Victor Dodig
by Beatrix Dart
CIBC’s President and CEO
explains why he became chair
of the 30% Club and what
his bank is doing to attract — and
keep — top female talent.
56
‘Whitening’ and
Self-Presentation in
the Labour Market
by Sonia Kang, Katherine DeCelles,
Andràs Tilcsik and Sora Jun
Job candidates concerned about
discrimination are ‘whitening’
their résumés. And they have
good reason to.
76
How to Move Millions up
the Income Ladder
by Debby Bielak and Devin Murphy
A look at five interventions
that can positively impact economic
mobility in our society going
forward.
46
Leadership Forum: The Role
of the LGBTQ + Ally
by Ken Fredeen, Sandeep Tatla,
Deborah Richardson and Jennifer Tory
A panel of senior leaders looks at
the challenges and rewards of being
an ally for LGBTQ+ employees.
62
Poorer Than Their Parents?
A New Perspective
on Income Inequality
by R. Dobbs, A. Madgavkar et al.
Flat-or-fallling incomes in advanced
economies have implications
for today’s citizens — and future
generations.
82
Lessons from Movement Makers:
What Social Upheaval Teaches
Us About Engagement
by Charlie Brown
Successful companies have strong
networks of engaged people
on their side — a strategy that social
movements have been perfecting
for decades.
 Rotman Management
Fall 2017
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From the Editor Côté, Beatrix Dart, Katherine DeCelles,
Richard Florida, Sonia Kang, Sarah Kaplan,
Daehyun Kim, Jan Mahrt-Smith, Will Mitchell,
14 Andràs Tilcsik, Daniel Trefler

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Ed Clark
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FROM THE EDITOR Karen Christensen
Inequality
GLOBALLY SPEAKING, the standard of living has never been high-
er. According to the United Nations, 200 million fewer people
are now living in extreme poverty than 25 years ago, and life ex-
pectancy increased by five years between 2000 and 2015 — the
fastest increase since the 1960s. In other words, in many impor-
tant ways, the world itself is more equal than it has ever been.
And yet, in advanced economies, the gap between the rich
and the poor is at its highest level in decades — leading the
World Economic Forum to identify income inequality as “the
most challenging problem the world faces today.”
The discourse on inequality often makes a distinction be-
tween inequality of outcome (as measured by income or wealth)
and inequality of opportunity (attributed to circumstances be-
yond an individual’s control, such as gender, sexual orientation
or family background). As we have seen recently, high levels of
both types of inequality come with significant social costs.
It is not surprising, then, that the extent of inequality, its
drivers — and what to do about it — are hotly-debated issues. In
this issue of Rotman Management, we look at some of the key
issues related to both inequality of opportunity and inequality of
outcome, and show what today’s leaders can do to address both.
Inequality is a reflection of persistent disadvantage for par-
ticular segments of society. On page 6, Professor Sarah Kaplan,
founding director of the Rotman School’s Institute for Gen-
der and the Economy, argues that innovation is the only way
to tackle this issue in Because it’s 2017: Embracing Gender
Equality as an Innovation Challenge.
Boston Consulting Group Chairman Hans-Paul Bürkner
recently noted that in today’s global economy, many people
feel trapped, and “they want their futures back.” To facilitate
this, he says, the world’s leaders need to focus on one goal: De-
livering inclusive growth. On page 20, the World Economic Fo-
rum’s Richard Samans et al. discuss Rising to the Challenge
of Inclusive Growth.
In Canada, the top 1% earns more than 10 times as much
as the average Canadian and inequality is most pronounced in
our cities: Toronto, Vancouver and Montreal have the country’s
highest levels of income inequality. On page 28, Rotman Profes-
sor Richard Florida looks at the key causes of what he calls The
New Urban Crisis.
Elsewhere in this issue, we feature former TD Bank CEO
Ed Clark in our Thought Leader Interview on page 14, and in
our Idea Exchange, Harvard Behavioural Economist Iris Bohnet
describes how to ‘design’ diversity on page 90; inequality ex-
pert Branko Milanovic explains who has gained the most from
globalization on page 98; Bank of America’s Jackie Vander-
brug talks about investing with a ‘gender lens’ on page 112; and
Rotman faculty Daniel Trefler, Stéphane Côté, Daehyun Kim
and Will Mitchell present their latest research findings.
In Why Nations Fail, Daron Acemoglu and James Robin-
son write: “The real reason to worry about economic inequality
is not the unfairness of it all. The problem is that economic in-
equality often comes bundled with inequality of opportunity and
political inequality.”
As they note — and few would argue — prosperity depends
upon innovation. The truth is, no one knows where the next
Google or Amazon will come from, and we waste untold innova-
tive potential if we do not provide a level playing field for all.
Karen Christensen, Editor-in-Chief
editor@rotman.utoronto.ca
Twitter: @RotmanMgmtMag
rotmanmagazine.ca / 5
 BECAUSE
IT’S 2017:
Gender Equality as
an Innovation Challenge
Instead of focusing on building a ‘business case’ for gender equality,
we need to re-frame it as an innovation challenge.
by Sarah Kaplan
MOST READERS PROBABLY REMEMBER that moment when newly-
elected Prime Minister Justin Trudeau was asked by a reporter,
why he had appointed women to 50 per cent of his cabinet posi-
tions — and his now-famous response: “Because it’s 2015.”
What is remarkable to me about that moment is not the
Prime Minister’s appropriately-feminist response — although
that was a welcome surprise; but the fact that the question had
to be asked at all. How did we get all the way to the 21st century,
and this is still a question? How are people still wondering wheth-
er women should have equal positions of leadership in politics,
business — or anywhere else in the world?
If I think back to my own career, it has been 30 years since I
had my first job out of university; and frankly, I thought we would
be further along than we are. Lately I’ve begun to wonder, why
haven’t we seen more progress?
Indeed, in many ways, we appear to have plateaued. Some
have concluded that this is because the case for ‘equality of op-
portunity’ has largely been made on an anti-discrimination ba-
sis. For a long time, the messaging around this issue was, ‘It’s just
not right to discriminate against women’. In response to the lack
of impact of this argument, the messaging has shifted in recent
years to ‘making a business case for equality’. Somehow, the
thinking goes, if we can make an economic argument for why di-
versity matters, we should be able to make more progress.
Publications from the Financial Times to The New York Times
have been touting the ‘growing evidence’ for a business case.
This evidence has come, in large part, from reports from organi-
zations like Catalyst, which are focused on establishing relation-
ships between the presence of women and company performance.
For instance, their research shows that returns for firms with no
women on their board of directors are much lower than for firms
with three or more women on their board.
For those who prefer to look beyond the elite setting
of boards, there is also data from McKinsey showing that
rotmanmagazine.ca / 7
 Why have we become so obsessed with making a business case
for gender equality, and what is the actual evidence for it?
gender-diverse companies are more likely to outperform their
peers. These findings are being quoted not just in the business
world, but also in the world of non-profits and NGOs, with organi-
zations like the World Bank and Oxfam justifying their policies on
the idea that gender equality is based in a ‘strong business case’.
This kind of rhetoric about the business case for gender equal-
ity has led to comments like the one that appeared in the New
York Times recently, in which the writer said — almost with re-
lief — that ‘The business case now transcends public policy and
moral imperatives’ — as if moral imperatives somehow don’t
matter anymore.
All of this got me thinking: Why have we become so ob-
sessed with making a business case, and what is the actual evi-
dence for it?
I turned to the academic literature to see what scientific
studies had to say about the relationship between gender diver-
sity and performance. Based on my analysis of the findings to
date, it appears that this relationship holds true — in some cir-
cumstances, in some industries and at some points in time. More
importantly, the research shows that the relationship between
gender diversity and performance is not necessarily causal: It
could be that the best companies happen to hire a more diverse
workforce and have more diverse boards, so it is not the diversity
that causes their strong performance, but that diversity and per-
formance are two outcomes of ‘being a great company’.
And yet, the headlines continue to trumpet: ‘Just add one
more woman to your board, and your company will perform bet-
ter.’ The truth is, we don’t actually know if this supposed business
case actually holds. Researchers have definitely found correla-
tions between gender diversity and performance — but because
we have not yet achieved full equality and there are few truly-
8 / Rotman Management Fall 2017
inclusive environments to study (yet), we actually have no idea
what the true potential could be.
When I get to this point in the conversation, many of the
people who thought I was ‘on their side’ suddenly think I’m the
enemy. By calling the business case into question, people are
concerned that I am ‘undermining’ their ability to make change.
What I’m suggesting, however, is that doubling down on the busi-
ness case may actually be impeding change. I would like, instead,
to re-frame this conversation.
Critically, the existing research does not show that adding
women in leadership positions leads to worse performance for
an organization. This leads me to question why we even need to
‘prove’ that including women is somehow a ‘win-win proposi-
tion’ in order to have them included in business or politics — or
any other kind of setting. Why is the bar set higher in the first
place?
Figure One shows the difference between having women on
a board and having no women on a board. If you turn the compari-
son on its head and look at how firms compare relative to the av-
erage performance for their whole industry, the companies with
no women on their board have, on average, much worse perfor-
mance than the average for their industry (Figure Two). No one
is asking those companies, ‘What is your business case for having
only men on your board?’ Yet, we still seem to be obsessed with
the ‘business case for action’ when it involves increasing the rep-
resentation of women.
Why is this? I don’t have a perfect answer, but I believe it has
to do with the notion of meritocracy.
We all want to believe that we live in a meritocracy, where
the best and the brightest people get the big jobs and the best and
brightest entrepreneurs get opportunities for funding. To explore
 Returns For Firms Based
on Number of Women on Board
10.4%
6.5%
No women 3 or more
SOURCES: Returns = ROIC; Catalyst (for years 2004-2008), but also similar results from
Credit Suisse and many others © Sarah Kaplan
FIGURE ONE
how meritocracies actually work, I decided to examine a domain
where everyone thinks meritocracy truly rules: Silicon Valley and
its venture capital investing community.
Silicon Valley is known for having some mysterious, magi-
cal way of finding greatness and supporting it. By implication,
it must value meritocracy more than any other place in the
world, right?
Not so fast: If you look at the data, only two per cent of ven-
ture capital funding currently goes to female-led startups (and
that is down from six per cent in recent years). How is that a meri-
tocracy? When I asked venture capitalists what was going on,
they said, ‘Women just aren’t bringing us enough good ideas’ or
‘We can’t find enough good female entrepreneurs’.
This seemed problematic to me and, in fact, to several other
researchers. These colleagues decided to create a situation where
the ideas presented to investors were objectively equivalent and
asked, ‘Would we still see this gendered difference in investing?’
They developed a pitch for a new startup, along with a script to
narrate that pitch. Then, they asked potential investors to view
the PowerPoint presentation. The only difference was that, in
some cases, the narration was read by a recorded female voice,
and in others, it was read by a male voice. At the end, they asked,
‘Would you invest in this startup?’
The results were startling: When the exact same pitch with
the exact same script was narrated by a male voice, it was more
than twice as likely to get recommended for an investment.
Maybe venture capital and Silicon Valley are a special case,
you might say. So, I looked at the world of hiring in organiza-
tions. In one experiment, researchers used two versions of the
exact same resumé to apply for a lab technician job. The only dif-
ference was that one applicant was named John and the other,
Returns For These Firms Relative
to Average Perfomance
2.3%
3 or more
-1.6%
No women
FIGURE TWO
Jennifer. When hiring officers evaluated the resumés to decide,
‘Is this person hirable for this job?’, it turned out that ‘John’ was
much more hirable than ‘Jennifer.’
You might still be thinking that people are inferring some
underlying difference in quality that is represented by gender but
not by the résumé or the business pitch. How could we hold this
constant and see if a bias still exists?
So, here’s another experiment: A group of people were asked
to perform some specific tasks on a computer. Everyone in the
experiment used the same exact type of computer, and every-
one was asked to do the same tasks. The only difference was
that some participants were told that their computer’s name was
James, and others were told that their computer’s name was Julie.
After they completed the tasks, they were asked, ‘How
did the computer perform?’ Everyone said that the comput-
ers worked well—there was no discernable difference between
them. But when they were asked, ‘Given that performance, how
much do you think this computer is worth?’ — it turned out that
‘James’ was worth 35 per cent more than ‘Julie.’
The examples of bias in the face of equal levels of quality
and ability are endless, making it harder to cling to the notion of
a meritocracy. In my own research, I’ve spent a lot of time talk-
ing with and observing people who are trying to achieve gender
equality in terms of access to capital and in the world of finance.
So, let’s go back to Silicon Valley for a moment. One of the people
I talked to there told me, “Meritocracies are noble and worthy
goals, but they are absolute myths. The only thing that meritoc-
racy serves in Silicon Valley is as great validation if you’ve made
it; it justifies your success. You are just that much smarter than
everyone else.” And, by the way, it is the same on Wall Street.
As one banker who did a survey of members of her Wall Street
rotmanmagazine.ca / 9
 We are all jointly producing and perpetuating
a system that is biased.
firm said: “The feeling that the firm was a meritocracy was much
more likely to be held by those in the majority [white, male, het-
erosexual] group. Non-majority members were more likely to say
that there were ‘hidden rules’ for success, and that it was harder
to get the right opportunities.”
The takeaway: When you look closely, you realize that the
current ‘meritocracy’ is actually reinforcing the privilege of the
people at the top. Those in positions of privilege want to believe
in meritocracy because it justifies that they have ‘made it’ based
on their own skills — not that they’ve somehow benefited from
privilege. And this, I believe, is why we are being forced to make
a ‘business case’ at the moment: Because we have to prove to
these people in positions of privilege that there is ‘something in
it for them’.
So, what to do? This is not a story about criticizing white, het-
erosexual men. The fact is, we are all in this together: We are all
Tackling the Gender Gap in Entrepreneurship
As tough as it is for talented women to climb the corporate lad-
der, female entrepreneurs may have it even harder: According
to a U.S. Senate report, a paltry 4.4 per cent of the total value of
small-business loans went to women-owned businesses in 2014;
and last year, Bloomberg reported that women comprised only
seven per cent of founders receiving US$20 million or more in
venture capital.
For investors, fixing the flaws in the entrepreneurship ‘meri-
tocracy’ would result in better decisions and higher returns —
ultimately benefiting the entire ecosystem. In my research
with Peter Roberts of Emory University, we are using a gender
lens to scrutinize the performance of ‘innovation accelerators’ —
programs whose explicit goal is to give a boost to new entre-
preneurs — with two questions foremost in mind: Are these
accelerators working for women? And if so, how are they moving
the needle?
Our early findings offer both good news and bad: While the
right combination of messaging and methods could help women
make strides towards gender parity, most accelerators we
studied adopted either half of this equation or none. They said
they wanted to attract female entrepreneurs to their programs,
10 / Rotman Management Fall 2017
jointly producing and perpetuating a system that is biased and so,
we are going to have to collaborate in order to solve the problem.
This is also not a ‘fix the women’ story. We can’t simply say,
‘The system is broken; women need to fix it themselves.’ And we
can’t say to women, ‘You just need to be more self-confident,’
‘You need to be less risk averse’, or, ‘You need to learn to negoti-
ate better’. These are suggestions that are easy to make, as they
come without costs to those with privilege and without a require-
ments that the system itself change.
If ‘fixing the women’ is not the solution, then what is?
My answer is this: Innovation. It will be hard to make further
progress if we continue to do the same old things within the same
old system. In my mind, the demand for a business case perpetu-
ates the existing ways of doing business, because we are being
asked to make a case within the existing system — instead of think-
ing about how to change that system.
but then didn’t actually change any of their practices to be more
inclusive.
Unlike incubators, accelerators don’t offer physical infra-
structure for operations. They are more like ‘entrepreneurship
bootcamps’, where a cohort of start-ups is given fixed-period
access to an intense regimen of mentoring and training. Some
are structured as competitions with a prize (usually funding)
awarded at the end; for others, participants receive only non-
financial resources, such as education or access to networks.
We analyzed 49 accelerators in the social innovation space
— a field generally thought to be female-friendly, so that there
would be enough female participation to make a viable com-
parison. Surveys from the accelerators — as well as from more
than 3,000 ventures that applied to them over a two-year period
(including those that were rejected) — comprised our dataset.
Happily, our study found that acceleration does work, for
both female- and male-led teams. Indeed, we found no average
difference in post-program performance that could be attributed
to gender. A closer analysis, however, revealed some telling
gender differences.
Our first point of interest was the gender mix of the
 I’ve been doing research on innovation for my entire career,
and one thing that is unquestionably true is that innovation is dif-
ficult. The fact that it is so difficult means that organizations put
their best people on it and invest substantial resources in it; and
the fact that it’s so difficult is what makes it so exciting for these
smart people. In contrast, when people start talking about diver-
sity and equality, and how hard those things are to achieve, most
people get depressed or frustrated, rather than excited. What if,
instead, we thought of diversity as an innovation problem—mak-
ing this challenge as exciting as other innovation challenges?
Following are a few examples of what innovation looks like
in this arena.
INNOVATIVE PROCESSES. ‘Social innovation accelerator’ Village
Capital brings together cohorts of entrepreneurs with new ven-
tures to develop their business potential. The goal — as with all
applicants. Not surprisingly, accelerators that made special
overtures to women applicants received more applications
from women. Perhaps also not surprisingly, those who used
language emphasizing financial performance or solo entrepre-
neurs rather than teams, received fewer applications from
women-led start-ups. This is consistent with well-publicized
research demonstrating that female job-seekers are less likely
than males to apply for a job when they don’t fulfill all of the
requirements laid out in a job description.
Accelerators who solicited applications from women not
only received more, but also accepted them at a greater rate
than those that did not reach out to women. Also, programs em-
phasizing financial returns under-selected women — indicating
that women entrepreneurs may have been rational in choosing
not to apply to these programs to begin with.
What about performance? Not all women-led start-ups that
went through these accelerators benefited equally one year
later, or in fact saw any benefit whatsoever. Accelerators with a
critical mass (30 per cent or more) of female program leaders
and mentors were much more effective with women-led
ventures. Additionally, when the accelerator was run as a ‘con-
innovation accelerators — is to help new ventures make their
business more viable through training, mentoring and network-
ing. In this program, two of the ventures from each cohort are se-
lected to receive funding at the end of the program.
Without even having gender in mind, Village Capital’s
leaders had a discussion about the mechanism they were using
to make these investment decisions. In most entrepreneurial
settings — Silicon Valley being the prime model—you pitch your
venture to a panel of investors. But research shows that pitching
is actually a highly-gendered, ‘masculinized’ process. At Village
Capital, they wanted a new model for their due-diligence pro-
cess—so they decided to focus instead on peer mentoring and
peer evaluation. They thought, ‘Wouldn’t it make more sense to
have the actual participants — the entrepreneurs themselves —
vote on which of their peers should receive funding?’
They decided to experiment with this approach, and
test’ (with prizes), women alums performed worse one year later
than their male counterparts; and when funding was made avail-
able to all accelerator participants, women entrepreneurs ended
up outperforming the men.
One would hope that the accelerators with stated prefer-
ences for women would also be the ones with the best practices
for women — but that wasn’t the case. We found little correla-
tion between stated preferences for women entrepreneurs and
the use of gender-inclusive practices. In fact, many programs
that made special efforts to recruit women may have done their
female participants a disservice, by exposing them to a hyper-
competitive program run almost completely by men.
The bottom line: Our fascination with diversity — the nu-
merical representation of women and minorities — may actually
be inhibiting progress towards workplace equality.
Prof. Sarah Kaplan presented her research on innovation accelerators at
INSEAD’s Singapore campus in January 2017.
rotmanmagazine.ca / 11
something amazing happened: While only about 15 per cent of
the entrepreneurs in the program were women, these entrepre-
neurs made up 30 to 40 per cent of those who were voted by
their peers to receive funding. Basically, Village Capital took
proactive steps to innovate and change its system, and as an un-
intended outcome, female entrepreneurs are benefitting.
INNOVATIVE EVALUATIONS. In 1970, women made up only five per
cent of symphony musicians. Today, that number is closer to
30 per cent—and that is because in the 1980s, orchestras began
doing ‘blind auditions’. Candidates are now situated on a stage
behind a screen to play for a jury that can’t see them. In some
orchestras, blind auditions are used just for the preliminary se-
lection, while others use it throughout the process, until a hiring
decision is made. Even when the screen is only used in the pre-
liminary round, it has a powerful impact: Researchers have de-
termined that this step alone makes it 50 per cent more likely that
a woman will advance to the finals.
biases at bay and carry out your evaluation using only the criteria
that actually matter.
This is not just about checking our own individual biases.
Once we recognize that these biases are built into our systems
for hiring, evaluating and investing, we need to think about
ways to change the systems themselves. If we can collectively
recognize that our supposedly-neutral systems are actually gen-
dered in many ways, together, we can make progress on gender
equality.
And we won’t even need a business case to do it. We’ll just
be able to say: Because it’s 2017.

INNOVATIVE CRITERIA. France is in the process of moving to a 40 per

cent quota for women on corporate boards; and everyone is up in
arms: They don’t know how they are going to find these women,
because they claim that there is no pipeline in place. One execu-
tive at a search firm even said, ‘We might have to look outside of
France.’ Well, why not? This is a global economy; maybe French
companies should want to have some board members from out-
side of France. Maybe lots of companies’ criteria for ‘what makes
for a good board member’ are outdated, and if they changed the
criteria, they might see all sorts of benefits. Indeed, research sug-
gests that boards that proactively seek gender diversity become
more effective because the gender diversity brings functional
and intellectual diversity along with it.
Sarah Kaplan is Director of the Institute for Gender + the
In closing Economy, University of Toronto Distinguished Professor
Many of us believe that we can make evaluations based on quality of Gender and the Economy, and Professor of Strategic
alone. But as indicated herein, the research suggests otherwise. Management at the Rotman School of Management.
This article was adapted from her TED talk, which can
The next time you are making a decision about hiring some-
be viewed online.
one, giving an employee a raise or investing in a new business,
perhaps you can take some proactive steps to keep your implicit Rotman faculty research is ranked #3 globally by the Financial Times.

12 / Rotman Management Fall 2017

BUSINESS INNOVATOR
CHAMPION FOR DIVERSITY,
HEALTH AND EDUCATION
WILLIAM DOWNE (MBA ’78)
The 2017 Rotman Lifetime Achievement Award
will recognize William Downe for his outstanding
commitment to enhancing diversity and inclusion
in corporate Canada, his steadfast support
of education and health care, and his nimble
leadership of BMO Financial Group during times
of global uncertainty.

Join us on Wednesday, October 18, 2017,

as the Rotman School of Management at
the University of Toronto, fellow alumni
and members of Canada’s business and
philanthropic community pay tribute to
Mr. Downe’s extraordinary achievements.

Speakers include John Cassaday, Corporate

Director, Founding CEO of Corus Entertainment,
Deborah Gillis, President & CEO, Catalyst,
Rose Patten, Special Advisor, BMO Financial
Group, Robert Prichard, Chairman, Torys LLP,
and Mark Wiseman, Global Head of Active Equities
and Chairman, BlackRock Alternative Investors.
Richard Nesbitt, President & CEO, Global Risk
Institute and Joanna Rotenberg, Group Head,
BMO Wealth Management will emcee the evening.

To find out more about the Rotman Alumni Awards

Dinner, contact jessica.freeman@rotman.utoronto.ca

To register for the Reunite@Rotman

homecoming weekend (October 20–21),
visit rotman.utoronto.ca/reunite

rotmanmagazine.ca / 13
 The former CEO of TD Bank — who led its U.S.
expansion and the tripling of its market capitalization —
talks about his track record of ‘doing the right thing’.

Thought Leader Interview:

Ed Clark
by Karen Christensen

In your time as CEO of TD Bank [2002-2014], you became
known for embracing LGBTQ+ issues. Describe how and why
you became involved.
First, I’ll segue a bit and go back to my eldest son’s wedding a few
years ago. As is the custom, he stood up to give a toast, to thank
everyone for being there. He proceeded to go on and on about
his mother, and all the things he had learned from her; then, he
turned to me said, “My dad? Not so much.” Once the laughter
subsided, he paused and said: “I actually did get one really im-
portant lesson from my father: Do the right thing.”
That simple concept has been a core belief and motivator for
Fast forward to 2002, when I became CEO at TD. At the
time, we had about 55,000 employees, and I asked my HR execu-
tive, How many people have signed up for our same-sex benefits
program? The answer shocked me: 50. I immediately viewed this
as a personal failure of leadership on my part. It really brought
home to me that just ‘doing the right’ thing is not enough: You
actually have to build a culture where people understand what is
right and do the right thing.
Culture can be defined in so many ways, but at TD, we de-
fined it as, ‘what people do when no one else is looking’. When
I found out that so few employees had signed up for same-sex
ILLUSTRATION BY DELPHINE LEE

me throughout my career. And let’s face it, working in financial
services, this approach stood out a bit. Back in 1994, when I was
running Canada Trust, we were the first financial institution to
provide same-sex benefits to employees. To be perfectly hon-
est, we didn’t even think much about it; it just seemed like, why
wouldn’t you provide same-sex benefits? We didn’t see it as part
of any bigger agenda at the time; it was simply the right thing to
do — so we did it.
benefits, it showed me that, when no one was looking, we were
basically running a homophobic organization, where people felt
uncomfortable asking for some basic employee rights. That was
a huge learning moment for me.
Another key lesson I learned is this: A leader’s good behav-
iour is not enough to instill good behaviour throughout an orga-
nization. I used to think that if I behaved in a certain way, natu-
rally, people would follow suit. But that is not how it works. I have

14 / Rotman Management Fall 2017

 Simply put, we have to be intolerant of intolerance.
been in situations where a new leader takes over and they are
arrogant, and they yell at their people; and the culture gradually
shifts to reflect that behaviour. But where the opposite is true —
when there are huge cultural issues and historic prejudice — the
simple fact that the new leader doesn’t buy into those prejudices
is not enough. It requires a proactive, constant effort to change
the culture.
Tell us more about your role in changing TD’s culture.
As I found out, you really have to ‘campaign’. I used to say that I
was running for office, every single day. When I left TD in 2014,
we had 85,000 employees scattered across North America. Obvi-
ously, you can’t just order that many people to believe in what you
believe in, so you have to be very explicit about your expectations.
There is no room for subtlety. I used to go into meetings and say,
“At this bank, you can’t yell at your employees. If you do it ac-
cidentally one time, fine; but the second time, you will be gone.”
And we actually fired people on those grounds.
That’s another key lesson regarding culture change: You
have to be prepared to follow through on your values, and act on
them. Simply put, you have to be intolerant of intolerance, and
recognize that change will only happen if you put your whole
personal brand behind that change. Of course, the first reac-
tion when you take a stand on something will be, ‘This too, shall
pass’. People will think you just want to make headlines, or look
good in the business community. That’s why you have to let them
know that you are going to be relentless — to the point that you
will say to your Board, ‘If I don’t win this battle, I will be a com-
plete failure as CEO’.
You also have to be prepared to be tested, from time to time.
At TD, we become major sponsors of annual pride parades in the
cities we operated in, and one of our competing banks actually
put out messaging that said, ‘Do you really want to be associ-
ated with a bank that would sponsor this type of parade? Have
you seen what people wear in this parade?’ Sometimes, I would
sit down at a meeting, and a colleague would say to me, ‘Your
actions have cost me my bonus! I just lost Client X to the bank
across the street’. In these moments you have to be prepared to
16 / Rotman Management Fall 2017
say, ‘Sorry, but that’s the way it is. If you don’t want to work for a
bank that believes in these things, please walk across the street
and apply for a job.’
At one point, we bought a bank in South Carolina, and the
night before I was to meet with its management team, there
was a big event sponsored by the local business community. I
was up at a podium, talking about TD’s vision and our values.
At one point, an elderly gentleman worked his way through the
crowd, waving his cane, and went up to the microphone, and
said, “Well, the least that I can say about you is, you are not a
Yankee.” I thought to myself, ‘Oh boy, we really are in the Deep
South here.’
When I sat down with the management team the next day,
I said to them, ‘I strongly believe that most business choices
are 55/45. People who think it’s all deadly obvious are missing
half of the reality.’ But, I continued, ‘Values are not contestable:
You are either in or you are out. This is not a deli. You can’t say,
‘I like this one, but I don’t like that one. There is a very good
severance package for anyone who doesn’t buy into our values,
and if you are one of them, you should declare yourself now,
because you will not last’. That was an extremely difficult con-
versation to have, because obviously, I didn’t want to lose the
entire management team. But that is the sort of stance that you
have to take.
You also have to be prepared to talk about what you’re do-
ing in public. Many times, I would say to my management team,
‘Here’s what we are going to do…’, and I could see their eyes glaze
over: They were thinking, ‘He’ll never actually do that!’ So, at our
next big investor conference, I would announce it to the entire
crowd. It was amazing: Once I said something in public, people
realized that I was dead serious.
What is your take on increasing income inequality?
Former President Barack Obama called income inequality
“the defining challenge of our time”. The reality is that the
globalization of technology has made a few people very, very
rich, while the average person has seen few, if any, gains. This
has been a complete disruption of what we used to think of as
‘normal growth’ — whereby everyone across a society grows
together. Unfortunately, when this happens, people actually
move backwards in their thinking. Whether it’s prejudice of
race, gender or sexual-orientation, we are seeing more of it, be-
cause people are afraid, — and they are desperate to get their
‘old world’ back.
When this happens, we need leaders to stand up and say, ‘We
are not going to let this become the norm; we are going to fight it.’
Leaders also have to talk to their peers and say, ‘Let’s be honest:
The distribution of income in the world right now is ridiculous: It
is not sustainable for the top 1% to be enjoying all the gains, while
the real income of the average worker barely budges’.
By the way, we’re kidding ourselves if we think Canada is
an exception to all of this. There is a part of every Canadian that
smugly thinks to herself, ‘We are pretty special here’. The fact is,
we are just as vulnerable to the rise of intolerance as anyone else.
And in my experience, no prejudice is more deeply ingrained in
society than homophobia. All of us have to fight it — and not just
once, but every day.
Each year in Canada, the big banks’ profits continue to
increase, while other parts of the economy struggle. Why is
this happening?
Generally speaking, bank earnings grow in line with the econo-
my, and the only thing that might cause them to grow faster is
demographic changes. The fact that the Baby Boom generation
is nearing retirement definitely means that wealth management
earnings are growing faster; and, if we continue to see a housing
boom, that will also contribute to earnings growth. But generally,
as an investor, I would not expect bank profits to grow any faster
than the economy itself is growing.
Should bank compensation packages for executives contin-
ue to go up? In my view, the answer is No. Financial sector execu-
tives are more than adequately paid. In fact, if you contrast Can-
ada to the U.S., there has been more moderation happening here,
because our Boards have pushed back, and our bank leaders have
been more moderate in terms of what they are asking for. The
bottom line is, if they want to be seen as leaders in society, they
have to acknowledge that we have a severe problem right now,
where lots of people are not benefiting from economic growth.
And that means looking at their own compensation.
You believe the growing income gap is not just unfair, but cor-
rosive to society as a whole. How so?
We are seeing a prime demonstration of that in the U.S. today,
where large parts of the population had been hurting for quite a
while, and the reaction was to turn to a more populist leader and
introduce even more racism, sexism, homophobia and protec-
tionism into society. These things are the direct result of the av-
erage person believing that the leaders of society are reaping all
the benefits, and that they don’t care what happens to ‘the little
guy’. We are seeing the same phenomenon in Europe.
Just look at the proposal that President Trump made [in
February 2017] around healthcare. He basically proposed to
pay for a massive tax cut for the rich by reducing health benefits
to the poor — despite the fact that he ran his campaign on ‘Look-
ing after the little guy’. That type of thing is highly corrosive to
a society.
Do you fear that the populist approach will cross the border
into Canada?
I’m hopeful that it will not. We did see increased inequality in
Canada in the 1990s, but since 2000, that has not happened, be-
cause we run much more generous programs than those in the
U.S. As a result, the very poor in Canada have not lost position
in terms of their income. That is not to say that they shouldn’t be
paid more — but they have not lost their relative share. The thing
to worry about is this: As technology continues to evolve, it is the
working middle class that will fail to see the benefits of economic
growth. We must take steps to mitigate that.
On that note, you are now working (pro-bono) for Ontario
Premier Kathleen Wynne, as her business advisor. Describe
the work you are doing.
We are developing a framework for long-term, sustainable eco-
nomic growth, measured against a pretty straightforward goal:
rotmanmagazine.ca / 17
 Let’s be honest: The distribution of income
in the world right now is ridiculous.

Making the average citizen better off. This focus on the ‘average
citizen’ is important: We need to show that growth can, and will,
benefit working and middle-class Ontarians — not just those at
the top of the income pyramid.
Ontarians get that we are all better off if we can avoid widen-
ing income disparities, and hopefully reduce them. We have built
an open, tolerant society that is able to attract and harmoniously
absorb thousands of immigrants each year — a unique asset in
North America. But when we step back and look at what is hap-
pening in the rest of the world, I worry that we are not changing
fast enough to adapt.
Doing so will require some paradigm shifts and tweaks in
policy. These include shifting our focus in manufacturing to be-
come a world leader in ‘smart manufacturing’; recognizing the
importance of the service economy and focusing on how we can
be leaders in service exports; reducing regulatory burdens on the
economy by focusing on the lowest cost way of achieving desired
regulatory outcomes; turning more of our small businesses into
mid-sized businesses and exporters; and avoiding a race to the
bottom, focusing instead on the parts of the economy where we
are competitive — so that we can afford to pay more to those at
the lower end of the wage scale.
We need a civil service that can do more with less; that can
think of innovative solutions; that can re-engineer the delivery
of government services; and that knows how to manage change.
This requires not just bold thinkers — but people with an ac-
tive focus on the doable. The onus isn’t all on the civil service,
of course: The business community must also step up and sup-
port the discussions required for our society to keep pace with a
complex world. And it must lend a hand — sharing its expertise
to make innovative ideas a reality.
Going forward, how will you apply your ‘do the right thing’
credo?
In addition to my work with the province on a range of projects —
from electronic health records to issues of privatization — I’m still
very involved with charities, in particular, organizations devoted
to homelessness and the LGBTQ+ community. Years ago, when
I found out the high percentage of street youth that was LGBTQ,
I was shocked. Today, I feel truly blessed to be in a financial posi-
tion where I can spend so much of my time giving back.

You have said that there is a ‘huge paradox’ facing today’s

public sector. Please describe it.
Demand for government services is growing rapidly — driven
in part by our aging population. But its capacity to act is con-
strained by a shrinking labour pool and, in turn, a slowing do-
mestic economy, which are putting downward pressure on its
revenue streams.
Back in the 1960s and 70s, recovery in Europe, productivity
gains, the baby boom and growing female participation rates all
fed a period of extraordinary growth. All politicians pretty much
embraced the same mission statement: Find a problem to fix and Ed Clark (UofT BA ’69) is the former President and CEO of TD Bank
make the world better — and they seemed to have the resources Group. He retired in 2014 after 12 years in the role. He is now a senior
to do it. A lot of good came from this period: Medicare. Old Age advisor to Ontario Premier Kathleen Wynne and chairs the Advisory Council
on Government Assets and the recently-launched Vector Institute. He also
Security. Today, politicians face harder choices. Not just manag-
serves on the Board of Trustees of The Brookings Institution and has been
ing in a world of scarcity — but also dealing with forces that can chair of the advisory board for the School of Public Policy and Governance
make a society less fair. at the University of Toronto since 2011.

18 / Rotman Management Fall 2017

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 The Challenge of the Century:
Inclusive Growth
and Development
In rich and poor countries alike, social inclusion is a burning
political issue. Here’s what to do about it.
by R. Samans, J. Blanke, G. Corrigan and M. Drzeniek Hanouz
WHILE INCOME INEQUALITY between countries has declined signifi-
cantly over the past 20 years, it has grown markedly within coun-
tries. A combination of accelerating technological change, global
integration, domestic deregulation and immigration has been
driving major changes in labour markets in most advanced coun-
tries. This has resulted in heightened dislocation, pressure on
median wages and insecurity — even though these countries have
enhanced efficiency and overall national income. At the same
time, many developing countries have had difficulty diffusing
the benefits of rapid growth and industrialization widely enough
to satisfy rising social expectations. The result: In rich and poor
countries alike, social inclusion is a burning political issue.
The dawning Fourth Industrial Revolution appears likely
to accelerate the forces of dispersion. Advanced technologies are
being applied and combined in ways that promise to transform
multiple industries. In particular, the increased sophistication
and declining cost of industrial robots and artificial intelligence
are projected to transform manufacturing and services in a va-
riety of sectors in coming decades, leading to major job losses.
Social impatience with stagnation is spiking in advanced
countries, as dramatically illustrated by the Brexit vote and the
2016 U.S. presidential election. A widespread sense of frustra-
tion is contributing to the growing popularity throughout the
West of political parties that challenge the fundamental tenets
of the post-war liberal international economic order. At the
same time, increasingly- educated and connected populations in
developing countries are raising their own demands for more
widely-shared economic opportunity.
Government, business and other leaders from every region
have been calling for a way to turn the current vicious cycle of
stagnation and dispersion into a virtuous one in which greater
social inclusion and sustainable growth reinforce each other.
In an effort to narrow the gap between aspiration and ac-
tion, the World Economic Forum has developed an actionable
framework for inclusive growth. In this article we will present it,
along with its accompanying metrics.
Defining Success
The ultimate objective of national economic performance is
‘broad-based and sustained progress in living standards’—a con-
cept that encompasses wage and non-wage income (e.g., pension
or child care benefits), economic opportunity and quality of life.
This is the bottom-line basis on which a society evaluates the
economic dimension of its country’s leadership.
Economic growth is one means to this end, albeit a very
important one. While a growing national economic pie does not
guarantee that the size of every household’s piece will be larger,
such an outcome is arithmetically impossible unless the overall
rotmanmagazine.ca / 21
 An increase in the income share of the bottom 20 per cent
is associated with higher GDP growth.
pie expands. Growth creates the possibility of a positive-sum
game for society, even if it does not assure it.
To borrow from a business concept, growth can be thought
of as the top-line measure of national economic performance,
with broad-based or median progress in living standards repre-
senting the bottom-line. The related concept of inclusive growth
can be thought of as a strategy to increase the extent to which
top-line performance is translated into the bottom-line result
society is seeking, i.e., broad-based expansion of economic op-
portunity and prosperity.
Inclusive growth is more than that: An economy is not a busi-
ness, and history has shown that there is a feedback loop between
the bottom and top lines (growth and equity) in a national econ-
omy. This feedback loop can run in a positive or negative direc-
tion. Broadly-shared prosperity can be a tonic for growth, creat-
ing a virtuous cycle of buoyant domestic consumption, increased
business and investor confidence, higher investment, stronger
aggregate demand, expanding employment, rising wages, fur-
ther boosting consumption and demand, and thus even stronger
growth. Alternatively, the dispersion and hollowing out of living
standards can create a pernicious cycle of sluggish consumer
demand, anemic business and investor confidence, weak invest-
ment, expanding unemployment or underemployment, stagnant
wages — and thus even slower growth.
There is mounting evidence that inequality has a statistically
significant negative impact on growth, and that reducing it can
enhance and strengthen the resilience of growth. According to
research by the International Monetary Fund, if the income
share of the top 20 per cent increases, GDP growth tends to de-
cline over the medium term. One explanation is that wealthier
households spend a lower fraction of their incomes, which could
reduce aggregate demand and undermine growth.
In contrast, an increase in the income share of the bottom
20 per cent is associated with higher GDP growth. If the income
share of the rich is lifted by one percentage point, GDP growth
decreases by 0.08 percentage points; if the income share of the
poor and the middle class is increased by one percentage point,
GDP growth increases by as much as 0.38 percentage points over
five years.
The Inclusive Development Index (IDI)
The conventional metric used to measure countries’ level of eco-
nomic development is Gross Domestic Product (GDP) per capita.
But, given the multidimensional nature of living standards — and
the systemic nature of the strategy needed to achieve and sus-
tain them — a wider set of key performance indicators (KPIs) is
needed.
22 / Rotman Management Fall 2017
Our Dashboard of National KPIs includes GDP as well as the
best available cross-country measures of several other important
facets of broad-based progress in living standards. Four indica-
tors have been chosen within three key pillars:
PILLAR 1: GROWTH AND DEVELOPMENT captures four core metrics
of economic growth and development: GDP per capita; la-
bour productivity, which underpins wages that account for
household income; employment, a proxy for the breadth of
economic opportunity and ultimately family, security; and
healthy-life expectancy, a measure of quality of life.
PILLAR 2: INCLUSION includes four core measures of social in-
clusion: Median household income, perhaps the single best
proxy for the breadth of progress in living standards; poverty
rate, a measure of the extent to which progress occurs at the
bottom of the income scale; income Gini, the standard inter-
national measure of inequality; and wealth Gini, the analo-
gous measure of wealth concentration.
PILLAR 3: INTER-GENERATIONAL EQUITY incorporates four mea-
sures of intertemporal equity and sustainability for the rea-
son that growth and gains in living standards are not truly
socially-inclusive if they are generated in a manner that un-
sustainably burdens future generations. These are: Adjust-
ed net saving, which measures the true rate of saving in an
economy, after taking into account investments in human
capital, depletion of natural resources, and damage caused
by pollution; public indebtedness as a share of GDP, which
roughly illustrates the scale of borrowing by the current gen-
eration against the capacities of future ones; the dependen-
cy ratio or proportion of retirees and youth (under 15 years
of age) to the working-age population, which is also a lead-
ing indicator of likely future pressure on a nation’s finances;
and carbon intensity of economic output, an indicator of the
country’s relative performance on climate change.
The result is an index that captures a more integrated picture of
the relative state of economic development than that provided
by GDP alone. Comparing this new composite indicator with
the traditional GDP ranking, it is not surprising that there is a
high correlation — 0.75 — between the two measures, particu-
larly given that our Index includes GDP per capita as one of its
12 indicators. Indeed, Germany and Sweden have exactly the
same rank for both (12 and 6, respectively) and five countries
only differ by one rank, namely Australia, Austria, Denmark,
Norway and Switzerland. These are the countries whose broader
 Dashboard of National KPIs
Key Performance Indicators
Growth and Development Inclusion
GDP Labour Median
(per capita) Productivity Household Income
Healthy Life Poverty Rate
Employment
Expectancy
FIGURE ONE
inclusive growth performance is highly consistent with their
growth in national output more specifically.
However, three advanced countries have a rank that is at
least 10 positions higher on our Index than in the basic GDP per
capita measure: the Czech Republic, New Zealand and the Slo-
vak Republic. These are countries where, despite comparatively
low output per capita, much is in place for an inclusive and sus-
tainable growth process as they move forward.
The U.S. presents a striking counterexample: It ranks ninth
in terms of GDP per capita, but a very low 23rd on the IDI—the
largest difference by far of all advanced economies, indicating
that what looks like healthy growth is in fact characterized by sig-
nificant shortcomings in terms of the inclusiveness and sustain-
ability of the growth process.
In looking at the difference for a selection of developing
countries, the correlation between GDP per capita and the IDI is
a bit lower at 0.73, although for many countries the relationship
is quite strong — for example, for Lithuania and Hungary. How-
ever, 18 out of 82 developing countries display an IDI score that
is nine places or more higher than their GDP per-capita rank-
ing. Six of these — Azerbbaijan, Nicaragua, Vietnam, Cambo-
dia, Bangladesh and Nepal — register IDI scores that are 20 or
more places higher than their GDP per capita rankings, suggest-
ing that their development model is considerably more balanced
and inclusive than that of countries with a comparable national
income per capita.
By contrast, 16 of 82 countries register an IDI ranking that
is nine places lower than their GDP per capita standing. Six
of these — South Africa, Namibia, Swaziland, Nigeria, Zambia
and Mauritania — have IDI ranks that are 20 or more places
lower than their GDP per capita standing. The interactive ver-
sion of this Index [available at wef.ch/igd17] enables users to
vary the weighting of the indicators in the Index to emphasize
the elements they believe are most important for a country’s
circumstances.
Intergenerational Equity
and Sustainability
Income Adjusted Dependency
Gini Net Savings Ratio
Wealth Public Debt Carbon Intensity
Gini (as a share of GDP) of GDP
Towards a New Global Agenda
Based on our analysis of the Inclusive Development Index, five
dimensions of workforce development and security merit par-
ticular attention in industrial countries seeking to keep pace with
the labour market challenges accompanying the Fourth Indus-
trial Revolution. Sadly, our data suggest that few countries — if
any — are performing well across all five.
ACTIVE LABOUR-MARKET POLICIES. As the pace of change accel-
erates, the enabling environment for worker adjustment and
training becomes more vital. Some countries, such as Denmark,
Sweden and Finland, have kept pace thus far; others, notably the
U.S., Israel and Japan, are lagging substantially behind. For ex-
ample, the U.S. invests only 0.11% of GDP in active labour-mar-
ket policies (i.e. training and job-search assistance) compared
with an OECD average of 0.6% and levels of 1% or more among
top performers. A gap such as this predisposes countries to skills
mismatches, long-term under- and unemployment, eroding la-
bour force participation rates, and persistent geographical pock-
ets of social exclusion. That is to say, lower economic growth and
social inclusion.
EQUITY OF ACCESS TO QUALITY BASIC EDUCATION. Inequitable edu-
cational opportunity is another source of avoidable under-
and unemployment and suppressed human and economic
potential. The policy indicator data reveal large variations in
country performance, suggesting that some countries can
learn a considerable amount from the practices of others.
Across several measures of the impact of socioeconomic status
on educational performance, Luxembourg, France, Belgium,
Czech Republic, Israel, Slovak Republic, Sweden, Austria, and
Greece exhibit the greatest weakness, with Canada, Japan,
Estonia, and Finland leading the way. Laggards in this area
risk locking-in higher levels of inequality and social exclusion
across generations.
rotmanmagazine.ca / 23
GENDER PARITY. Redressing major disparities in the participa-
tion of women in the workforce can be one of the most effec-
tive ways to raise rates of economic growth and progress in
broad living standards. East Asian economies have particular
room for improvement in this area, with Japan and Korea hav-
ing among the widest gender gap in labour participation within
the OECD (i.e., female rates of less than 80 per cent of men).
However, other countries such as Italy, Greece, Singapore, Ire-
land and the Czech Republic would also benefit from greater
initiative in this area. Gender gaps in income are even more
pronounced — with female workers earning an estimated 60
per cent or less of the level earned by men — in the UK, Korea,
Netherlands, Japan, Italy, Austria, Greece, Ireland, Israel and the
Slovak Republic. Rates in top-performing countries, by contrast,
are 80 per cent or more.
NON-STANDARD WORK BENEFITS AND PROTECTIONS. Almost half of
the jobs created between 1995 and 2007 in OECD countries
were temporary, part-time, or involved self-employment. As
sharing, on-demand, and care-economy jobs expand along with
the digital economy and employers seek to remain as flexible
as possible in the global market, this part of the labour sector is
likely to expand further. Because these workers tend to experi-
ence weaker statutory benefits and protections in many coun-
tries, there is a risk that inequality will expand as a result of the
changing nature of work. Most such rules were crafted in an
earlier era, and updating them should be a priority in the Fourth
Industrial Revolution.
SCHOOL-TO-WORK TRANSITION. Many advanced economies have
made great progress in raising the proportion of student popu-
lation that goes on to attain a tertiary education degree. Others
still have a considerable way to go in making university educa-
tion broadly accessible, with Canada, Switzerland, the UK, and
Slovak Republic having enrollment rates below 60 per cent,
compared with 80 per cent or above in the top-12 OECD coun-
tries. At the same time, some advanced countries appear to be
significantly underinvesting in technical, software and skilled
trades. In six countries — Canada, Singapore, Republic of Korea,
Japan, Ireland, and reportedly the U.S. (for which official data
are incomplete) — fewer than one third of secondary students
enroll in vocational programs.
Refocusing Trade and Investment: Action Items
A more inclusive approach to international trade and investment
cooperation will require a shift in policymakers’ emphasis from
the negotiation of formal new norms such as free trade agree-
ments to the facilitation of trade and investment activity within
as well as among countries. Four sets of recommendations are
particularly relevant for inclusive growth.
24 / Rotman Management Fall 2017
1. SCALING INTERNET-ENABLED SMALL-BUSINESS TRADE
• Create comprehensive, online, single points of enquiry for
cross-border service providers to learn about the regulatory,
licensing, and other administrative requirements in the host
country.
• Establish standardized customs levels to facilitate cross-
border flows of small packages supplied by Internet-enabled
retail services providers, especially small and medium en-
terprises (SMEs). For example, by adopting a $100 (or even
$200) minimum common threshold for developing coun-
tries and a higher threshold, such as $800, for advanced
countries.
• Adopt interoperable, digitally-enabled single windows for
customs and border compliance with open application pro-
gram interfaces (APIs) that allow developers to create digital
platforms which seamlessly link SMEs with various coun-
tries’ single windows.
• Establish clear rules pertaining to electronic transmission
of data and related services by aligning rules with reading
practices regarding intermediary liability, privacy, intellec-
tual property, consumer protection, electronic signature,
and dispute settlement; and by allowing the free flow of data
across borders, subject to an exceptions provision.
2. FACILITATE REDUCTIONS IN BARRIERS TO TRADE IN SERVICES AND TO
INVESTMENT IN INDUSTRIAL VALUE CHAINS
• Develop a comprehensive World Trade Organization
Framework for Trade Facilitation in Services, with both ca-
pacity-building and graduated normative elements as in the
recent WTO Trade Facilitation Agreement to support the in-
clusion of developing countries.
• Establish a Global Value Chain Partnership — a public-
private platform to improve the cross-country inclusivity
and social responsibility of global supply chains. The plat-
form would facilitate cooperation between governments
seeking to integrate their economies with international
supply chains and the companies and experts who could be
their partners.
3. CATALYZE THE LEVELING-UP OF SOCIAL AND ENVIRONMENTAL STAN-
DARDS
• A group of like-minded governments could catalyze the scal-
ing of responsible supply-chain practices by multinational
and other companies around the world by forming an open
‘club’ that establishes a common floor for such standards.
They would assist other countries to join them by offering
trade preferences and substantial capacity-building assis-
tance. The recent partnership between the World Bank and
the World Economic Forum to create an Inclusive Develop-
ment Hub to facilitate the contribution of responsible value
 Canada’s Approach: A Model for the Global Community
Canada’s commitment to inclusive growth and its ambitious plan
to revitalize its economy, foster long-term growth and strengthen
the middle class provides a model for the international commu-
nity. Central to this plan is Canada’s continued commitment to
diversity, immigration and global investment.
Canada’s approach recognizes that there are no quick and
easy solutions to fostering, broadly-shared growth, which is
why its government is using a broad set of policy levers. It began
by taking steps to create fairer income distribution through the
provision of direct income support. Benefits for low- and middle-
income families with children were increased, which is expected
to reduce the number of children living in poverty by roughly 40
per cent. Income taxes have also been reduced for nearly nine
million middle-class Canadians.
The government has taken important steps to reinvigorate
growth, starting with increased investment in public infrastruc-
ture; redoubling of efforts to attract foreign capital through the
establishment of a new agency, the Invest in Canada Hub;
and changes to Canada’s immigration system to provide faster
access to top global talent. New investments in infrastructure
totaling $95 billion will boost economic growth and social inclu-
sion by reducing traffic congestion and commute times, and
by providing more affordable housing. A new institution, the
Canada Infrastructure Bank, will be set up to focus on at-
tracting private capital to spur innovative funding and financing
for infrastructure projects. This bank will work with govern-
ments and investors to provide better results for middle-class
chains to inclusive development could provide a platform to
facilitate progress in this respect.
4. MODERNIZE AND HARMONIZE INTERNATIONAL INVESTMENT AND RE-
GIONAL TRADE AGREEMENTS
• A public-private process to create a Model Investment
Agreement — using the G20 Guiding Principles for Global
Investment Policymaking and United Nations’ Conference
on Trade and Development Investment Policy Framework
for Sustainable Development as starting points — could seek
to build common ground on various facets of investment
agreements, including state and investor obligations. For-
mulated as a best practice open for voluntary adoption, this
model framework would be a bottom-up way to spur harmo-
nization across the more than 3,200 existing international
investment agreements.
In closing
Countries eager to improve social inclusion and economic
growth must assemble a much wider structural economic re-
form strategy than has been the norm, drawing from the consid-
erable expertise available within the international community.
The framework described herein will inform the develop-
ment of the WEF’s new Centre on the Fourth Industrial Revolu-
Canadians by identifying potential projects and investment
opportunities that contribute to larger economic, social and
environmental returns.
The Government of Canada has also introduced important
measures to advance gender equality. Budget 2016 included
new investments in Status of Women Canada — a govern-
ment agency that promotes equality for women and their full
participation in the economic, social and democratic life of the
country — to enhance its capacity to provide government-wide
support on the gender-based analysis of programs, policies,
and legislation.
Canada is changing the way it looks at the performance
of its economy by adopting a new lens that measures progress
differently, placing greater weight on broad-based gains rather
than strict economic measurements that might miss the bigger
picture. This new perspective combines metrics like job creation
with equally important outcomes like quality of life, job satisfac-
tion, poverty reduction and access to opportunities.
Canada recognizes that the public and private sectors
must work together to help create conditions for success.
In March 2016, Canada’s Minister of Finance announced the
creation of an Advisory Council on Economic Growth to focus
on policy actions that generate strong and sustained long-term
growth that is shared across income groups. The Council has
used the World Economic Forum’s Framework for Inclusive
Growth to evaluate the implications of its recommendations
for inclusiveness.
tion. Based in San Francisco, it will examine governance consider-
ations related to emerging technologies, including cross-cutting
societal issues such as those addressed here. Through this initia-
tive, the World Economic Forum seeks to contribute to a better
appreciation within societies of how to make inclusive growth
and development a reality at a time of accelerating change.
Richard Samans is a Member of the Manag-
ing Board of the World Economic Forum
(WEF) and heads up its Centre for the Global
Agenda. Jennifer Blanke is Vice President
Agriculture, Human and Social Development
at the African Development Bank and the
former Chief Economist at the WEF. Gemma
Corrigan is Practice Lead for Inclusive Growth
at the WEF. Margareta Drzeniek Hanouz
is Head of Competitiveness Research and
a Senior Economist with the Global Competitiveness and Benchmarking
Network at the WEF.
The complete report on which this article is based can be downloaded at:
http://www3.weforum.org/docs/WEF_Forum_IncGrwth_2017.pdf
rotmanmagazine.ca / 25
The New
Urban Crisis:
Putting an End to Winner-
Takes-All Urbanism
Our cities are failing the middle class, increasing inequality
and deepening segregation. Here’s what to do about it.
by Richard Florida
TODAY’S URBAN CRISIS is not the first we have faced, but it bears
little resemblance to its predecessor. The crisis of the 1960s and
70s was defined by the economic abandonment of U.S. cities.
Shaped by deindustrialization and ‘white flight’, many cities lost
their core industries and became sites of growing and persistent
poverty. Housing decayed; crime and violence increased; and
social problems escalated — many of which remain with us to
this day.
What I see as ‘the New Urban Crisis’ is more all-encom-
passing. Although two of its core features — mounting inequality
and rising housing prices — are most often discussed in relation
to urban centres such as New York, London and Toronto, the cri-
sis also hits hard at small and mid-sized cities, and its other core
features — economic and racial segregation, spatial inequality,
entrenched poverty — are becoming as common in the suburbs
as they are in the cities.
Seen in this light, the New Urban Crisis is a crisis of urban-
ization itself, and of contemporary capitalism writ large. For the
past six years, I have married my long-held interest in urban eco-
nomic development with the insights of urban sociologists on
the corrosive effects of concentrated poverty, mapping the deep
new divides that isolate the classes and tracing the growth of eco-
nomic disadvantage in the suburbs. In this excerpt from my latest
book, I will present a few of my key findings.
Five Dimensions of the Crisis
As my colleagues and I have come to understand it, the New Ur-
ban Crisis encompasses five key dimensions:
GROWING GAPS CREATED BY SUPERSTAR CITIES. The first is the deep
and growing economic gap between a small number of super-
star cities, such as New York, London, Hong Kong, Los Ange-
les and Toronto, along with leading technology and knowledge
hubs, such as the San Francisco Bay Area, Washington DC, Bos-
ton, Seattle, and other cities around the world. These superstar
locations have wildly disproportionate shares of the world’s
leading high-value industries, high-tech innovation, startups
and top talent.
rotmanmagazine.ca / 27
 The 50 largest metro areas house just seven per cent of the world’s total
population, but generate 40 per cent of global economic activity.
THE CRISIS OF SUCCESS IN SUPERSTAR CITIES. Citizens of superstar
cities face increasingly unaffordable housing and staggering
levels of inequality. In these places, mere gentrification has es-
calated into what some have called ‘plutocratization’. It’s not just
musicians, artists and creatives who are being pushed out: Grow-
ing numbers of economically-advantaged knowledge workers
are seeing their money eaten up by high housing prices and now
fear that their own children will never own a home. But it is the
blue-collar and service workers, along with the poor and dis-
advantaged, who face the direst economic consequences. Both
groups are being denied the opportunities and upward mobility
that these cities have to offer.
GROWING INEQUALITY AND SEGREGATION. This is taking place within
virtually every city and metro area — winners and losers alike.
The New Urban Crisis is marked by ‘the disappearing middle’
— the fading of the once large middle class and its once-stable
neighbourhoods. From 1970 to 2012, the share of families living
in middle-class neighbourhoods declined from 65 to 40 per cent,
while the share living in either poor or affluent neighbourhoods
grew substantially. As the middle has been hollowed out, neigh-
bourhoods are dividing into large areas of concentrated disad-
vantage and much smaller areas of concentrated affluence.
THE BURGEONING CRISIS OF THE SUBURBS. Poverty, insecurity and
crime are mounting in the suburbs, and economic and racial
segregation are growing deeper. In the U.S. today, there are
more poor people in the suburbs than there are in cities — 17 mil-
lion versus 13.5 million. And the ranks of the suburban poor are
growing much faster, by a staggering 66 per cent between 2000
and 2013, compared to 29 per cent in urban areas. Some of this
suburban poverty is being imported from the cities as displaced
families seek more affordable places to live. But much of it is
also homegrown: More and more people who were once mem-
bers of the middle class have fallen out of it, as a result of job
loss or rising housing prices.
THE CRISIS OF URBANIZATION IN THE DEVELOPING WORLD. Urban op-
timists believe that urbanization will ultimately bring econom-
ic growth, rising living standards and a growing middle class
28 / Rotman Management Fall 2017
to the developing world, just like it did for the U.S., Canada,
Europe and more recently, China. Cities, after all, have histori-
cally driven the development of national economies. But we are
seeing the rise of a troubling phenomenon of ‘urbanization with-
out growth’, in which people pour into rapidly-urbanizing areas
of the developing world, but see little to no improvement in their
living standards. More than 800 million people currently live in
substandard conditions, and their numbers will continue to grow
as the world’s urban population surges.
The Global Clustering Contradiction
The New Urban Crisis is shaped by the fundamental contradic-
tion brought on by ‘urban clustering’. On the one hand, it is no
longer natural resources or even large corporations driving eco-
nomic progress, but the ability of cities to cluster and concentrate
talented people, enabling them to combine and recombine their
ideas and efforts, which massively increases innovation and pro-
ductivity. Out of that ferment come the new inventions and en-
trepreneurial enterprise that power prosperity.
The extent to which economic activity has become concen-
trated in the world’s cities and metropolitan areas is staggering:
The 50 largest metros across the globe house just seven per cent
of the world’s total population, but generate 40 per cent of global
economic activity. Just 40 mega-regions — constellations of cit-
ies and metros like the Boston–New York–Washington corridor
— account for roughly two-thirds of the world’s economic output
and more than 85 per cent of its innovation, while housing just 18
per cent of its population.
The amount of economic activity packed into small urban
spaces within these cities is even more astonishing: Just one small
sliver of downtown San Francisco, for instance, attracts billions
of dollars in venture capital annually — more than any nation on
the planet save for the U.S. This is why I believe it is more use-
ful to refer to contemporary capitalism as ‘urbanized knowledge
capitalism’ as opposed to ‘knowledge-based capitalism’.
Even as urban clustering drives growth, it also carves deep
divides into our society. Not everything can cluster in the same
limited space; some things ultimately crowd others out. And, as
with most things in life, the winners in the competition for urban
space are those with the most money to spend. As the affluent
and advantaged return to cities, they colonize the best locations,
while everyone else is crammed into the remaining disadvan-
taged areas or pushed farther out into the suburbs.
This competition in turn shapes a related economic paradox:
The paradox of land. There are seemingly-endless amounts of
land in the world, but not nearly enough of it where it is needed
most. Place and class are combining to reinforce and reproduce
socioeconomic advantage: Those at the top locate in communi-
ties that afford them privileged access to the best schools, servic-
es and economic opportunities, while the rest get the ‘leftover’
neighbourhoods, which have inferior versions of all these things.
Sadly, these divides will only deepen and harden in the age
of Trump. For all of his populist rhetoric about fighting for for-
gotten blue-collar workers and rebuilding the middle class, his
administration and the Republican congressional majority are
unlikely to address the deep structural forces that created them
— and even less likely to help the people and places that are being
left behind.
Urbanism for All
So, what can we do to overcome the New Urban Crisis? My col-
leagues and I believe that a strategy for a more productive urban-
ism can take shape around seven pillars:
1. Reform zoning and building codes, as well as tax policies, to
ensure that the clustering force works to the benefit of all.
2. Invest in the infrastructure needed to spur density and clus-
tering and limit costly and inefficient sprawl.
3. Build more affordable rental housing in central locations.
4. Expand the middle class by turning low-wage service jobs
into family-supporting work.
5. Tackle concentrated poverty head-on by investing in people
and places.
6. Engage in a global effort to build stronger, more prosperous
cities in rapidly urbanizing parts of the emerging world.
7. Empower communities and enable local leaders to strength-
en their own economies and cope with the challenges of the
New Urban Crisis.
I will now discuss the first three pillars in more detail.
1. MAKE CLUSTERING WORK FOR US, NOT AGAINST US
The clustering force is the key driver of economic growth, and
it is absolutely critical that we effectively harness it to create the
broadest possible benefits. As indicated, the crux of the problem
revolves around the ‘urban land nexus’: Land is scarce precisely
where it is needed the most. We can’t ‘make’ more land — but
we can develop the land we have more efficiently.
A growing chorus of ‘market urbanists’ argues that the best
way to do this is by eliminating the restrictive zoning and build-
ing codes that limit the market’s ability to build as needed. They
make an important point: Zoning and building codes need to be
liberalized and modernized. But land use deregulation by itself
is insufficient to address the full breadth of the problem. While it
will result in new housing and increased density, the high costs of
urban land combined with the high cost of high-rise construction
mean it is likely to mainly add more expensive luxury towers —
and will do little to provide the kinds of affordable housing our
cities really need.
Urban economies are powered not by extreme residential
density and huge towers, but by the mid-rise, mixed-used den-
sity that promotes mixing and interaction. The world’s most
innovative places are not the skyscraper districts and vertical
sprawl of Hong Kong or Singapore, but the former industrial
neighbourhoods of New York, San Francisco and London, which
are filled with mid-rise buildings, factory and warehouse lofts,
and the occasional high-rise, arrayed along streets that enable
constant mixing and interaction to take place. Extreme land use
deregulation could end up damaging these innovative urban dis-
tricts by encouraging too much vertical sprawl and turning them
into ‘condo canyons’. It is precisely these kinds of mixed-use
neighbourhoods that are in short supply, because we effectively
stopped building them long ago. Every time we kill one off, we
lose an irreplaceable asset for innovation.
In his book Progress and Poverty, economist Henry George
argued that a ‘land value tax’ would not only make more effective
use of land, but also raise wages, reduce inequality and generate
greater productivity. The basic premise is that the less developed
land is, the higher it should be taxed. George in fact suggested
that undeveloped land be taxed at a rate of 100 per cent, minus
the improvements made to it. Absent such improvements, he
rotmanmagazine.ca / 29
 Building more rental housing reinforces the urban clustering
that stimulates innovation and economic growth.
argued, all of the land’s value should return to the public com-
mons.
In today’s cities, property owners who use their land for,
say, undeveloped surface parking lots, would be taxed at a very
high rate. A small apartment building would be taxed at a lower
rate, and a larger one at an even lower rate. This system would
provide greater incentives to put land in high-priced urban cen-
ters to its most productive use, increasing density and clustering.
Furthermore, under the current property tax system, land-
lords and property owners not only have disincentives to add
density and further develop their properties, but they are able to
reap extraordinary rewards by simply profiting from the increase
in property values that is created by neighbourhood upgrading
and the ongoing appreciation of real estate values. The High Line
Park in New York, for instance, created a huge increase in the
land value of surrounding property, which generated windfalls
for real-estate developers, but little if any of those gains were
returned to the park or to the broader community.
A land value tax can help ensure that such benefits are
shared more broadly by the public, because the rise in the value
of the land that occurs through these broader neighbourhood
improvements is also captured by the tax and returned to the
public, where it can potentially be used to invest in needed ser-
vices and help to close economic gaps in the community.
2. INVEST IN INFRASTRUCTURE FOR DENSITY AND GROWTH
Infrastructure is an important piece of the puzzle. If well planned
and invested in strategically, it can help expand the scale of clus-
tered development, the number of places that can support clus-
tered development, and the connections between outlying areas
and existing clustered development close to urban centres.
Infrastructure is certainly the topic du jour among politicians
of all stripes, including Donald Trump, who has called for sub-
stantial investments in it to stimulate the economy. In Canada,
the administration of Justin Trudeau is doing just this, making
a huge financial commitment to infrastructure to spur economic
growth and create better jobs. But a menu of random projects
won’t do the trick. What we need are strategic investments in
the kind of infrastructure that will push us closer together, as op-
posed to spreading us apart, and that will strengthen the urban
density and clustering that power economic growth. That means
shifting infrastructure investment away from roads and highways
that spread us out and towards mass transit that helps cluster
people and economic activity closer together. Research shows
that transit-served neighbourhoods provide better access to jobs
30 / Rotman Management Fall 2017
and improve residents’ chances for upward mobility. Expanding
transit will increase the number of these locations and enable
greater numbers of people, especially the less advantaged, to
gain access to them.
The fact is, when metro areas reach a threshold of five or
six million people, cars and roads are no longer a very effective
way to move people around. The U.S. has quite a few areas that
are roughly this size — for example, the Bay Area, Greater Wash-
ington DC, Boston, Philadelphia, Houston, Dallas, Atlanta and
Miami. Investing in transit and reducing reliance on cars is a key
mechanism for generating more clustered development in both
central and outlying areas.
High-speed rail can also help to link separate metros to-
gether in larger and more formidable mega-regions. This has
already happened in some parts of the U.S. without the benefit
of high-speed rail — namely, the so-called Amtrak Corridor
running between Boston, New York, Philadelphia, Baltimore
and Washington, DC, an area with a population of more than
50 million people and economic output north of $2 trillion. True
high-speed rail — travelling at speeds like France’s TGV or Ja-
pan’s Shinkansen — could reduce the travel time between New
York and Boston to less than 90 minutes; and trips from LA to
San Francisco, or Pittsburgh to Chicago, would shrink to a more
manageable two and a half hours. This could substantially ex-
pand the functional labour markets of these places and bolster
their overall economic competitiveness.
The most effective way to fund new transit and high-speed
rail is to redirect a larger share of the gas tax toward such proj-
ects. It is time to level the playing field by reducing the outright
subsidy we give to the automobile in the form of roads and
highways. Cities in other parts of the world, including London,
have begun to institute congestion charges, which make driv-
ers pay for their use of busy roads to help alleviate traffic and
pollution.
New developments like self-driving cars, electric vehicles
and on-demand systems such as Uber and Lyft will certainly
play a big role in the city of the future. But we still need mass
transit to provide the connective fiber that will increase cluster-
ing and enable the development of a larger number of dense,
mixed-use clustered neighbourhoods that are affordable to
more people.
3. BUILD MORE AFFORDABLE RENTAL HOUSING
In our most expensive cities, housing has become unaffordable
for all but the top one-third of society’s most advantaged people.
Essential service providers — including police and firefighters,
teachers, hospital workers and restaurant workers — are being
pushed farther and farther away from urban centres and other
key areas of economic activity. In some places, it is becoming so
hard to attract people to these roles that large-scale commercial
developers are calling for ‘urban workforce housing’ to ensure
their cities have the workers they need to operate.
The problem of housing affordability may be most acute in
superstar cities and tech hubs, but it extends far beyond them.
People across the country, especially low-income renters, are
spending too much of their incomes on housing. And the hous-
ing system is strongly oriented toward single-family housing in
sprawling suburbs and against the more affordable, clustered
rental housing that urbanized knowledge capitalism requires.
A big part of the problem is housing policy itself. Designed
to stimulate suburbanization, current housing policy massively
subsidizes homeowners. The U.S. government provides an esti-
mated $200 billion in annual subsidies for home ownership via
tax deductions for mortgage interest. When the indirect costs are
accounted for, the subsidy may run as high as $600 billion, four
to 12 times as much as the nation spends on housing assistance to
those in need ($46 billion a year). The top 20 per cent of income
earners gain 75 per cent of these benefits, and the top 1 % hauls
in 15 per cent. These policies badly distort the housing market,
causing it to produce too much spread-out, single-family housing
and not enough clustered rental housing.
Despite these distortions, the shift from single-family sub-
urban homes to multi-family rental housing, which I refer to as
‘the great housing reset’, is already under way. The number of
renter households increased by nine million between 2005 and
2015—the largest one-decade increase on record. By the end of
that period, 43 million Americans were renting, and the share of
renters had grown from 31 to 37 per cent of the population. More
than seven in ten Millennials between the ages of 18 and 34 are
renters — as are more than half the residents of New York, LA
and San Francisco.
In my view, renting is more closely aligned with the needs
of the urbanized knowledge-based economy than home owner-
ship. Renters are more likely to live close to work or use transit
to get to their jobs, while suburban homeowners are more likely
to commute long distances in their cars. Metro areas with higher
levels of renters have higher levels of innovation, greater con-
centrations of high-tech firms, higher shares of college graduates
and the creative class, and higher wages, incomes, and produc-
tivity, while metro areas with higher levels of homeownership are
less innovative, less productive, and less diverse, on average, and
have smaller shares of highly educated and skilled talent.
Building more rental housing and less single-family housing
is in sync with and reinforces the urban clustering that stimulates
innovation and economic growth. Still, too many renters are se-
riously burdened by their housing costs, many of them caught
in a death spiral of rising rents and declining incomes. Average
rents increased by more than 22 per cent between 2006 and
2014, while average incomes declined by nearly six per cent. The
number of renters paying 30 per cent or more of their income for
rent (which is considered the threshold for being cost-burdened)
soared from 14.8 million in 2001 to 21.3 million in 2014, while the
number who devoted more than half of their income to rent grew
from 7.5 million to 11.4 million.
In closing
Ultimately, the only way forward for our economy and society is
more — not less — urbanism. How we respond to the New Urban
Crisis will determine whether our cities, suburbs and nations will
successfully forge a new era of sustainable and inclusive prosper-
ity, or fall victim to our growing inequities and divides.
New and better urbanism is indeed possible, but it will
not create itself. Do we want the divides and contradictions of
winner-take-all urbanism, or the promise of a fuller and fairer
urbanism for all? This is the defining issue — and struggle — of
our time.
Richard Florida is University Professor and Director of Cities
at the Martin Prosperity Institute at the Rotman School of
Management, a Distinguished Visiting Fellow at NYU and
co-founder of The Atlantic’s CityLab. This article is an adapted
excerpt from his latest book, The New Urban Crisis: How Our
Cities Are Increasing Inequality, Deepening Segregation, and Failing the Middle
Class — and What We Can Do About It (Basic Books, 2017).
Rotman faculty research is ranked #3 globally by the Financial Times.
rotmanmagazine.ca / 31
 DIVERSITY’S
NEW FRONTIER:
Diversity of Thought
Advances in neuroscience can help to ‘operationalize’ diversity
of thought and change how we harness human capital.
by Anesa Parker, Carmen Medina and Elizabeth Schill
UP UNTIL NOW, diversity initiatives have focused primarily on fair-
ness for legally-protected populations. But the smartest orga-
nizations are embracing and harnessing a more powerful and
nuanced type of diversity: Diversity of thought. Advances in
neuroscience mean that matching people to specific jobs based
on more rigorous cognitive analysis is now within reach. Organi-
zations that can operationalize faster ideation can begin to pur-
posely align individuals to certain teams and jobs simply because
of the way they think.
As we will demonstrate, diversity of thought brings an or-
ganization three key benefits: It helps guard against groupthink
and expert overconfidence; it helps to increase the scale of new
insights; and it helps to identify which employees can best tackle
your most pressing problems.
The Next Frontier
Diversity of thought refers to a concept that all of us know
intuitively and experience throughout our lives: Every human
being has a unique blend of identities, cultures and experiences
that inform how he or she thinks, interprets, negotiates and ac-
complishes a particular task. Diversity of thought goes beyond
the affirmation of equality — simply recognizing differences and
responding to them. Instead, the focus is on realizing the full
potential of people, and in turn, the organization, by acknowl-
edging and appreciating the promise of each person’s unique
way of thinking.
The implication of this ‘new frontier in diversity’ is that lead-
ers must let go of the idea that there is one ‘right way’ and instead
focus on creating a learning culture where people feel accepted,
are comfortable contributing ideas, and actively seek to learn
from each other.
In the not-too-distant future, managers adept at leading di-
verse work teams will be sensitive not only to factors of gender,
race, ethnicity, sexuality and ability, but also to understanding
how people think differently. Managers will also need to un-
derstand how to use emergent technologies to help employees
rotmanmagazine.ca / 33
 Individuals have particular thinking strengths: Some of us are inclined to
be better at math, others at pattern recognition or creativity.
evaluate their unique thinking strengths and identify their opti-
mal contributions to your mission.
Technology, of course, is not a panacea. Leaders will also
need to adjust their management styles to better encourage con-
nections between individuals and their ideas in order to improve
problem solving, learning, cooperation and innovation.
Hiring practices also need to evolve. Hiring for a diversity
of backgrounds may not necessarily yield different perspectives,
because physical diversity is not a sufficient proxy for diversity
of thought. And once someone is hired, organizations will need
to adjust their approach to managing and advancing each indi-
vidual’s career.
Over the last 20 years, cognitive scientists and neurologists
have made progress in understanding how the human mind
works. For example, many of us are familiar with the distinction
between left- and right-brain thinking and its impact on work
performance. Although this taxonomy is overly simplistic, re-
search does show that individuals have differing cognitive styles
and particular thinking strengths: Some of us are inclined to be
better at math, others at pattern recognition or creativity. Ap-
Problem Solving In a Post-Truth World by Glen Markham
“They all die!”
We were on our way out of a screening of Rogue One – A Star
Wars Story, and the 8-to-10-year olds in the group were con-
sumed by the realization that every single main character had
died. This was not what they were expecting. To those of us who
understood more about the saga, this was less shocking: We saw
that the plans had gotten out to the Death Star in time, renewing
the ongoing clash between the dark side and The Force: There
would be another sequel.
The word rogue can be applied many ways, but a general
definition is the idea of being outside of the norm — an outlier.
On January 20, 2017, a new kind of rogue assumed the presi-
dency of the United States. Since then, we have witnessed rogue
behaviour—behaviour that, while consistent with the man,
is inconsistent with perceptions of how things ‘should be’.
The bottom line: Both money and meaning are up for grabs.
And the stakes have never been higher.
Stephen Colbert coined the term ‘Truthiness’ in 2006.  and the intelligence services are now in the black books. These
Today, more than a decade later, it has never been more apt.
Terms such as ‘alternative facts’ and ‘fake news’ have raised
questions about how people believe and perceive the world
around them.  The question many are asking is, How can so
many people have such differing views on things that appear
to be factual?
34 / Rotman Management Fall 2017
propriately harnessed, even the slightest nuance of one worker’s
thinking can bring value to an organization.
Investing in diversity of thought can help organizations real-
ize three key benefits.
BENEFIT 1: DIVERSE THINKERS GUARD AGAINST GROUPTHINK AND EXPERT
OVERCONFIDENCE. Research demonstrates that diverse thinking
helps organizations make better decisions because it triggers cre-
ative information processing that is often absent in homogenous
groups. Moreover, while homogenous groups are typically more
confident in their performance, diverse groups are often more
successful in completing tasks. This is because diverse team
members don’t just introduce new viewpoints; they also trigger
more careful information processing that is typically absent in
homogenous groups.
Some of the most ground-breaking research in this area
is being conducted by the government, specifically by the In-
telligence Advanced Research Projects Activity (IARPA). Its
Aggregative Contingent Estimation (ACE) program aims “to
dramatically enhance the accuracy, precision and timeliness of
Already, we have seen the death of many assumptions that
have guided policy, politicians, people and the press for decades.
Arguably, this all started with the death of consensus—a shift-
ing of the sands of belief. One thing is certain: A situation with no
shared understanding is truly wicked.
The next four years are going to be a bonanza for those of
us in the practice of tackling wicked problems. What else would
you call a situation with little precedent, where ambiguity reigns
and where new languages are being spoken? Economic inequal-
ity, healthcare and earth care were wicked-enough problems
already—but now, we get to work on them under constantly-
shifting baselines. Not just the baselines we forget about that have
‘normalized’ situations, such as the ongoing loss of marine life, but
new ones that determine what we want for our society—and for
our world.
Going forward, we are going to have to gather some strange
bedfellows. As one reporter recently pointed out, both the media
two—usually on opposite sides — now find themselves being
singled out and looking to support each other. What new mashups
will be created? What new alliances? What new possibilities can
be explored? What new opportunities exist for creating shared
understanding?
There is a new language in town, and since getting out of
 While homogenous groups are more confident in their performance,
diverse groups are often more successful in completing tasks.
forecasts for a broad range of event types, through the develop-
ment of advanced techniques that elicit, weight and combine
the judgments of many intelligence analysts.”
Philip Tetlock, a professor of management and psychol-
ogy at the University of Pennsylvania, leads an ACE program
research team. Tetlock, whose book Expert Political Judgment ex-
amined the frequent overconfidence of substantive experts, has
assembled a group of laypeople with diverse backgrounds to pre-
dict the future likelihood of certain events. This eclectic team has
replicated the results Tetlock first published in his book by hand-
ily beating the recognized experts in its ability to forecast future
events. The ACE studies and Tetlock’s original research illus-
trate the potential that organizations have to “fully understand
the causes of successful collective performance and to improve
their outcomes by assembling teams of more diverse thinkers to
complement their more traditional experts.”
BENEFIT 2: DIVERSE THINKERS HELP INCREASE THE SCALE OF NEW
INSIGHTS. When time is of the essence, organizations often resort
to gathering a group of experts and specialists — the premise be-
town is not always possible, we need to learn it and use it—rather
than deny it. In Connecting Hearts and Minds, culturalist Greg
Nees shows that people today are living in separate psychologi-
cal realities that are built upon separate sources of information
and the human brain’s desire to avoid cognitive dissonance. These
realities are maintained by searching for facts that support our
beliefs while ignoring those facts that don’t. Because the warring
sides are each defending a ‘virtual reality’, they are prone to see
anyone who does not agree with them as the enemy, and are thus
unable to talk and work well with ‘them’.
To manage this, Nees argues, we need more face-to-face
communication based on the principle of ‘safety first, truth second’.
In order to avoid triggering people, we need to create safety first—
because when the fight-or-flight response kicks in, a productive
conversation becomes impossible. Once a modicum of trust is built
up, we can then begin to explore the facts in a way that allows the
truth to emerge. Nees points to the importance of three particular
skills for managing the challenges of today’s dueling realities: 
1. Self-awareness and deep listening. Deep listening is not
only listening to words, it’s listening for meaning and connection.
When we become more self-aware, we automatically become
better able to listen to people whose viewpoints might otherwise
trigger us.
ing that subject-matter knowledge is more likely to quickly gen-
erate a quality solution to whatever issue faces the organization.
However, emerging technologies are creating options rendering
the congregation of experts less useful. Instead, it is becoming
clear that generating a great idea quickly requires connecting
multiple tasks and ideas together in a new way.
Crowdsourcing and gamification techniques are unique
ways to channel the diversity of human thinking through their use
of diverse online crowds to solve challenging issues. The crowd-
sourcing game Foldit, sponsored by the University of Washing-
ton’s Departments of Computer Science and Engineering, uses
the puzzle-solving intuitions of volunteer gamers to help scien-
tists better understand the function of human protein enzymes.
In one puzzle, scientists asked the community to remodel
one of four amino acid loops on a particular enzyme. They re-
ceived over 70,000 design submissions, the top five of which
came from players who had not taken any science beyond high
school chemistry. What the players did have in common were
spatial reasoning skills, intuition, agility, collaboration, self-
organization and competition. These skills, when multiplied by
2. Switching viewpoints. Learning to switch viewpoints is a
key skill for creating safety for the other person. When we can
switch viewpoints fluidly, we become better listeners and com-
municators.
3. Beginner’s mind. When we create enough safety — both for
ourselves and for the other person — we become able to sus-
pend the pretense that ‘we know all the answers’. Only then can
we allow the truth to emerge in a way that enables us to escape
dueling realities.
Like the rebels in Rogue One, we might not all make it out of this
era unscathed, but the optimists among us believe that this ‘new
normal’ could actually be the best of times for making progress
on the world’s wicked problems.
Glen Markham is a Toronto-based strategist, creative
catalyst, designer and storyteller who has worked with Fiat,
McDonald’s, Unilever, Nestle and General Motors.
rotmanmagazine.ca / 35
 Employees should feel comfortable holding opinions that
are different from those of management.
the number of players in Foldit, quickly pointed the scientists to a
solution that would have taken recognized experts much longer
to complete.
Though most organizations cannot give all their problems
to the ‘crowd’ to solve, they can promote a broader range of
thinking to help them achieve the same benefits of speed and
scale afforded by crowdsourcing techniques.
BENEFIT 3: DIVERSE THINKERS CAN TACKLE YOUR MOST PRESSING PROB-
LEMS. Organizations that operationalize diversity of thought can
begin to purposely align individuals to certain teams and jobs
simply because of the way they think. Some of this can already
be accomplished with testing, but advances in neuroscience
mean that matching people to specific jobs based on more rig-
orous cognitive analysis is within reach. Emotiv Lifesciences,
a neurobiology company, has created a brainwave ‘reading rig’
designed to measure how well a person can concentrate on a giv-
en activity. Using sensors similar to an EEG machine, it connects
cognitive activity with the control of a device like a computer,
offering real-time analysis. These and other techniques being
developed reveal not just the symphony of neural activity, but
the notes behind it.
The acceptance of these new technologies can be challeng-
ing and will likely take organizations into uncharted territories.
But if properly incorporated into work processes, they can help
identify individuals who can best tackle an organization’s most
pressing problems. These new capabilities will empower organi-
zations not to read minds, but to understand how a mind might
react and how best to match it with others to achieve mission
success. Those who learn to do this well will have an immediate
competitive advantage.
How to Increase Diversity of Thought
As indicated, the intersections between neuroscience, psychol-
ogy and technology are creating new opportunities for organiza-
tions to better understand how people think and how to translate
these cutting-edge findings into practice. Following are three
steps to developing a strategy to foster diversity of thought.
36 / Rotman Management Fall 2017
STEP 1: Hire Differently
FIND STRATEGIC SKILL GAPS. With an eye for diversity of thought,
managers and HR representatives can select people who think
differently while maintaining alignment with the firm’s mission
and bottom line. To get a diverse pool of applicants, recruiters
will need to examine their practices to ensure not only that a job
description includes the technical competencies necessary for
success, but also that the job description and interview process
contain competencies and questions designed to help identify
and select for cognitive diversity.
German software firm SAP AG has taken this idea a step
further by actively recruiting for a particular strand of cogni-
tive ability that has historically been branded a disability. A few
years ago, it began recruiting people with autism to make use of
this population’s unique ability to process information. People
diagnosed with autism have difficulties communicating and suf-
fer from emotional detachment, yet those with mild autism can
often perform complex tasks that require high levels of concen-
tration — typically much better than the average population.
Beyond their advanced mathematical skills, autistic peo-
ple also frequently exhibit a particularly potent ability to find
patterns and make connections. SAP’s willingness to seek out
unique cognitive skill sets where other organizations may see
prohibitive deficits injects new complexity into their talent man-
agement, but can be well worth the effort: “SAP sees a potential
competitive advantage to leveraging the unique talents of peo-
ple with autism, while also helping them to secure meaningful
employment.”
HIRE WITH DEBATE IN MIND. One of the most important projects
in U.S. history benefited from a similarly unorthodox ap-
proach to assembling a team. During World War II, the Man-
hattan Project was led by Colonel Dick Groves and physicist
Dr. Robert Oppenheimer. It was, first and foremost, a military
operation, and would come to represent the beginning of the
military-industrial complex — a hybrid of public, private, and
academic brain power. Groves and Oppenheimer brought to-
gether several thousand physicists and engineers, 20 of whom
were Nobel laureates.
Oppenheimer, in particular, summoned scientists with con-
trasting theoretical points of view, knowing that if they could
collectively work through their differences, they would be able
to accomplish one of the greatest scientific feats of the 20th cen-
tury. Had they not hired with this in mind, the opportunity to
generate and take advantage of innovative ideas may have been
squandered. Although Groves and Oppenheimer did not open
the floodgates to all types of diversity — women, for example,
were not included — they did hire widely within the field of sci-
ence and the military to combine two distinct worlds, setting the
precedent for how diverse talents can achieve difficult tasks in a
short period of time.
The lesson? Organizations need to recruit diverse top tal-
ent, even if it means shaking up the status quo with opinionated
employees. Oppenheimer intentionally gathered dissenting,
great minds in an effort to harness their conflicts. He knew that
the series of solutions they worked toward would never have
sprung forth from a chorus of agreement, no matter how collec-
tively brilliant.
STEP 2: Manage Differently
FACILITATE ‘DIVERSITY TENSION’. One of the challenges associated
with diversity is that it introduces greater complexity. The most
successful organizations will be those who can overcome chal-
lenges such as misunderstandings and increased conflict, which
can happen when diversity is not successfully managed.
When confronted with ‘diversity tension’, even the best-
intentioned manager can send off subconscious signals of dis-
comfort. A research team in Denmark studied city government
officials to identify reasons why their organization experienced
high levels of negativity. They observed the local government
officials, using videos to record typical interactions during the
workday. When looking back through the tapes, the researchers
noticed that whenever an executive was asked a tough question
by his or her employees, he or she would make a slight variation
in their head movement. Working with psychologists, the re-
searchers determined that this slight head nod was the same tic
observed in nature when an individual comes into contact with a
wild animal.
Your office may not have a pet tiger, but managers and em-
ployees still face the instinctual urge to avoid conflict. It is simply
easier for us to agree than to be confrontational. Part of being
comfortable with conflict is abandoning the idea that consensus
is an end in and of itself. In a well-run diverse team, substantive
disagreements do not need to become personal: Iideas either
have merit and points of connection or they do not. Diversity of
thought challenges managers to rethink conflict itself, shifting
their perspective away from mitigating conflict’s negative ef-
fects and toward designing conflict that can push their teams to
new levels of creativity and productivity. Leaders and manag-
ers who create the necessary space for disagreements will find
richer solutions and the buy-in of naysayers who are at least able
to voice their ideas.
Leading design firm IDEO manages this tension by pur-
posely hiring people from diverse backgrounds to inject differ-
ent perspectives, and then fosters a collaborative culture where
people have to advocate for their ideas. IDEO’s approach is
born out of careful hiring practices and its ability to facilitate
‘controlled conflict’ — the subject of IDEO general manager
Tom Kelly’s book The Ten Faces of Innovation. Since these non-
traditional teams are formed with experiential conflict in mind,
individuals are required to be advocates for their ideas and to
respect the ideas of those around them.
Furthermore, IDEO has a resourcing approach that gets
people with great facilitation skills, not years of service, to drive
the design process and manage the project to get the most value
out of its unique experts. Kelly insists that while there is no for-
mula for who should contribute when, the key is for all people to
be encouraged to bring multiple ideas to a problem set.
GIVE PERMISSION. Organizations aiming for a more diverse work-
force need to adopt specific practices so that employees believe
they have permission to bring their entire selves to the work-
place. In this sense, firms that strive for inclusion attempt to ap-
preciate their employees’ differences and foster an environment
rotmanmagazine.ca / 37
where all feel comfortable sharing their views and their authen-
tic selves. Employees should feel comfortable disagreeing and
holding opinions different from those of management. One of
the hardest things for a manager to do is to let employees dis-
agree with her and allow them to explore their ideas — even if
that exploration leads to failure.
To relieve the pressure on employees, managers can use
behavioural ‘nudges’ to prompt conversation and depersonalize
debate around even the manager’s own personal ideas. A man-
ager in an intelligence agency told us that one way she has found
to ensure that her team members provide honest and necessary
insight is to give them permission to give harsh, constructive
feedback. Instead of asking, ‘Does this make sense?’, she in-
stead asks, ‘What is wrong with my logic?’ or ‘What points am I
missing?’ Such questions provoke more contrarian analysis that
ultimately helps her create a better final product.
STEP 3: Advance Differently
DRIVE CAREER SPONSORSHIP. Once cognitively-diverse individu-
als are hired, managers and leaders need to retain and advance
that talent. One way to do so is to enact sponsorship programs
directed at individuals who represent different thinking styles.
Sponsors can help cognitively-diverse thinkers find the appropri-
ate application of their unique thinking styles, thus helping them
to advance in their new career track. A sponsor trained in the
tenets of cognitive diversity would also be able to translate and
promote the otherwise hidden attributes of individuals new to an
organization.
Individuals with diverse thinking styles can also act as a
mentor to other people within their organizations. For example,
in today’s digital age, many Millennials are reverse-mentoring
more senior colleagues in social media and networks. Cisco has
implemented a reverse-mentorship program designed to en-
able the mentor to provide the executive with a perspective on
how comments and decisions might be interpreted by diverse
employees as well as valuable feedback on how well he or she
encourages inclusion and diversity in his or her own business
practices.
SHIFT TO TEAM-BASED EVALUATION. To the extent that diversity of
thought is about identifying and managing potential, it is help-
ful to recall what the late Peter Drucker once said: You can only
manage what you can measure. As a result, leaders willing to
harness the power of diverse thinking may want to measure be-
haviours such as ‘openness to constructive conflict’ to push their
teams toward more robust results. It’s time to shift the conver-
sation from managing individual performance to nurturing the
collective intelligence of the team.
38 / Rotman Management Fall 2017
The U.S. Office of Personnel Management has provided
team evaluation guidance that highlights that individual per-
formance can be linked to a team’s cooperative behaviour. By
focusing on the team’s outputs, public sector organizations can
continue to drive toward results while holding the collective ac-
countable to attributes such as motivation, intellectual breadth,
emotional intelligence, and risk tolerance.
Critically, these elements are aligned with the larger goals
and values of the organization and can help create an environ-
ment where people can bring their authentic selves. Any evalu-
ation framework must reflect the complexities that make up the
authentic self, and by pivoting evaluations toward the team, the
appraisal becomes about shared performance and how each in-
dividual can enable the larger group to drive toward excellence.
By moving to a team evaluation framework, organizations can
create and foster a culture of inclusion that empowers its people,
spurs collaboration, and inspires more innovation.
In closing
Executives and managers alike must take increasing owner-
ship for creating an inclusive culture characterized by diversity
of thought. In ways that were unimaginable a few decades ago,
people and organizations can now optimize the opportunities
found at the intersection between cultures, values and perspec-
tives. To achieve this, today’s practices and regulations need to
be reimagined to allow for the emergence and full development
of a powerful diversity strategy.
As MIT Professor Andrew McAfee recently said, “Exper-
tise for problem solving and innovation is emergent. It’s out there
in large quantities, and in hard-to-predict places. A problem-
solving approach that lets pockets of enthusiasm and expertise
manifest themselves and find each other can yield surprisingly
large rewards.”
Anesa Parker is a Strategy
Manager at Monitor-Deloitte,
based in Washington DC.
Carmen Medina is the founder
of MedinAnalytics LLC and
a former Specialist Leader at Deloitte. Elizabeth Schill is a guest blogger for
GovLoop and former Senior Consultant at Deloitte.
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 CEO SPOTLIGHT:
CIBC’s
VICTOR DODIG
CIBC’s CEO explains why he became chair of Canada’s 30% Club, and
what his bank is doing to attract — and keep — top female talent.
Interview by Beatrix Dart

BEATRIX DART: The 30% Club started out in the UK in 2010.
What made you want to be a part of it here in Canada?
VICTOR DODIG: It was actually you who called me and said, ‘Vic-
tor, what they are doing in the UK would be great for Canada; but
we need some profile for it: Would you be willing to sign on as
Chair?’ And I said, absolutely. A month after I started at CIBC, we
had a big kick-off on International Women’s Day. The team from
the UK came over to share their learnings to date, and from that
point on, we have done things in our own Canadian way.
Talk a bit about how you tweaked the Club’s mandate to
reflect the Canadian environment.
The focus in the UK is on FT 100-listed companies. We cast a
significantly broader net, to cover professional services firms —
law firms, accounting firms and executive search firms — as well
as listed companies. If you look at CIBC’s proxy statement on
boards — which reflects the Ontario Securities Commission’s
gender diversity initiative — our chairman called for us to have a
minimum of 30 per cent women on our board, as opposed to sim-
ply aiming for 30 per cent. Our wording was very specific from
the start, and we have now reached 35 per cent.
The two women we added most recently were technol-
ogy executives, one from Silicon Valley and one from New York,
both with an American perspective as well as a technology per-
spective. It’s all about bringing talented people to the table with
diverse expertise.
The second thing we did was to implement a targeted
approach to the advancement of women in our C-Suite. We’ve

rotmanmagazine.ca / 41
If it’s just white men and women running the show,
that’s not diversity, either.
added more women to our executive committee, and we now have
a robust succession plan in place. I actually just reviewed it in terms
of identifying the women and men that we believe can succeed
— and how can we make this more of an important item with the
Board, so that three years from now, people aren’t asking, ‘What
happened to all the women?’ For some time, we were so focused
on strategic issues that that we missed the whole gender piece in
a big way. As a result, for women now in their 30s and 40s, there
has been a generational gap in terms of succession planning. But
as indicated, we are working to address this.
The State of Women in Capital Markets
Karen Christensen: Your job entails advocating for the
importance of gender diversity to the Canadian econo-
my. How would you summarize your argument?
Jennifer Reynolds: If you want to have a
competitive edge, it just makes sense to use
the whole talent pool. How can you possibly
think you’ve got the best talent, if 50 per
cent of the talent pool is absent from your
leadership team? In Canada, 62 per cent
of university graduates today are women,
so for those who disqualify women, the
leadership pool is actually shrinking.
Most of your career was spent in investment banking.
What key lessons did you learn about excelling in this
environment?
At the end of the day, it’s about being able to take in a huge
amount of information and recognize what’s important, and be
able to distill that down into an analysis or argument. Also, the
more senior you get, you’ve got to be a great relationship-builder.
Certainly, being the only woman in the room presents challenges.
When you’re more junior, the differences aren’t as significant,
because you’re delivering a more technical end-product; but
as you become more senior, the things you are being judged
on become more subjective, so biases come into the picture.
Do you see enough organizations moving beyond ‘lip
service’ and implementing diversity initiatives?
The big banks are leading the way in terms of the programs
they have in place—although their capital markets areas are
not as advanced as the rest of the banks. But I do believe that
most bigger companies are thinking about this. When you look
broadly at Canada, close to 75 per cent of our companies
have a market cap of less than one billion. We are an economy
of smaller companies, so it can’t just be the big companies
42 / Rotman Management Fall 2017
We’ve got an internal group here called Men Advocating
for Real Change, which is a leadership program we set up with
Catalyst to uncover the unconscious biases that people bring to
the table and to create awareness about the impact of privilege
on ‘leveling the playing field’. In trying to sensitize people and
awaken them to the inhibitors to creating a more diverse work-
place, we’ve worked mainly with men, because we recognize that
if men don’t embrace this initiative — and they currently occupy
well over 80 per cent of executive positions in Canada — change
will simply not happen.
and banks doing this: We need the broader economy to think
about why they don’t have more gender diversity and how to
address that.
I’m pleased to say that there is a very good level of aware-
ness of this issue at the senior levels of our banks. Once you have
that buy-in, the harder work needs to be done. The toughest
nut to crack is the ‘frozen middle’, as I call it—all of those layers
below senior executives—and convincing them that this is really
important. That takes time, because it entails a culture shift.
What should every company be doing to build a strong
pipeline of female talent?
First, whenever you’re hiring at junior levels, you should be
intentional about reaching out specifically to women. Often,
when women see a job posting in the capital markets or in
a resource sector, they assume it’s male dominated, and they
think, ‘That’s probably not for me’. Companies need to convince
young women that they are looking for people like them. You
also have to be really diligent about having targets. I’m not talk-
ing about quotas, but you do need to have goals—like, ‘We are
going to hire 50/50 men and women this year’—and make sure
that you’ve tasked people with finding the résumés required
to make that happen.
From what I’ve seen, most capital markets firms are now
trying to hire 50/50. They are making sure that they’re reach-
ing out to women at different universities, and they’re suc-
ceeding in finding some really talented young professionals.
You have talked about the importance of building a culture
that values diversity of thought. What does such a culture
look like?
We need to be more innovative in all industries, not just in technol-
ogy. And in order to do that, you need diversity of thought. If you’re
constantly going back to the same pool of people with similar
resources and backgrounds, you’re never going to get that. To
A lot of male executives say, ‘Of course I want more women
on our senior leadership team; I just don’t know how to get
there’. How are you going about it at CIBC?
As indicated, we now have a proactive succession-planning pro-
cess in place, so we can identify future leaders early on. I also
have monthly lunches with six to eight pre-boarded women ex-
ecutives; I haven’t targeted our vice-presidents yet, so I’ve got
to get to know them better and enable them to create a network
amongst themselves. That way, when there are opportunities, we
can say that we’ve actually met these individuals, and that they
achieve it, you need gender diversity, ethnic diversity, and cultural
diversity on your teams.
We often talk about ‘fit’ when we hire people, and that can
be a dangerous thing, because it often means, ‘Let’s go and hire
the same person we hired last time.’ What fit should mean is that
you are thinking about all the different pieces of a puzzle, and
putting them together to form a great team. To make ananalogy,
the pieces of a puzzle look very different, but when they are put
together, it makes for an optimal end result. I challenge people
to think about it that way.
Tell us about your Return to Bay Street Program.
That is one of the things I’m most proud of. We’ve been doing this
for six years now. The premise was, in our industry—as in many
industries—we need more women at the mid-level. If women have
taken a few years off to devote to family, first of all, do they want to
come back? And secondly, can they do it? If so, how can we make
it work from a business perspective? We don’t want to have them
come back and start all over at the bottom of the ladder, we want
them to come back in some commensurate role and get them
back into the talent pipeline.
We started this program with BMO Capital Markets and
since then, we’ve had 34 women go through it. We now have seven
institutions involved, because BMO’s competitors saw that this
was a great program for bringing back incredibly talented woman
who had 10 to 15 years of experience. The key to the program is,
you’re not going to lose that 10 or 15 years of valuable experience.
The program hasn’t been led by HR. No offence to HR, but you
need senior business people to buy into this, and view it as a pool
of talent that they wouldn’t have had access to without this type
of a program.
I get calls regularly, not just from financial institutions, asking
about how people can do this in their industry. I really think this
type of program should be in every organization, as part of the tal-
ent management program. I’m also a big proponent that men need
truly are capable — beyond what is listed on their CV. If you look
at our statistics over the last 12 months, 100 per cent of our board
appointments and 50 per cent of our executive appointments
have been women.
A big part of this is measurement. I’m a big believer that if
there is no concrete plan to get there, there is no hope of achiev-
ing any of these goals. Just talking about it and hoping that ‘next
year, things will change’ won’t work. To be clear, this issue is
purely business: We will build a better banking business by having
more diversity.
to be able to take paternity leave — and that the stigma around
that needs to go away. Once it does, I think women’s problems will,
to a great degree, get solved too, because family responsibilities
will be built into the fabric of a corporate culture. After all, this is
something both women and men deal with. We have to find ways
to enable them to be great at work and great at home.
Looking ahead, what is the key obstacle in the way of
gender equality?
If you ask someone to close their eyes and picture a CEO,
chances are that 99 per cent of people will picture a man. We have
to challenge those biases and really think about how they are
seeping into the so-called meritocracy. As indicated, challenging
traditional roles and biases, and putting resources behind things
like paternity leave is also critical, because it’s about starting to do
things differently — and to think differently about family and work
responsibilities. We need to be innovative about that, as well.
Jennifer Reynolds is President and CEO of Women in Capital Markets.
Previously, she spent 15 years working in the capital markets industry,
primarily in investment banking, holding senior roles with BMO Capital
Markets and Stonecap Securities, and in the venture capital industry with
OMERS Ventures.
rotmanmagazine.ca / 43
It’s great that you view this as a business imperative — and
that it’s not just being addressed for ‘social good’. Have you
started to see some business impact?
I have. If I think about the senior women at CIBC and the im-
pact they’re having, it’s amazing: People like Christina Kramer,
our Executive Vice-President, Retail Distribution and Channel
Strategy, who is responsible for leading over 21,000 sales and
service employees; Veni Iozzo, Senior Vice-President, Com-
munications and Public Affairs; Sandy Sharman, Executive
Vice-President and Chief Human Resources Officer; and Laura
Dottori-Attanasio, Senior Executive Vice-President and Chief
Risk Officer. I won’t go into the specific details of their accom-
plishments, but I know for a fact that they have added a whole
new level of excellence and engagement to our culture. The fact
is, banking should not be a white man’s culture: It should be re-
flective of what is going on in the outside world.
With respect to diversity, I think the next challenge for ev-
eryone will be, How diverse is your workplace? Because, if it’s just
white men and women running the show, that’s not diversity, ei-
ther. I’m very mindful of that, as we look at who our next genera-
tion of leaders will be.
Banks and professional services firms are leading the way on
this; but companies in sectors like technology and natural re-
sources might not have made these adjustments yet. Do we
need to nudge them? Do we need quotas?
My opinion is that there are no pros to quotas, because what
happens is, the women who advance in that way always feel like
they’re there because of the quota — and everyone else thinks the
same thing. This creates a very negative force around what we’re
trying to achieve. There are more positive ways to make prog-
ress. Targets, in my view, are a good thing, but enforced quotas
are not.
The fact is, every company is at a different stage of devel-
opment, and some of them have a more advanced approach to
governance than others. If you look at the TSX 60, I’d say it’s fir-
ing on all cylinders — or most cylinders — when it comes to good
governance. That includes a focus on succession planning and
considerations around diversity and say-on-pay. Smaller mid-
cap companies face challenges in terms of their resources, and
as a result, many are not focused on their talent pool. They often
don’t know where to get started — and because many of them are
in the natural resource business, which has been burdened by
significant challenges since the financial crisis — they don’t con-
sider this to be a priority.
Should we have more patience with these companies?
Everything takes time, and in my experience, anything that you
try to force-fit will fall apart over time. I believe that these busi-
44 / Rotman Management Fall 2017
nesses can have an impact without the government telling them
what to do.
In The Wealth of Nations, Adam Smith describes the invis-
ible hand, and many people think of it as a euphemism for, ‘Let
the market decide’. But the market can decide things in a very
wrong way sometimes, when it comes to people. When I was at
business school, one of the books I read was by Alfred Chan-
dler, a noted American historian who wrote a book called The
Visible Hand. His whole argument was that, if J.P. Morgan didn’t
exist as a person, after the railroads went bankrupt, and didn’t try
to reorganize it all, the free market would not have done it in the
way it should have. Likewise, with Alfred Sloan at General Mo-
tors or Henry Ford at Ford. It wasn’t the free market that made
these companies great, it was great leadership that took the ini-
tiative to do something differently.
Back then, it was much more focused on manufacturing,
but as our economy becomes more service-oriented, the greater
factor input is the intelligence of your people rather than the raw
power of physical labour. If you look at how to succeed in that
kind of environment, diversity of thought and diversity of back-
ground help in a very big way.
As its title indicates, the 30% Club aims to have at minimum
that many women in senior roles and on boards. Based on
what you’ve seen, what will be the biggest challenge to get-
ting there?
For us, a big part of it is convincing talented women that they can
succeed here: They can have a family and a robust personal life
and succeed professionally. In many cases, they don’t believe
that, because they’ve never received the right level of support or
mentorship. Instead, they hear things like, ‘Six weeks after giving
birth, you’ve got to be back in here and give us some face time’.
That is just not the case: Companies need to get better at giving
other employees opportunities to temporarily fill these roles, and
then step back when the aspiring female executive is ready to
come back. It requires a mindset shift.
Why do you devote so much of your own valuable time to this
issue?
There are a few reasons. First, when I was at business school back
in 1993, I edited a book on workplace diversity, which was used in
the first year business ethics course at Harvard. So, this is some-
thing I’ve been thinking about for a very long time — and it went
beyond just gender diversity. It was also about people of colour,
work-life balance, embracing the LGBTQ community — the book
covered many elements of diversity in the workplace.
The second reason I wanted to get involved is my own sense
of personal remorse. My wife is a highly educated, talented wom-
an who basically gave up her career to move to Canada with me
 Banking should not be a white man’s culture: It should reflect
what is going on in the outside world.
and have a family. I feel like this could have been handled better.
She is now thinking about what she wants to do next, and I’m en-
couraging her; so the issue has personally touched me.
The third thing is, I have a daughter, and I always tell her,
‘Never rely on the person you may partner up with or marry to
be your economic pillar; you have to be independently success-
ful’. Creating opportunities for young people like my daughter is
extremely important to me.
Talk a bit about the role of male leaders in making ‘the diver-
sity dividend’ a reality.
First of all, they have to listen to the facts. A lot of people have
a preconceived notion that this is all a ‘social engineering proj-
ect’, or a pet project for some companies. They have to seriously
absorb how this will positively impact their business. So, I would
say, immerse yourself in the facts, and as good business people,
start bringing this mindset into your business plan as a strategic
imperative. Launch programs, establish targets, start identifying
talented individuals early on, and add this as a key dimension of
your succession-planning program.
Is there a real-life story that indicates what this mindset looks
like in action?
I know lots of young women who work on our capital markets
floor, who are in here every Sunday, working all day. I have told
them directly, ‘You don’t have to be here seven days a week in or-
der to succeed!’ I want them to recognize that face time is not the
only way to move ahead at CIBC. Working smart and diligently,
and gaining respect for what you do is what is important. But, it
can’t just be me; all of our leaders need to be saying, ‘You can
advance your career without working 70 hours per week’. As I
indicated earlier, we are living with the baggage of some of our
past decisions, but 20 years from now, this will be a much more
balanced organization than it is today.
What about your own working habits? Are you setting an ex-
ample?
This year, I have actually made a huge effort to be home at least
two nights a week: Fridays for sure, and one other day. I’m really
trying to change my habits, because I don’t think being at the of-
fice all the time is a smart way to work.
What will success look like for the 30% Club, 10 years from
now?
I believe that 20 years from now, we will have female CEOs lead-
ing at least 25 per cent of Canadian companies. But we all have to
be mindful of how this ecosystem works: Everyone has to start
now, looking at their pipeline and who they are hiring. If we all
started doing that immediately, that would also indicate success
to me. My dream is for Canada to have more companies with 30
to 50 per cent females on their boards than any other country in
the world. I believe we can be a world leader in this regard.
In my view, the biggest challenge right now is that there is too
much focus on ‘the percentage of women in senior roles’. I
worry that not enough attention is being paid to the pipeline.
What is your take on that?
I agree, and it is the reason that we are proactively engaging with
our talented pre-executive employees, to make sure that they
don’t leave our workforce. First of all, we identify who they are;
then we create individual training programs and talent programs
for them and make sure that they move across the bank and get a
diversity of experience.
For this past summer’s recruiting, we looked at the number
of women in our capital markets business — which has always
been more unbalanced than our retail business — and we made
sure that 50 per cent of our recruits were women. The fact is, lots
of women are still self-selecting out of investment banking — so
we almost have to recast the industry and say, ‘This is not your
father’s investment bank!’ We need to change some of the work-
ing norms in this industry, because lots of men are now saying, ‘I
don’t want that 70-hour workweek lifestyle anymore’.
What would be at the top of your wish list for leaders to start
doing, tomorrow morning?
I would advise all leaders to take a close look at their talent strat-
egy, and make it part of their business mechanics. This should
not be seen as a ‘philosophical issue’; it has to be integrated
into the running of your business. Talk is cheap: You have to
take action and make things happen. That’s what we are trying
to do.
Victor Dodig (UofT BComm ’88) is President
and CEO of the CIBC group of companies,
Chair of the 30% Club Canada and a Catalyst
Canada Advisory Board member. Previously,
he led CIBC’s Wealth Management, Asset
Management, and Retail Banking businesses. Beatrix Dart is a Professor of
Strategy and Executive Director of the Initiative for Women in Business at
the Rotman School of Management. She served as the Academic Director
and Associate Dean for Executive Degree Programs until 2015. She chairs the
steering committee for the 30% Club in Canada.
rotmanmagazine.ca / 45
Leadership Forum:
The Role of the LGBTQ+ Ally
Four senior executives recently gathered at the Rotman School
to discuss “How Allies Can Advocate for LGBTQ+ Employees”.
Following are highlights from the panel discussion.
Compiled by Karen Christensen
Kenneth J. Fredeen
General Counsel, Deloitte LLP
ALMOST TEN YEARS AGO, when I was asked to be on Deloitte’s
original diversity council and to be the executive sponsor for its
LGBTQ network, I felt honoured. Although I have family mem-
bers and friends who are gay, I soon realized that we had lots of
work to do in becoming an inclusive culture for members of the
LGBTQ community.
46 / Rotman Management Fall 2017
As a straight man, there are some who see what I did as
a courageous act, but it never felt that way to me. There were
some whispers that I was gay, but that didn’t bother me. I am still
asked sometimes, ‘What is your vested interest in doing this?’,
and I honestly don’t have one. It all starts from my belief that
inclusiveness means a more stable and successful society and
economy. The fact is, an inclusive business will be more success-
ful in attracting and keeping the best talent — which makes for
a pretty compelling business case. The great thing for me is, as
a straight, white, typically-abled, middle-aged guy, the expecta-
tions for me are pretty low — so being passionate about the im-
portance of inclusion allows me to ask a lot of questions.
I really believe that today, you can’t be a great leader unless
you understand, practice and promote inclusiveness. And it’s
not just about the LGBTQ community: Unless people with dis-
abilities are part of the inclusiveness equation, you can be nei-
ther an inclusive leader nor create an inclusive workplace.
Men have a critical role to play around inclusion, as do wom-
en. Together, we need to work to advance those who are ‘not like
us’, so that the playing field is equal for everyone. It is not enough
to agree with this in principle: You need to be prepared to say it
out loud and to be visible about it.
I want young people to know that the most important thing
for them is to be true to themselves about who they are and
what they are passionate about. Businesses today are looking for
diverse thinkers with different experiences who are passionate
and resilient, to successfully confront the challenges we face.
LGBTQ employees will flourish in this environment and bring
success to their employers.
In the end, it is about visible leadership, calling out b*llsh*t
when needed, and providing mentorship, coaching and spon-
sorship. We also need to understand that people are on differ-
Illustrations by Delphine Lee
ent levels on the inclusion ladder. We have to be sensitive to
that and educate and support people by removing the fears they
might have. The good news is, people joining our company to-
day are joining a much more inclusive environment than just
a decade ago.
Sandeep Tatla
Assistant VP, Global Head
of Diversity & Inclusion,
Manulife

ISSUES OF EQUITY AND INCLUSION have always been very important

to me. In my day-to-day work, I have the opportunity to lend my
influence, power and privilege to ensure that those who may not
have a voice are heard.
Over the years, the riskiest things I’ve done are not the ac-
tions that I’ve taken, or making changes to policy, or talking in
front of groups. It’s been more about the one-on-one conversa-
tions I’ve had with leaders who, for example, in meetings, have
made inappropriate comments, or said something (often, not on
purpose) negative. The first time I did this, I was extremely ner-
vous about it, but each time after that, whenever I’ve talked to a
senior leader about these issues, they have been incredibly open
to the feedback.
Most people don’t intend to be exclusionary, so when you call
them on it, they often breathe a sigh of relief. Lots of people are each individual to dictate their own journey. Even as an ally, you
grappling with LGBTQ language. They don’t know what to say or can’t speak for them or assume that they are ready to have a con-
how to say it. When I open the door to these conversations, it’s versation in public about particular things.
amazing how open people are. Being an ally doesn’t always have People who think discrimination and harassment no longer
to be about big, bold actions. At Manulife, we talk about being ei- exist have just never experienced it, and as a result, they’ve got
ther an active or a passive ally, and there are plenty of opportunities blind spots. Being an Indian woman, my whole life has been as an
for those of us who just want to dip our toe in the water. outsider looking in. I also know that there are lots of other outsid-
As a visible minority, I live a very specific experience, and ers looking in, and I can appreciate that. Just because I have that
from that perspective, I realize that I will never truly under- experience, it doesn’t give me carte blanche to say that I under-
stand the experience of an LGBTQ person; but I can certainly stand someone else’s experience.
try my best to empathize and learn, and that’s how I approach In some ways, it’s easier for a visible minority like me, be-
it. That is why I often defer to members of the community. cause there is no hiding the fact that I am Indian. When I’m apply-
I’ve also learned that someone may ‘come out’ in the work- ing for a role, people can tell immediately from my name — and
place once, but then, there are multiple other times throughout either they want me there, or they don’t. But for individuals who
their career where they have to do it again — whether it be with are minorities in ways that we can’t see, there is always an internal
a new boss or a new team member. It’s very important to allow struggle going on, day in and day out.

rotmanmagazine.ca / 47

Deborah Richardson
Deputy Minister, Ministry
of Indigenous Relations
and Reconciliation,
Province of Ontario
TYPICALLY, WITHIN THE LGBTQ community, there is a lot of focus on
the ‘LG’, and the rest of the community is left behind. Within
my own space at the Deputy Minister’s office, we have a trans-
gendered colleague, and this was a real learning opportunity
for us. We suddenly realized that there was no available wash-
room for this person, so we had to have one installed. Pushing
the bureaucracy about what constituted ‘appropriate signage’
turned into a pretty big deal. Even people who were trying
to be helpful would use the term ‘transvestite,’ because they
just didn’t understand the language. Pushing back on that, as
a leader, is very important. There have been other incidences
where I have to call out my own boss or other Deputy Ministers
48 / Rotman Management Fall 2017
around a number of issues involving the Pride Network. It’s
never easy to have these conversations, but it is critical.
As an ally, I am basically ‘leading with permission’. You can’t
just become a champion for people and charge ahead: You need
to make sure you are doing what they want you to do. That re-
quires two key attributes: Empathy and self-awareness. Leaders
often want to take charge, but I can’t think that my experience
of discrimination as an indigenous woman is the same as any-
one else’s. I do think that for people from marginalized groups,
it’s easier to identify with each other, because many people from
privileged groups don’t even believe that discrimination or rac-
ism still exist.
It is absolutely vital that we become comfortable calling
out behaviour and inappropriate language, and not be afraid
to do that. That really starts to change the tone in a workplace
culture, especially when the person doing it is in a senior posi-
tion. The Ontario Public Service Pride Network offers a course
on how to become an ally, and it teaches three principles: First
you must stand behind the individuals being discriminated
against. That means organizing events that people can speak
out at, and tell their own story, and we’ve done a number of
these across the Ontario Public Service. Second, you must
stand beside these individuals — attending the Pride Parade, or
going to different events that are important to the community.
And third, you must stand in front of these individuals, which
means using your influence to advocate for continued progress
on inclusion.
Whether it’s installing transgendered washrooms or creating
a positive space so that people feel comfortable coming out, it’s
really about leading with permission, not just being a ‘renegade
advocate’. It takes courage to be an advocate for marginalized
groups, because you’re fighting against the status quo — particu-
larly in the big banks and within government, where representa-
tion in the senior ranks is not as inclusive as it should be.
Jennifer Tory
Group Head, Personal
and Commercial Banking,
RBC
WHEN I STARTED LEADING LARGE GROUPS 20 years ago, my role pro-
vided the opportunity to meet people from all walks of life. Once
you are in a leadership role, I believe it comes with certain re-
sponsibilities. I was honoured and humbled when, early in their
journey, a couple of my close colleagues came out to me, and I
was able to help them take steps to come out more broadly, open
doors, and provide a platform where they could make a differ-
ence inside the firm and out in the community.
Years ago, when I was working in a retail banking environ-
ment that employed thousands of people, the employees wanted
to signal that our work culture was a welcoming place. They had
heard about a ‘rainbow initiative’ that was started somewhere
else, and they wanted to try it. So, we put rainbow stickers outside
the offices of people who gave us permission. To our surprise,
someone actually went to the press and said, “Look what they’re
doing at RBC!” It took real courage to continue the initiative, and
to make people understand that we wanted to create an inclusive
environment where everyone could feel comfortable bringing
their whole self to work.
As an ally, you also have to create opportunities to bring
others along with you. If you want to celebrate National Coming
Out Day, it’s not just about sending an invitation out, but actually
reaching out to involve senior people so that they, too, are seen as
allies, and employees know that the environment is inclusive and
safe, as it relates to career progression.
If you don’t create that kind of open environment, you won’t
have people willing to come and talk to you about their individual
situations, or how they’re feeling in the workplace, because they
won’t perceive you as being open to that discussion. One of the
most critical things we can do is reach out to people at all levels
and create opportunities for everyone to be more open and com-
fortable with each other, and share their experiences.
When I first started in my role as head of Greater Toronto
region, I knew that TD Bank already had a prominent position
in the LGBTQ community. We had not done anything wrong
at RBC — we just hadn’t done anything visible enough to re-
ally demonstrate our commitment to the community. So, one of
the first things I did was to invite a group of community leaders
in, to get their advice on the type of support we could provide.
We didn’t just support the community with our dollars, but also
through volunteer opportunities for our employees, which cre-
ated visibility and demonstrated that RBC itself was an ally.
Many LGBTQ employees have no interest in being political:
They just want to come to work and be treated with the same re-
spect as everyone else. People have said to me, ‘I don’t necessar-
ily want to go to large events, or speak out about issues related
to the LGBTQ community. That’s not for me.’ Supportive allies
acknowledge that our job is not to put pressure on someone to
‘come out’; it’s to respect the fact that, in a sometimes homopho-
bic society, people also have the right to not come out. As an ally
I totally respect that and am there to follow your lead: Let me
know how I can support you, and I will do whatever I can.
rotmanmagazine.ca / 49
 Updating the Image of
THE IDEAL
WORKER
The association between success and complete devotion to one’s
work may be as much a matter of perception as reality.
by Erin Reid
IN MANY ORGANIZATIONS TODAY, employees are expected to be whol-
ly devoted to their work, such that they attend to their jobs ahead
of all else, including family, personal needs — and even their
health. These expectations are personified by the image of the
‘ideal worker’, which defines the most desirable workers as those
who are totally committed to and always available for their work.
Embracing this image is richly rewarded — particularly in profes-
sional and managerial jobs.
Scholars have long focused on the difficulties that women
experience with these expectations, but my research suggests
that men also find these expectations challenging. People of both
genders are facing a conflict between employer expectations and
the type of worker that they prefer to be.
I recently set out to examine how people working at a de-
manding professional services firm navigate tensions between
organizational expectations that they be ‘ideal workers’ — which
I call the expected professional identity — and the type of workers
they prefer to be — their experienced professional identity.
Identity Management: ‘Passing’ and ‘Revealing’
For some time, the image of the ideal worker and its attendant
expectation of ‘complete devotion to work’ has been believed
to be a key driver of workplace gender inequality. Scholars have
mostly examined how women — and mothers in particular —
navigate expectations that they devote themselves to work.
Less attention has been paid to men’s experiences in this
regard, echoing more general tendencies to frame work–family
conflict as a ‘woman’s problem’. Yet as a core element of an ex-
pected professional identity, this image shapes all workers’ ex-
periences. To develop a theory about the ways that people man-
age incongruence between expected and experienced professional
identities, I turned to sociologist Erving Goffman’s concepts of
‘passing’ and ‘revealing’.
Passing and revealing are ways that people control other
peoples’ beliefs about ‘who they are’. The need to ‘pass’ or ‘re-
veal’ arises when an individual feels she does not belong to a fa-
voured group. In some cases, the characteristics that disqualify
one from membership are clearly visible (e.g., skin colour) and
are managed through methods that reduce the salience of that
characteristic. Other characteristics, however, are invisible (e.g.,
sexual preference), so people can choose how to manage them:
They may either misrepresent themselves as being members of
the favoured group — thus ‘passing’; or proactively disclose that
they are non-members — thus ‘revealing’.
To better understand these issues, I conducted a field study
at ‘AGM’ (a pseudonym), a global consulting firm with a strong
rotmanmagazine.ca / 51
 For these consultants, being committed to work meant
often placing work ahead of other life demands.
U.S. presence. Like many such firms, AGM offers advisory ser-
vices in multiple areas, using small teams to complete projects
over a period of weeks to months. Consulting is a notoriously
demanding profession: Typically, individuals must be available
for overnight travel to client sites and often work evenings and
weekends on short notice.
This work setting provided certain advantages for my in-
vestigations. First, identity expectations in professional jobs
are strong, and AGM’s status as one of the most demanding
consulting firms qualified it as an ‘extreme’ case, where pres-
sures to be an ideal worker might be especially acute. Second,
as AGM hired from elite colleges and MBA programs, its hires
were fairly homogeneous in terms of intellect, education level
and social skills. Participants were therefore likely to be capable
of doing the work, and this helped to focus my analysis on how
they coped with the firm’s expectations.
The core data for my study came from more than 100 in-
terviews with consultants, all of whom held undergraduate or
advanced degrees from elite schools. Twenty-two percent were
women, similar to the proportional representation of women at
AGM at the time, and similar to or higher than that at competitor
firms; and 13 per cent were visible racial minorities. One year af-
ter the initial interviews, I reached out to participants to request
access to their performance data and to learn about their recent
work experiences.
The Expected Identity: Committed and Available
The consultants in my study believed that AGM expected them
to be fully devoted to work — primarily committed to it and avail-
able at all times. Although people sometimes associated other at-
tributes with success (e.g., courage, charisma), mention of these
attributes was sporadic relative to the near-constant emphasis on
commitment and availability.
For these consultants, being committed to work meant often
placing work ahead of other life demands. Curtis, for example,
had spent Thanksgiving “running a project remotely from the
outside deck of [my in-laws’] condominium in Florida.” Despite
his wife’s fury, he believed that his job required this commitment:
I sometimes have to get calls on Sunday nights or Saturday
mornings; the weekend is not sacred. If the client needs me,
I will generally take the call. When they need me to be some-
where, I have to be there; you don’t have the latitude to say,
‘I can’t do it’.’
52 / Rotman Management Fall 2017
Although availability was associated with commitment, the two
were not the same: Commitment involved ‘dedicating oneself to
work ahead of other demands and responsibilities’, while avail-
ability corresponded to ‘extended work hours and willingness
to travel’. People were expected to work all night, if needed, to
get things done and to travel at the drop of a hat. The need to be
fully available, along with the need to be primarily committed to
work, characterized Junior Manager Amos’s description of his
colleagues:
We’re thinking about work 24/7. I mean, maybe you tune
out for a little while here and there, but AGM people work
all the time. I mean, you wake up at night, you’re dreaming
about it. The first thing you do in the morning is pick up your
BlackBerry.
To assess the extent to which consultants’ views about the iden-
tity of a successful consultant were shared by those who evalu-
ated them, I compared the perceptions of people in client-service
based roles (associate through partner) to those of people who
led the firm and who controlled recruiting and evaluation (senior
partners and HR leaders). The result: Nearly all shared the con-
sultants’ beliefs regarding the importance of commitment and
availability. As Sharon (a Partner) said, “The culture at AGM is
‘give, give, give’. But no one ever thanks you. It’s like the message
is, We will only love you if you give, give, give.”
I found that AGM pressured its people to adopt this highly
committed, highly-available identity through two primary ‘iden-
tity-control mechanisms’.
THE STRUCTURE OF WORK. The first control mechanism was the
firm’s haphazard work structure: Crisis situations, wherein teams
worked late into the night, were common, and partners often
promised clients new work, mid-project. Clients often expected
travel at short notice: Two people arrived for our interview uncer-
tain as to whether they would be travelling that day, and several
rescheduled interviews because of unanticipated travel. Junior
Manager Kristi’s comments about a recent project illustrate the
demands that ensued:
On a recent project, the partners were very busy, so they
would get my document at 10 a.m. and not look at it until
10 p.m. Then, at 11 p.m., I’d have to work on it and get the
team online to do the work so they could turn it around for
the next day.
Partners acknowledged that the structure of work demanded a
particular type of person. Said one: “My teams occasionally have
to work overnight, around the clock. Some people thrive on the
idea that, ‘This is a gold medal game,’ and others don’t. This job
requires that you thrive on that. It uses every bit of you”.
PERFORMANCE EVALUATIONS. The second control mechanism used
by AGM was its performance evaluation system. Assessing com-
petence and work quality is difficult in professional service work,
and firms consequently may evaluate people based on subjective
perceptions. AGM officially assessed performance along mul-
tiple dimensions, including relational and analytic skills. How-
ever, HR leaders stressed the importance of availability and com-
mitment and described these attributes in terms of an expected
identity. For example, Partner Keith, head of the HR department,
described successful consultants in the following terms:
I have person A and person B. Person B doesn’t seem that
committed, or willing to go the extra mile; if I ask them to
do something, they huff around and it feels like work to get
it done. Person A, I ask to do something and it gets done im-
mediately; if I have a problem I can call them, and the next
day they’ve taken a crack at it, with a smile on their face. We
will use that in appraisal and recruiting.
This evaluation system, together with the structure of work at
AGM, was key to how the firm controlled who succeeded and
who failed.
Embracing the Ideal vs. ‘Straying’
Nearly all consultants I spoke to were aware of the firm’s expect-
ed professional identity, but I found that only a minority actually
conformed to it. Whether consultants embraced or strayed from
the expected professional identity varied according to its fit with
the type of professional they authentically wanted to be.
Many people’s preferred professional identities — 43 per
cent of the sample — were congruent with the expected profes-
sional identity, and they easily embraced it. Revealing their com-
mitment, they spoke frequently of their ‘passion’ for their work
and ‘what we’re trying to do in the world’. Many described being
offered good jobs elsewhere, but choosing to stay at AGM. They
were also fully available: Most regularly worked late nights and
weekends, more than 70 hours a week, and willingly travelled
at a client’s whim. Senior Manager Dave told me:
At the end of the day, I like working hard. I want to be suc-
cessful and make a lot of money. So, I don’t mind being at
work at 9 pm.”
However, the majority of people I spoke to (57 per cent of the
sample) encountered conflict between the expected identity
and their preferred identity. Scholars typically identify the ideal
worker image as being chiefly problematic for women, but at
AGM, that was definitely not the case: The majority of my sample
was unwilling to make work their primary life commitment, un-
willing to make themselves fully available for their work, or both,
and hence, their experienced identities conflicted with AGM’s
expected professional identity. Such a conflict is illustrated in
Senior Manager Thomas’s musings about his future at the firm:
I’m at a crossroads about how much I want to push for part-
ner. I kind of want to do it on my own terms, as opposed to
assume I have to be like some of the other partners. There’s
definitely the ‘road warrior’ model, the guy who’s always on
the road, who’s sending emails on Saturday and Sunday. But
I don’t want that.
People’s non-work lives provoked conflict over their professional
identities. Junior Manager Cliff told me:
[I’m] someone that is a little quicker to say, ‘This is good
enough’ and pass it along than my peers are. I think that
might affect my ability to be really successful here. The deci-
sion for me is, do I sit down and have dinner with my fiancée
or wolf it down and go back to work? I always choose not to
work. That makes it a little less likely that I’ll be CEO of this
place one day.
Some people coped with this conflict by actively straying from the
expected identity. By altering aspects of their work (e.g., client
types, client location), they constructed opportunities to remain
true to their preferred identities. Unlike those who embraced the
ideal, these people reported working 60 hours per week or less,
having predictable work schedules, and having regular engage-
ment in other aspects of life.
Partner Colin told me: “I work until 5:30 or 6. I go home,
have dinner with my family, put the kids to bed. Then I’ll prob-
ably work an hour or two after that, if I need to’. Most limited
weekend work to exceptional circumstances; several minimized
rotmanmagazine.ca / 53
 The majority of people I spoke to (57 per cent of the sample) encountered
conflict between the expected identity and their preferred identity.
travel, and for these people, work did not normally trump other
life commitments. Thus, they were both less committed to their
work, and less available for it, than the expected identity de-
manded.
Some people described cultivating local, repeat or non-
profit clients who required less time and commitment than typi-
cal clients. Others found ways to work on internal firm projects,
which reduced travel time and had more predictable demands,
worked from home, creating space for other aspects of life. These
efforts bear resemblance to ‘job crafting’ — altering the aspects
of one’s job in ways that reshape one’s work identity. However,
my findings go further, showing that these efforts to alter the
structure of work also permitted people to avoid disclosing their
desire to stray from the expected identity and allowed them to
pass as having embraced it. Although some who altered their jobs
were penalized, others seemed to ‘pass’ as having embraced the
expected identity.
For example, Senior Manager Lloyd viewed himself as an
‘odd duck’ and strayed from the expected identity: “I skied five
days last week; I took my calls in the morning and later in the
evening, but I was able to be there for my son when he needed
me.” He clarified that he viewed these as work days, not vacation
days: “No one knows where I am. Because we’re mobile, there
are no boundaries.”
By working with local clients and telecommuting, Lloyd al-
tered the structure of his work in ways that allowed him to stray
from the expected professional identity. Indeed, despite his ‘devi-
ance’ from the ideal, senior colleagues viewed him as an incum-
bent of the expected identity: Partner Cameron labeled Lloyd a
“rising star” who worked “much harder” than he did. This as-
sessment — in combination with Lloyd’s star performance rating
of 4 and his promotion to Partner that year — suggests he had suc-
cessfully ‘passed’ in the eyes of senior members of the firm.
By contrast, those who actually requested AGM’s help to
restructure their work through informal alterations such as lo-
cal clients or formal accommodations such as parental leave
— thereby revealing their ‘deviance’ — were penalized. Junior
Manager Doug recounted how he lost a promotion because, fol-
54 / Rotman Management Fall 2017
lowing months in the Middle East, he requested a U.S.-based
project:
I told the firm, I don’t think I can go back to the Middle East,
and if that means I’m going to have to look for something
else, that’s okay. Because I’m a brown guy, it’s easy to think
that the Middle East is no big hurdle for me. They actually
said, ‘Its easier for you because you don’t drink’ (alcohol is
prohibited in the country I was working in). I said, ‘Listen,
drinking and not drinking is not the issue: It’s about being
away from my family for that long.”
Doug’s story arose again during an interview I conducted with
Senior Manager Barry, who had also worked in the Middle East.
Barry told me, “Doug’s wife didn’t want him to do it, but he did it
anyway. He stayed for about five months and then came back and
refused to go back again.” Barry identified working in the Middle
East as an opportunity that had signaled his personal commit-
ment to AGM and had enabled a recent promotion. Thus, the
man who went to the Middle East happily was promoted; and the
man who publicly cut his stay short, thereby revealing his devi-
ance, was denied a promotion.
Accessing the firm’s formal accommodations also revealed
deviance. For example, Michael told me:
When my daughter was born, I wanted to take off three
months and be a stay-at-home dad. I felt like this was the
only time in my career I would be able to do this. But the re-
action I got was, ‘You can’t take three months off!”
He settled for six weeks of unpaid leave and worked 80-hour
weeks, travelling weekly, for the rest of the year. Yet he found
that “people still talked like I was out three months.” At his an-
nual review, he was told that AGM could not properly evaluate
him because the six weeks he had taken off meant he “had this
big donut hole in [his] year.” That year, his performance rating
fell from a 3 to a 2, and he did not receive a hoped-for promotion.
Thus, Michael’s ‘deviance’ was both recognized and penalized.
 Navigating Conflict Between Expected and Experienced Professional Identities

Organizational Mechanisms of Identity Control

Structure Performance Evaluation

of Work System

Manipulating

Expected/
Tools for Straying Passing Perception
Experienced
of Senior
Identity
Revealing Members
Conflict

Controlling

Personal Information

Factors Shaping Identity Factors Shaping Spread

Management of Perceptions Across
Audiences
• Audience status
• Closeness of relationship • Halo Effect
• Perceived access to formal • Informal help from close
accomodations colleagues
• Situation-specific conflict • Visibility and continued
negotiation of
accomodations

FIGURE ONE

In a subsequent conversation, he reflected, “No one ever ques-
tioned my commitment until I had a family.”
In closing
In the firm I studied, most workers — not simply women and not
simply those with families — encountered conflict between the
expected ‘ideal worker’ identity and reality, and they responded
by straying from the expected identity. This deviance did not in
itself beget penalties: Rather, some people ‘strayed’ while still
‘passing’ as having embraced the expected identity. Moreover,
although men and women both experienced conflict, they man-
aged their deviance differently: Men tended to pass, whereas
women tended to reveal.
An important contribution of my study is to introduce the
idea of ‘straying’ from the ideal worker image, and from expect-
ed professional identities more generally, while still ‘passing’
as having embraced it. As indicated herein, not all deviance is
detected: Rather, people retain some agency in how they re-
spond to pressures to assume an expected identity and may find
ways to pass.
My findings underscore the importance of better under-
standing how people handle pressures to be ideal workers, as
well as the consequences of their conformity or deviance for
both themselves and the organization.
Erin Reid is an Associate Professor of Human Resources
and Management at McMaster University’s DeGroote School
of Business. The paper on which this article is based was
published in the journal Organization Science and can be
downloaded online.

rotmanmagazine.ca / 55
 ‘Whitening’ and
Self-Presentation in
the Labour Market
Job candidates who ‘whiten’ their résumés to avoid racial
discrimination have a better shot at getting a callback — even
among diversity-centric organizations.
by Sonia Kang, Katherine DeCelles, András Tilcsik and Sora Jun

MODERN ORGANIZATIONS PLAY A KEY ROLE in perpetuating economic
inequality in society. Despite the proliferation of equal oppor-
tunity and diversity initiatives, discrimination on the basis of
race remains particularly pervasive in North American labour
markets.
Résumé audit studies — experiments that submit résumés in
response to actual job postings — consistently show evidence of
race-based discrimination: Résumés containing minority ‘racial
cues’ — such as a distinctly African American or Asian name —
lead to 30 to 50 per cent fewer callbacks from employers than do
otherwise-equivalent résumés.
Although the research demonstrates persistent discrimina-
tion, one of the ways in which candidates attempt to proactively
avoid anticipated discrimination has been largely overlooked:
Changing how they present themselves — especially in relation
to racial cues — when applying for jobs. We recently set out to
investigate the phenomenon of ‘résumé whitening’ and how self-
proclaimed ‘diversity-friendly’ organizations respond to them.
The Phenomenon of Résumé Whitening
The first stage of our study consisted of interviews with young
job applicants. Using email lists from university campus resi-
dence halls, we recruited black and Asian participants (55.9 per
cent women) for a study of minority job seekers’ experiences.
Participants were undergraduate students in their junior or
senior year or were enrolled in professional degree programs.
Each had a recent experience applying for jobs or internships.
Our sample represented a range of targeted career fields, in-
cluding finance (16.9 per cent), science and medicine (13.6 per
cent), law and government (13.6 per cent), consulting (10.2 per
cent), education (8.5 per cent) and information technology (5.1
per cent).
Our first key finding: 36 per cent of these individuals (31 per
cent of black respondents and 40 per cent of Asian respondents)
reported engaging in résumé whitening. In addition, two-thirds
reported knowing friends or family members who had ‘whit-
ened’ their job application materials. Clearly, awareness of this

rotmanmagazine.ca / 57
phenomenon was common, even among those who did not per-
sonally engage in it.
Job seekers described two main techniques for whitening
their résumés: Changing the presentation of their name and
modifying the description of their extra-professional experienc-
es. Let’s take a closer look at each.
PRESENTATION OF NAME. Nearly one-half of participants who had
engaged in résumé whitening indicated that they changed the
presentation of their first name. Among Asian respondents,
a frequent change was to adopt a first name that was differ-
ent from their legal first name. One Chinese-American col-
lege senior — who has lived in the U.S. since she was a tod-
dler — described switching to a more ‘American-sounding’
name when applying for finance jobs. This change was con-
sistent with advice she had received from career advisors at
her university:
In freshman year, I put my legal name on my résumé, which
is very Chinese-sounding. Then I went to Career Services,
and they told me to put my American nickname on it in-
stead. It wasn’t like, ‘Oh, you definitely need to do this’. It
was more like, ‘This is just a suggestion’. I think it’s just more
relatable if you’re more American sounding.
After making the change, this interviewee noted a substantial
increase in the rate of callbacks from employers: “Before I
changed it, I didn’t really get any interviews, but after that, I did.”
The majority of Asian respondents mentioned that this
practice was widespread among their Asian friends and was seen
as an imperative in some industries. Several reported using a
‘white’ or ‘English’ first name but noted that they used this name
in addition to their ‘real’ name. As one Korean-American stu-
dent explained: “In my freshman year, when I was applying [for
internships], I just put my full name, but now I put my [English]
nickname first and then my real name in parentheses.”
Though modifying first names was most common among
Asian respondents, several black participants also reported alter-
ing their first name—albeit in different ways. The most common
technique for them was to use their middle name, rather than
first name, if the former sounded more ‘white’ or ‘neutral’ than
the latter.
58 / Rotman Management Fall 2017
PRESENTATION OF EXPERIENCE. More than two-thirds of participants
who reported some form of résumé whitening mentioned chang-
ing the presentation of their professional or extra-professional
experiences. These changes took three main forms:
1. OMITTING EXPERIENCES THAT SIGNAL MINORITY STATUS OR ARE AS-
SOCIATED WITH NEGATIVE RACIAL STEREOTYPES. The omission of ex-
periences that could provide ‘racial cues’ was particularly com-
mon among black respondents. In some cases, these omissions
allowed job seekers to ‘pass’ — that is, to appear white, or at least
not necessarily black — on their résumé. As one black female
student explained: “I’ve been involved in a lot of black [campus]
groups and even though I’ve had leadership in them, [I took]
them off my résumé so you really couldn’t tell that I was black.”
More frequently, participants reported omissions that,
rather than allowing them to appear white, made their race less
salient by ‘toning down’ racial signals. One black female college
senior explained:
When I was looking for teaching jobs, I was concerned,
because I’m very involved in black organizations on cam-
pus, like the Association of Black Women, Black Students’
Association and Black Christian Fellowship. I was a little
hesitant about having so many black organizations on my
résumé, so I did remove a couple of them. To me, it was
about trying to tone down the blackness”.
Some Asian participants described similar actions. Several,
for example, reported removing involvement an Asian student
groups from their résumé and described how they concealed ‘ste-
reotypically Asian activities.’ Such omissions affected not only
extra-professional activities, but work experiences, as well. As a
female college student of Chinese descent noted: “If I’m apply-
ing for a position in the Attorney General’s Office, I’m not going
to bring up the fact that I once worked in Chinatown.”
An important feature of these reported omissions is that
they imply the concealment of potentially-relevant and valuable
human capital.
2. ALTERING ACTIVITY DESCRIPTIONS TO MAKE THEM MORE RACE-NEU-
TRAL. Participants also reported techniques for removing racial
cues without completely discarding the associated experiences.
 Résumés containing minority ‘racial cues’ lead to 30 to 50 per cent
fewer callbacks from employers.
A black male college senior with a career interest in medicine
noted: “When you’re whitewashing your résumé, you can phrase
racial activities in ways that are still conducive to you getting a
job”. Typically, this type of ‘spinning’ involved changing the de-
scription of experiences to render them racially neutral.
A female college student of Korean descent who had applied
for government jobs explained: “My volunteer work has been
exclusively with Korean organizations. Sometimes I take out the
word ‘Korean’ and just put the generic [organization name] on
my résumé.” Respondents explained that these more generic or
race-neutral descriptions of activities would seem ‘more presti-
gious’ or ‘more official’ to employers.
3. EMPHASIZING ASSIMILATION INTO WHITE CULTURE. Several respon-
dents also mentioned trying to change the ‘feel’ of their résumé
by adding ‘white’ or Americanized extra-professional experienc-
es and interests. A male college student of Bangladeshi descent,
who was born and grew up in the U.S. and had work experience
with a federal government agency, explained:
There’s usually a miscellaneous or ‘interests’ category on a
resume, and that’s where you want to kind of Americanize
your interests. A lot of people will put hiking or snowboard-
ing — things that are common to Western culture.
The Mitigating Factor: Diversity-Friendly Organizations
For the next phase of our study, we recruited participants for a
résumé workshop described in generic terms. Our sample in-
cluded 119 undergraduate business students (41 men and 78
women; 87 East Asian, 18 South Asian, and 14 black partici-
pants). Before coming to the lab, they were asked to submit
a copy of their résumé via email to a research assistant and to
indicate the field in which they were most interested (finance,
marketing or consulting).
Once at the lab, participants were given an envelope con-
taining a hard copy of their résumé and a job posting, which ad-
vertised a position that matched their selected field. They were
then randomly assigned to one of two conditions: In the ‘treat-
ment condition’, the job posting included a statement and an im-
age that presented the employer as an organization that values
diversity; while in the ‘control condition’, the posting included a
more generic image and did not mention diversity.
Participants prepared a tailored résumé for the job posting
by typing information into a standard résumé template on a com-
puter. The position was full-time and based in the area; salary was
‘to be negotiated.’ In the treatment condition, the job posting in-
cluded the following statement: ‘Accenture/The Parthenon
Group is an Equal Opportunity Employer, and strongly values
fairness, diversity and justice.’ Consistent with this statement, a
small image of a diverse group of four people (two women and
two men; two white persons and two racial minorities) appeared
beside the company logo. Neither this statement nor this im-
age appeared in the control condition, which featured instead
a standard image of a jigsaw puzzle with a pencil on top and
simply noted that the employer ‘values high performance and
efficiency.’ Aside from the job title, a few bullet points related to
the specific area of interest, and our treatment versus control ma-
nipulation, the advertisements were identical in every way.
The primary goal of this experiment was to test whether mi-
nority job seekers would react to employers’ pro-diversity signals
by constructing more racially-transparent (i.e., ‘less-whitened’)
résumés. The result: The proportion of those who engaged in
résumé whitening was about 1.5 to 2 times lower when the em-
ployer was presented as an organization that values diversity.
It is not surprising that some degree of résumé whitening
occurred in both conditions. As our interviews indicated, when
purposely tailoring a résumé to a particular position, a non-trivial
proportion of minority job seekers consider omitting or altering
racial cues. What our experiment tested and confirmed, how-
ever, was the hypothesis that minorities would engage in signifi-
cantly less résumé whitening when targeting a job posting with
pro-diversity signals: Nearly 39 per cent of participants engaged
in some form of race concealment in the control condition, while
only 21 per cent did so in the treatment condition.
As indicated, the résumé-screening stage of the hiring pro-
cess powerfully shapes individuals’ subsequent access to op-
portunities and can serve as a major barrier to employment for
minorities. As the third and final element of our research, we
conducted a randomized résumé audit study to explore the con-
sequences of résumé whitening. This involved sending applica-
tions from fictitious but realistic job seekers in response to actual
job postings. We then examined how randomly-assigned résumé
content, such as a name or an experience, affected the probabil-
ity that an applicant would be contacted for a job interview.
rotmanmagazine.ca / 59
 We did not find evidence that employers using pro-diversity language
in their job postings discriminate less against unwhitened résumés.
We sent résumés in response to advertised vacancies in U.S.
metropolitan areas. As in our interviews, we focused on black
and Asian job seekers. Because our interviews revealed two main
types of whitening — changing the first name and modifying the
description of experience — the degree of résumé whitening in
the audit study was either:
(a) no whitening,
(b) whitened first name,
(c) whitened experience, or
(d) whitened first name and whitened experience.
For the black applicant’s ‘unwhitened’ résumé, the name
appeared as ‘Lamar J. Smith.’ We chose Lamar as the first name
because it is distinctively African American but does not send a
strong signal of low socioeconomic status. For the last name, we
used Smith because it is a common surname among both whites
and blacks in the U.S. and therefore does not independently
send a strong racial signal. The applicant’s unwhitened résu-
mé also listed involvement in two college organizations whose
name contained a racial cue: ‘Vice President, Aspiring African
American Business Leaders’ and ‘Peer Counsellor, Black Stu-
dents’ Association.’
As several black interviewees noted, one whitening tech-
nique is to use the middle name rather than the first name if the
former is more race-neutral than the latter. Thus, when the black
applicant’s name was whitened, it appeared as ‘L. James Smith’
rather than ‘Lamar J. Smith.’ Also consistent with our interview
findings, we whitened the experience section of the résumé by
removing the words ‘African American’ and ‘Black’. Thus ‘Aspir-
ing African American Business Leaders’ became ‘Aspiring Busi-
ness Leaders’, and ‘[University] Black Students’ Association’ be-
came ‘[University] Students’ Association.’
On the unwhitened résumé of Asian applicants, the name
appeared as ‘Lei Zhang’. We selected this name from a list of
common Chinese male given names and surnames used in an-
other recent audit study. The Asian applicant’s unwhitened résu-
mé listed the same two college activities as the black applicant’s,
containing the racial cues ‘Asian American’ and ‘Asian’, respec-
tively. We whitened the Asian applicant’s name from ‘Lei Zhang’
60 / Rotman Management Fall 2017
to ‘Luke Zhang,’ reflecting the common whitening technique of
adopting an English first name. We chose Luke in particular be-
cause, like Lei, it is a one-syllable first name that starts with the
letter L, and because it is a very common non-Hispanic male first
name starting with that letter in U.S. cohorts born in the 1990s
(i.e., our applicants’ cohorts).
From July through September 2015, we applied to positions
through two of the largest online national job-search websites.
Because our interviews and lab experiment suggested that em-
ployers’ claims of ‘diversity friendliness’ affect the likelihood of
résumé whitening, we implemented a randomized design that
allowed us to examine whether diversity-friendly employers did
indeed discriminate less than their peers against minorities’ un-
whitened résumés.
To identify ads with an explicit pro-diversity statement, we
first searched the text of job postings in each metro area for word
roots and variants of the words ‘diverse’ and ‘inclusive.’ Pro-di-
versity passages typically stated that diversity was a central part
of the employer’s culture and provided reasons why a diverse
workforce was essential to the firm’s success. Most of these state-
ments also emphasized a commitment to fairness in hiring and
encouraged ‘diversity candidates’ or ‘underrepresented minori-
ties’ to apply.
Given these criteria, we were able to sample 80 job ads (40
with explicit pro-diversity language, and 40 without such lan-
guage) in each metro area, except for Los Angeles and New York
City, where we were able to sample a larger number (160 and
320, respectively). In total, we responded to 1,600 job postings, of
which 800 contained explicit pro-diversity language.
The result: 267 (or 16.7 per cent) of the 1,600 applications led
to a job interview request. There was little systematic variation
in the frequency of pro-diversity statements across industries
and job types, except that these statements were less common
than average in the construction industry and in the transporta-
tion and warehousing industry, and more common in the infor-
mation and cultural industries and the arts, entertainment and
recreation industries.
When we examined the interview requests, a clear pattern
emerged: Whitened résumés led to more callbacks than unwhit-
ened résumés. For blacks, the callback gap between unwhitened
résumés and those with both whitened names and experiences techniques is contingent upon how evaluating organizations
was 15.5 percentage points (a ratio of roughly 2.5 to 1). For Asians, present themselves.
the callback gap between these conditions was 9.5 percentage Second, we have introduced the idea that the selective ap-
points (or a ratio of roughly 1.8 to 1). plication of self-presentation tactics can actually disadvantage
With regard to the effect of ‘partial whitening’, black appli- stigmatized individuals. If the audience of evaluators is less
cants who whitened their experiences but not their first name accepting than it appears, stigmatized individuals may let their
received more callbacks than those who did not whiten at all (18 guard down and consequently experience greater disadvantage
per cent versus 10 per cent). For Asians, the size of this difference when interacting with seemingly-accepting evaluators. Third,
was five percentage points (not statistically significant). Whiten- we advance stigma theory by highlighting significant variation
ing the name only (versus not whitening at all) did not make a in the degree to which stigmatized racial identities are dis-
statistically significant difference for black applicants (13 percent closed. It is our hope that our work will lead to progress in all
versus 10 percent) but led to a marginally significant increase in three areas.
callbacks for Asians (18 per cent versus 11.5 per cent).
We next examined the subsample of job postings that con-
tained explicit pro-diversity language. Despite the diversity
rhetoric, the main patterns in this subsample were similar to
those observed across all job ads: As in the full sample, there
was a particularly prominent callback gap between unwhitened
résumés and those for which both the first name and the expe-
rience section were whitened. The size of this gap was 14 per-
centage points for black applicants and 11 percentage points for
Asians. Thus we did not find evidence that employers using pro-
diversity language in their job postings discriminate less against
unwhitened résumés.
This paradox shares parallels with the ‘paradox of meritoc-
racy’, whereby managers’ beliefs that their organization is meri-
tocratic and demography-blind make them more likely to make
prejudiced decisions. The paradox that we point to also arises be-
cause of the belief that a particular organization makes employ- Sonia Kang is an Assistant Professor of Orga-
nizational Behaviour and HR Management in
ment decisions fairly and on the basis of equal opportunity. In
the Department of Management, University
the present case, however, this belief is held not by a firm’s man- of Toronto Mississauga. Katherine DeCelles
agers but by prospective job applicants who, lulled into a false is an Associate Professor of Organizational
sense of security, may make themselves particularly vulnerable Behaviour & HR Management at the Rotman
School of Management. Andràs Tilcsik is an
to discrimination.
Associate Professor of Strategic Management
at the Rotman School. Sora Jun is a doctoral
In closing candidate in Organizational Behaviour at Stan-
An important insight from our research is that the self-presenta- ford University’s Graduate School of Business. The paper on which this article
is based, “Whitened Résumés: Race and Self-Presentation in the Labour
tion of organizations is key to understanding the self-presenta- Market,” was published in Administrative Science Quarterly.
tional choices of stigmatized individuals. We found, in particu-
lar, that stigmatized individuals’ use of ‘passing’ and ‘covering’ Rotman faculty research is ranked #3 globally by The Financial Times.

rotmanmagazine.ca / 61
 Poorer Than
Their Parents?
A New Perspective on
Income Inequality
Flat-or-falling incomes in advanced economies
have implications for future generations.
by R. Dobbs, A. Madgavkar, J. Manyika, J. Woetzel, J. Bughin, E. Labaye, L. Huisman and P. Kashyap
MOST PEOPLE GROWING UP in advanced economies since World
War II have assumed that they and their children will be better
off than their parents and grandparents — and for most, that as-
sumption has been correct. Over the past 70 years — except for a
brief hiatus in the 1970s — buoyant economic growth has meant
that all households, especially those of the Baby Boomer genera-
tion, experienced rising incomes, both before and after paying
taxes and receiving government transfers such as unemploy-
ment or social security benefits.
This positive income trend has come to an abrupt halt in
recent years: Our research shows that in 2014, between 65 and
70 per cent of households in 25 advanced economies were in in-
come segments whose real market incomes — from wages and
capital — were flat or below where they had been in 2005. This
does not mean that individual households’ wages necessarily
went down, but that households earned the same as or less than
similar households had earned in 2005, on average.
In the 12 preceding years, between 1993 and 2005, this ‘flat
or falling’ phenomenon was rare, with less than two per cent of
households not advancing. In absolute numbers, while fewer
than ten million people were affected in the 1993–2005 period,
that figure exploded to between 540 and 580 million people in
2005–14. Taxes and transfers to helped soften the blow, but dis-
posable incomes were nonetheless flat or down in 20 to 25 per
cent of income segments, on average.
The severe recession that followed the 2008 financial crisis
and the slow-growth recovery since are a fundamental cause of
this phenomenon, but we found that deep-rooted demographic
and labour-market factors have also played a role — and will
likely continue to do so, even if economic growth accelerates.
These factors include shrinking households, a smaller share of
GDP going to wages, and increased automation in the work-
place. Even in the 2005 to 2014 period, market incomes in most
of the countries we studied would have risen slightly had it not
been for such changes.
In this article, we will summarize the factors underlying the
‘flat or falling phenomenon’ and outline some options for deal-
ing with what is potentially a corrosive social and economic de-
velopment.
The Flat-or-Falling Phenomenon
There are several ways to think about income inequality and its
implications. The most common approach in recent years has
been to look at the rising gap between the wealthiest segments
rotmanmagazine.ca / 63
 Income from wages fell for all population segments between
2002 and 2012, regardless of age or level of education.
of the population and those in the middle or lower end of the
scale. This, for example, has been the focus of French economist
Thomas Piketty, whose best-selling book about the concentra-
tion of wealth going to top earners sparked broad public discus-
sion. Another frequently used approach is to focus on the poor
— those with insufficient income to provide for their basic needs,
often calculated as a percentage of the median income.
Our research looks at a third aspect, which has not been as
widely studied: The rapid growth in the proportion of income
segments in advanced economies whose earnings both before
and after taxes and transfers have been flat or falling. This goes
beyond the degree of inequality measured in the standard Gini
index by providing a detailed view of the trajectory of all income
segments, which can be lost in a consolidated index. We focus on
income rather than on wealth or consumption, and we also look
at the evolution of incomes over time, rather than at a fixed point.
We used three approaches to analyze this flat or falling phe-
nomenon. The first looked at changes by income segments, or
households divided into deciles (tenths), quintiles (fifths), and
even percentiles (one-hundredths), depending on where they
rank in the national income distribution. We examined income
segments in six advanced economies — France, Italy, the Neth-
erlands, Sweden, the United Kingdom and the United States —
to determine how they have fared over the past two decades. We
then scaled up the findings to include 19 other advanced econo-
mies — including Canada — with similar growth rates and in-
come distribution patterns, for a total of 25 countries with a com-
bined population of about 800 million that account for just over
50 per cent of global GDP.
Our second approach was an analysis of a detailed data
set for 350,000 people in the three countries, with microdata
available — France, Italy and the U.S. For these countries, we
examined income by age bracket and educational attainment.
Finally, we sought to understand perceptions through conduct-
ing detailed surveys of more than 6,000 people in France, the
UK and the U.S. that tested how people felt about the evolution
of their income.
Our first key finding: Since 2005, household incomes across
advanced economies have stagnated or fallen for most income
segments. This is based on an analysis of income segment data
from national agencies in the six countries we looked at in detail,
a total of 487,000 households. On average, 65 to 70 per cent of
the population were in income deciles (10-per cent slices of the
population) whose real market incomes in 2014 fell compared
with 2005. In our six focus countries alone, more than 400 mil-
64 / Rotman Management Fall 2017
lion people were in income segments with flat or falling market
incomes. When scaled up to the 25 countries in our sample, this
translates into 540 to 580 million people.
By comparison, in the 12 previous years, between 1993 and
2005, less than two per cent of the population — fewer than 10
million people — were in income segments whose average mar-
ket incomes were flat or down. The impact was smaller when
measured in disposable income; but even after accounting for
higher net transfers to households because of the recession, dis-
posable incomes, on average, were flat or down in 20 to 25 per
cent of income segments.
The distribution of flat or falling incomes varied across the
six economies we studied in depth. At one extreme was Italy,
which experienced a severe economic contraction in the reces-
sion after the 2008 financial crisis and has had a very weak
recovery since. There, real market incomes were flat or falling
for virtually the entire population. At the other extreme was Swe-
den, where only 20 per cent of the population had flat or falling
incomes. In each of the four other focus countries — France, the
Netherlands, the UK and the U.S. — the proportion of segments
whose market incomes did not advance was in the 60-to-80 per
cent range.
The variation was even greater at the level of disposable in-
come: The share of income segments whose disposable income
did not advance between 2005 and 2014 ranged from 100 per
cent in Italy to 10 per cent in France and less than two per cent
in Sweden and the U.S. These variations reflect widely varying
national economic, fiscal and monetary policy responses to the
recession.
The trend of flat-or-falling incomes was confirmed by our
second analysis of age- and education-based population seg-
ments. Our data on 350,000 individuals from France, Italy and
the U.S. tracked incomes of demographic segments based on
three age brackets (younger than 30, 30–45, and older than 45)
and three levels of educational attainment — low, medium and
high, based on whether a person received less than a high school
diploma, a high school diploma, or a bachelor’s degree or above.
This second set of data confirmed our results from the first
analysis by income segments: We found that income from wages
fell for all population segments between 2002 and 2012, regard-
less of age or level of education. In all three countries, less-ed-
ucated workers, and especially younger ones, have been most
affected. Moreover, the recession and weak recovery have led
to persistently high levels of youth unemployment, prevent-
ing young people across advanced economies from launching
 Flat or Falling Incomes: A Global Issue

Although the global recession was Both the extent of flat or falling incomes and the forces driving the phenomenon vary
the most important factor, median considerably among countries.
household incomes were also
affected by long-run trends. % of population in groups with flat or falling market income, 2005-141

AGGREGATE DEMAND 97
Slow or negative growth in
output and employment
81
DEMOGRAPHIC CHANGES 70 70
Smaller households with fewer 65-70
63
working-age adults

LABOUR-MARKET SHIFTS
Lower share of GDP flowing to
wages; weak demand for low-
and medium-skill labour
20
CAPITAL INCOME
Lower investment returns
AVERAGE OF
and business income
ITALY UNITED UNITED NETHER- FRANCE SWEDEN
25
TAXES AND TRANSFERS ADVANCED
STATES KINGDOM LANDS ECONOMIES
Reduced taxes and increased transfers
offset some losses in market income -2 +4 +3 +6 +4 +7 +4
-6 -1 -1 -5 -3 -5 -3
IMPACT OF THESE FACTORS
Percentage points of change in +4 -7 -8 -15 0 +10 -2
disposable income, 2005-14 -1 +1 +1 +2 0 0 0
-2 +5 +4 +10 +3 +5 +4

In a worst-case scenario, 70-80% of income groups might not advance in the coming decade

The 25 advanced economies we scaled up to are Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy,
Luxembourg, the Netherlands, New Zealand, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, the United Kingdom, and the United States. Countries including Japan and
South Korea are not included for lack of available comparative data.

careers. These are the people who are literally at risk of growing
up poorer than their parents.
Women were also over-represented in lower-income de-
ciles. Single mothers were more likely to be in segments that
were not advancing, although there was a variance among coun-
tries. In the U.S., 20 times as many single mothers were in the
lowest-income decile as in the highest. In Italy, there were eight
times as many single mothers in the lowest income households
as in the highest-income households. For France this number
was 11 times.
Our microdata for the U.S. show that single-mother house-
holds not only earn less than the average household, but their
real household income also declined nearly one percentage point
faster than all other households in the decade from 2003 to 2013.
The citizen surveys we conducted in 2015 in France, the UK
and the U.S. show that perceptions are in line with the findings
of our analysis of income and population segments. We sought
to gauge whether people perceived a decline in their income by
asking them to respond to statements about their financial posi-
tion today, whether it had improved, and how it compared with

rotmanmagazine.ca / 65
 Declining earning power for large swaths of the population could limit
demand growth and increase the need for social spending.
that of friends and neighbours. We also asked what they expect-
ed their financial position to be in five years’ time, and whether
they thought they were worse or better off than their parents at
the same age.
While the answers varied by country, overall, there was an
even split, with 30 to 40 per cent saying their incomes were not
advancing, and the same proportion saying their incomes had
advanced. The remaining 20 to 30 per cent were neutral and did
not feel strongly either way. The 30 to 40 per cent who felt they
were not advancing held more pessimistic views about their fu-
tures and the futures of their children than those who felt they
were advancing. Nearly half of those not advancing expected
not to advance in the future, compared with just one quarter of
those who felt they were advancing. Those who felt they were
not advancing fell into one of two camps: The two-thirds who
believed that things would improve for their children and the
next generation, and the remaining one-third, who saw slow
income growth as a persistent problem that would continue to
affect their children.
Over time, declining earning power for large swaths of the
population could limit demand growth in economies and in-
crease the need for social spending and transfer payments, even
as tax receipts from workers with stagnating incomes limit capac-
ity to fund such programs. The impact could be more than purely
economic, however, if the disconnect between GDP growth and
income growth persists.
Our survey provided an indication of the potentially-cor-
rosive social and economic consequences of flat-or-falling in-
comes. Along with questions about income trends, we asked
about people’s views on trade and immigration. The citizens who
held the most negative views on both were the same group who
felt their incomes were not advancing and did not expect the situ-
ation to improve for the next generation. More than half of this
group agreed with the statement, ‘The influx of foreign goods
and services is leading to domestic job losses,’ compared with 29
per cent of those who were advancing or neutral. They were also
twice as likely to agree with the statement, ‘Legal immigrants are
ruining the culture and cohesiveness in our society’.
Those who were not advancing and not hopeful about the
future were also more likely than those who were advancing to
support nationalist political parties such as France’s National
Front or, in the UK, to support the move to leave the European
Union.
66 / Rotman Management Fall 2017
What Can Be Done to Advance Incomes?
For government policymakers and business leaders alike, in-
troducing changes that rekindle income advancement is not
straightforward and may require some difficult trade-offs. Poli-
cies to raise productivity may not help reduce income inequal-
ity, for example, while efforts to achieve a more equal income
distribution may at times inhibit moves to increase productivity
growth. Following are four policy options aimed at stimulating
discussion.
1. CREATE MEASUREMENT TOOLS TO GAUGE THE EXTENT AND EVOLUTION
OF FLAT OR FALLING INCOMES
International organizations including the OECD and the In-
ternational Labour Organization (ILO) are starting to look at
more effective ways to measure income inequality, alongside
other standard economic indicators such as unemployment or
GDP growth. Income advancement could become a policy goal
in its own right, a fundamental indicator of the health of the
economy and society, comparable to poverty reduction or sus-
taining overall employment.
To address the issue of flat-or-falling incomes effectively,
policymakers will need to adopt specific metrics to track the
phenomenon across the entire income spectrum. For now, such
data are not systematically gathered in most countries, and
where statistics are available, they tend to be based on survey
data. Measuring flat-or-falling incomes is an important starting
point to provide a fact base, and the metrics could be improved,
including through use of more reliable sources such as tax data.
Tracking this data could be part of the formal mandate of
international organizations including the OECD or the World
Bank so that it can be aggregated and compared across coun-
tries. As different policies are deployed around the world, they
could be structured in a way that would enable their outcomes
to be measured. Tracking and evaluating flat or falling incomes
would allow for the development of a set of best practices that
could be deployed across countries.
2. REVIVE GROWTH AND ENABLE A THRIVING BUSINESS ENVIRONMENT
THAT CREATES JOBS
As we have seen, the economic downturn was a fundamental
cause of the lack of income advancement for a large majority
of income segments since 2005. The corollary is that revival of
stronger economic growth will be a key to raising incomes, even
in the face of demographic shifts and labour-market changes that
work against them. Conversely, if the current low-growth world
becomes ‘the new normal’, flat-or-falling incomes could become
entrenched.
The paramount importance of boosting growth through im-
proved productivity is a theme we have researched extensively.
About three-quarters of the potential for productivity improve-
ments comes from the adoption of existing best practices and
‘catch-up’ productivity improvements, while the remaining one-
quarter comes from technological, operational and business in-
novations that push the frontier of the world’s GDP potential.
Governments have many opportunities to help boost productiv-
ity, including through measures that would reduce waste and im-
prove resource and energy efficiency, increase competition and
deregulation, or target infrastructure and other investment that
creates new jobs in the short run and shores up economic growth
over the longer term.
3. DEVELOP MEASURES AIMED AT HOUSEHOLDS MOST AT RISK
Beyond such general remedies, the phenomenon of flat-or-fall-
ing incomes could be addressed through measures specifically
aimed at low and middle-income households or the population
segments we identify as being most at risk, including young peo-
ple with low educational attainment, women and older workers.
Upgrading skills and easing the transition from education
to employment is one approach. At the secondary school level,
public school systems can collaborate with local businesses to
craft vocational training and apprenticeship programs, par-
ticularly in fast-growing service industries such as healthcare.
Governments and businesses could work with universities and
other post-secondary institutions to expand access to quality
education and ensure that the learning provided is relevant to
the workplace of tomorrow. And incentives could be offered for
students to pursue fields of study such as science, technology,
engineering and math, which lead to more lucrative jobs.
To raise labour participation among women and older work-
ers, policymakers could provide greater access to child care, or
help women enter or re-enter the labour force by removing tax
rules that penalize two-income households. Technology could
also provide some solutions. Digital platforms such as LinkedIn
or Monster, which link employers with workers, provide a new
way of overcoming a skills mismatch, while companies such as
TaskRabbit provide opportunities to become engaged in inde-
pendent work.
Why Incomes Stopped Rising
1. Aggregate demand factors. When aggregate demand (or
GDP) grows, employment and labour-force participation also
increase, enabling incomes to rise. Conversely, lower labour-
force participation rates, rising unemployment, and waning
productivity (output per worker) can all lead to stagnating
or falling incomes. Unemployment in particular can have a
dampening effect on household income.
2. Demographic factors. These capture changes in the
number of working-age people in each household. This
number has fallen in several of our focus countries because
of the shrinking size of households, the result of changing
family structures, lower fertility rates and aging, which de-
creases the number of people available to work.
3. Labour-market factors. These include the evolving
pattern in labour demand and supply. This is manifested in
the wage share of GDP and the median household’s share
of wages. Among the forces that can explain movements in
these two factors are income gains for high-skill workers
and negligible income gains or declines for low- and medium-
skill workers, and the share of part-time and temporary work,
which is often less well paid than full-time work. Labour-
market factors can vary depending on the role and influence
of unions, different national labour regulations and practices,
trade and immigration, and the degree to which jobs are
affected by automation.
4. Capital income factors. These include capital gains
from asset sales, interest and dividends from investments,
rental income, income from business, or income received
from private pension plans.
5. Tax and transfer factors. Transfers include a range of
cash payments to beneficiaries such as social security pay-
ments, disability or workers’ compensation, and unemploy-
ment benefits. The first three of these categories—aggregate
demand, demographic, and labour-market factors—contrib-
ute to changes in labour income. Changes in market income
are driven by changes in this labour income, together with
changes in capital income. Disposable income is the amount
households receive after taxes, and transfers are applied to
market income.
rotmanmagazine.ca / 67
 Income advancement could become a policy goal in its own right,
a fundamental indicator of the health of a society.
We estimate that such online platforms could increase glob-
al GDP by two per cent between now and 2025. Enforcing anti-
discrimination laws would also help raise incomes for women
and minority segments, while pension reforms can reduce the
proportion of workers who leave the labour force early.
4. USE TAX AND WELFARE POLICIES TO SECURE DISPOSABLE INCOME
GROWTH
Many advanced economies used transfer and tax policies to bat-
tle the effects of the recession and its aftermath. Fiscal stresses
and mounting government debt can make raising taxes and
transfers economically challenging today and in the future. But
rather than implementing broad-based redistributive programs,
policymakers can use tools targeted at income deciles with flat-
or-falling incomes that are not as costly.
For example, even where national income taxes are low,
sales and value-added taxes, payroll taxes and property taxes can
fall heavily on low and middle-income households. These taxes
could be adjusted to raise disposable incomes for these house-
holds. Policymakers can also consider the impact of their spend-
ing decisions on disposable incomes of segments whose incomes
are not advancing. A public transit system, for example, is likely
to provide more value for a lower income household than a new
highway.
Where there is political consensus, direct payments such
as a guaranteed basic income scheme could be used to main-
tain disposable incomes. Also, where appropriate, labour rules
could help lift incomes for segments that have not been advanc-
ing. This might include adjusting minimum wages or extending
employment benefits to part-time and temporary workers, which
some countries have already done.
The Role for Business Leaders
Flat-or-falling incomes — and the underlying causes for them —
raise questions about how businesses can thrive over the long
term in advanced economies. The declining purchasing power
of the broad middle classes in consumption-driven economies is
the most obvious problem. Another arises from one of the most
important causes of income stagnation: Escalating demand (and
cost) for high-skill labour and falling demand for other types of
workers. This is creating a potentially-serious shortage of high-
skill talent across advanced economies and a glut of less-skilled
workers.
68 / Rotman Management Fall 2017
Business leaders have a legitimate role to play in shaping the
discussion on flat-or-falling incomes and helping to create solu-
tions. CEOs can be advocates for the investment and growth nec-
essary to create employment. They may recognize that paying
better wages and introducing profit-sharing and non-cash bene-
fits can raise employee disposable incomes and at the same time,
raise productivity and loyalty. Companies can also benefit by
taking steps to keep women and older workers in the workforce.
Finally, companies can invest in a better labour pool — and
increase the earning potential of workers — by collaborating
with the public sector on job-relevant education. More broadly,
companies can act as catalysts in their communities to enact
policy changes.
Richard Dobbs is a Director of the McKinsey
Global Institute (MGI) and a Senior Partner,
based in McKinsey & Company’s London
office. Anu Madgavkar is a Partner with MGI,
based in McKinsey’s Mumbai Office. James
Manyika is a Director of the MGI and Senior
Partner in McKinsey’s San Francisco office.
Jonathan Woetzel is a Director of the MGI
and a Senior Partner in McKinsey’s Shanghai
office. Jacques Bughin is a Director of MGI
and a Senior Partner in McKinsey’s Brussels
office. Eric Labaye is Chairman of the MGI
and a Senior Partner based in McKinsey’s
Paris office. Liesbeth Huisman is a former
Engagement Manager at McKinsey’s Amster-
dam office. Pranav Kashyap is an Engage-
ment Manager at McKinsey’s Silicon Valley
office. The complete report on which this
summary is based can be downloaded online.
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 The Myth of a
Classless Society
Social class of origin continues to play a key role
in shaping economic and life trajectories.
by András Tilcsik

SOCIAL CLASS — defined as one’s relative socio-economic rank in
society — is one of the key factors shaping educational and eco-
nomic trajectories in a powerful way. Research shows that social
class of origin — whether defined by parental income or educa-
tion — affects a child’s future educational, occupational and eco-
nomic attainment as well as their mental and physical well-being.
But the existing research neglects a vital dimension of economic
stratification: employment.
Employers are the gatekeepers to jobs offering varying levels
of economic and symbolic resources, and their hiring decisions
shape individuals’ economic trajectories. Working alongside
Professor Lauren Rivera of the Kellogg School of Management,
I recently investigated employment discrimination on the basis
of social class signals in an elite U.S. labour market. Because pre-
vious research suggests that effects of social class on inequality
might depend on gender, we decided to experimentally manipu-
late job applicants’ apparent social class and gender.
In this article I will summarize our findings, which indicate
that social class signals do indeed affect hiring, and that gender
moderates this effect.
Class Inequalities in Education
The bulk of existing research on social class inequality focuses
on formal schooling. Scholars have shown that children from af-
fluent or highly-educated families — backgrounds we refer to as
‘socio-economically privileged’ — benefit from educational ad-
vantages that begin before preschool and persist throughout col-
lege, facilitating higher levels of educational attainment.
Simply put, students from socio-economically privileged
homes are more likely than students from less-privileged fami-
lies to attend high quality schools. And within a given school,
these students are more likely than students from less-privileged
backgrounds to be embedded in academically-focused peer net-
works; to obtain crucial support from parents, teachers and ad-
ministrators that enables them to access valued academic and
extracurricular tracks; and to wield cultural resources that facili-
tate positive impressions from teachers.
Collectively, these processes affect an individual’s college
prospects, because students from privileged homes are more
likely to have the types of carefully cultivated academic and
extra-curricular experiences that appeal to admissions commit-

rotmanmagazine.ca / 71
 In studies, people rate individuals who appear to be from a higher-class
background as ‘more competent’.
tees at prestigious universities. A missing link in the research is
the continuing role that social class plays after the completion of
higher education — when students enter the labour market and
compete for jobs.
Past research indicates that class is a meaningful status
characteristic that influences perceptions of competence and
the distribution of valued rewards. Studies show that people rate
individuals who appear to be from higher-class backgrounds
as ‘more competent’ and ‘worthy’ than those from lower-class
backgrounds. Studies also suggest that employers view individu-
als from higher-class backgrounds as more desirable workers.
In a study of hiring in elite professional service firms, Prof.
Rivera found that when screening resumes, firms favoured appli-
cants who displayed higher-class ‘cultural signals’ — such as par-
ticipation in traditionally upper-class sports and extra-curricular
activities. Apparently, employers believed that this signaled an
ability to fit in with the elite culture and clientele of these firms.
However, this study did not measure social class discrimination
directly, and thus we set out to separate its unique influence from
the impact of other selection criteria.
Heading into this research, we recognized that gender is
also a powerful status characteristic that shapes perceptions of
competence. In hiring evaluations, women are often rated less fa-
vourably than otherwise-equivalent men. Given such biases and
women’s historic under-representation in high-status careers, we
suspected that displaying signals of higher social class might be
more important for women than for men in elite labour markets,
because the status of being from a higher social class might com-
pensate for the ‘lower-status identity’ of being female.
There were also reasons to expect that coming from a high-
er-class background could actually serve as a liability for women.
Research shows that people evaluate individuals based on two
basic dimensions: competence and warmth. When making hir-
ing decisions, evaluators punish women (but not men) whom
they perceive as lacking in warmth, because such women ‘vio-
72 / Rotman Management Fall 2017
late’ feminine prescriptions of ‘niceness’. As a result, stereotypes
associated with social class might pose a particular dilemma for
higher-class women. As indicated, people tend to rate individu-
als from higher-class backgrounds as more competent than peo-
ple from lower-class backgrounds — but they also often rate them
as ‘colder’. Thus, while markers of higher-class backgrounds may
signal greater competence for both men and women, they may
also signal a lack of warmth that puts higher-class women at a
disadvantage.
Employers may also perceive higher-class women as being
less committed to intensive careers. The ‘ideal worker’ in many
professional organizations is completely devoted to work. Yet
professional women, especially mothers, may be perceived as
less committed to work than otherwise-equivalent men. Given
the norms of ‘intensive mothering’ that are prevalent among
socio-economically privileged families, employers may view
women from higher-class backgrounds as more encumbered —
and thus less dedicated and desirable — than higher-class men or
lower-class women.
Our Research
We set out to study discrimination on the basis of social class
signals and gender in the application process for entry-level
professional positions in large U.S. law firms. We conducted a
résumé-audit study in this elite labour market by sending ficti-
tious applications to large law firms and examining how signals
of social-class background and gender affected the chances of
receiving an invitation to a job interview (i.e., a ‘callback’). The
316 sampled offices belonged to 147 different law firms, and the
three cities with the highest number of offices were New York
City, Washington, DC and Los Angeles.
Our experiment focused on summer associate positions,
because large law firms hire the overwhelming majority of
their new associates through these programs. In 2013, for ex-
ample, firms surveyed by the National Association for Law
 Social Class Signals

Higher-Class Combination Lower-Class Combination

Last name Cabot Clark

Undergraduate athletic award University athletic award University award for outstanding
athletes on financial aid

Undergraduate extra-curricular activity Peer mentor for first-year students Peer mentor for first-generation
college students

Undergraduate extra-curricular sport Sailing team Track and field (relay team)

Personal interests Sailing, polo, classical music Track and field, pick-up-soccer,
country music

FIGURE ONE

Placement offered a full-time position to 92 per cent of their
summer associates, and at many large firms, this number is
closer to 100 per cent.
To create a realistic baseline résumé and cover letter, we
consulted lawyers with extensive knowledge about the job mar-
ket for summer associates. These ‘informants’ — eight lawyers
(five men and three women) ranged in rank from associate to
partner. Building on actual résumés obtained through these con-
tacts as well as templates provided by several law schools, we
developed a résumé that described the applicant’s educational
history, professional experiences and extra-curricular activities.
Each law firm in our study received one résumé to which we
randomly assigned signals of relative social class background
(higher or lower) and gender (male or female), while keeping
all résumé items constant. Appearing at the very top of a ré-
sumé, first name is a prominent and clear gender signal. We
signaled gender through the applicant’s first name (James or
Julia). We then signaled differences in social class background
through a combination of five minor résumé items, summa-
rized in Figure One.
Our choice of items signaling social class background re-
flects prior research on ‘class markers’. The first item we used
was the applicant’s last name, which can serve as an important
indicator of social class. For instance, the family name Cabot
is traditionally and persistently associated with the U.S. upper
class, whereas the name Clark provides a suitable control signal
because it does not carry a strong higher-class connotation and
is, in fact, one of the 20 most common non-Hispanic last names
in the U.S. Both names are of English origin, start with the same
letter, and contain the same number of letters.
The second set of signals — a generic undergraduate ath-
letic award versus one specifically for outstanding athletes on
financial aid — provides a straightforward indicator of class back-
ground because, other things being equal, students on financial
aid tend to come from lower-income families. The logic behind
the third item is similar: One applicant’s résumé listed a generic
activity (serving as a peer mentor for first-year college students),
whereas the other applicant’s resume included serving as a peer
mentor for fellow first-generation college students, which sug-
gested the applicant was a first-generation student—widely con-
sidered a signal of working-class origins.
The last items were cultural class signals in the form of
lifestyle markers. Sports are common bases of bonding and so-
cial distinction among North American managers. Although
sports are typically perceived as more democratic than tradi-
tional highbrow cultural forms, athletic participation is strongly
segregated and stratified by social class. We assigned applicants
to one of two university sports teams — either sailing or track and
field (relay) — from the beginning of freshman year, thus suggest-
ing a background starting before college. Both sports involve a

rotmanmagazine.ca / 73
 The higher-class male applicant had a callback rate more
than four times as high as the other three applicants.
combination of team and individual performance components,
but sailing is often associated with the upper class, whereas track
and field is not.
The very end of each résumé listed ‘Personal Interests’.
In this section, we indicated a personal interest in a second
sport: polo versus pick-up soccer. Both are team-based ac-
tivities, but only the former has a strong higher-class con-
notation. We also included one item pertaining to music, be-
cause musical tastes can also serve as important signals of
social class. For the ‘higher-class’ applicant, we indicated an in-
terest in classical music.
We emailed applications to the designated recruitment con-
tact person in all sampled offices within a 10-day period, and
then recorded whether each application led to an invitation for
an interview. Overall, the 316 applications generated 22 inter-
view invitations, a callback rate of 6.96 per cent, which is both (1)
very similar to the callback rate in other résumé audits focusing
on white-collar jobs and (2) consistent with the callback rate we
would expect for applicants to large law firms who are at the top
of their class but do not attend super-elite law schools.
The callbacks, however, were far from equally distributed
among the treatment conditions: The higher-class male appli-
cant had a callback rate of 16.25 per cent — more than four times
as high as the average rate for the other three applicants, who
collectively generated just nine interview invitations from 235
applications, a callback rate of 3.83 per cent. This is especially
striking when considering the fact that applicants’ entire law
school records and all academic and professional experiences
were identical.
We were also able to determine that higher-class signals in-
creased the odds of a callback for men, but not for women. Given
that the way in which gatekeepers interpret status characteristics
is intimately intertwined with the cultural meanings associated
with each characteristic, the interaction between gender and
class markers might reflect different stereotypical perceptions of
women and men from different social classes.
To explore this, we then conducted a survey experiment
with a sample of 210 practicing U.S. lawyers. Participants were
told they would evaluate a résumé that belonged to an actual
74 / Rotman Management Fall 2017
law school student who had applied to a summer associate posi-
tion at a large law firm based in Washington, DC. In an online
survey, each participant evaluated one randomly assigned ré-
sumé from the set we used for the audit experiment. We asked
participants to tell us if they would recommend the candidate
for an interview, and to rate the candidate on competence, lik-
ability, fit with the employer’s culture and clients and career
commitment.
As in our field experiment, the attorneys who completed the
survey favoured the higher-class man above all other applicants.
The survey, however, gave us a chance us to dig deeper into this
finding. We found that attorneys viewed higher-class candidates
— whether male of female — as being more of a fit with the cul-
ture and clients of large law firms than lower-class candidates.
But even though higher-class women were seen as just as good
‘fits’ as higher-class men, participants gave these women lower
overall recommendations because they believed they were not
committed enough to working in a demanding job. This ‘com-
mitment penalty’ for higher-class women offset any advantages
they received on account of their perceived fit with the culture
and clientele of an elite firm.
To gain additional insights into the mechanisms driving
these results, we then interviewed 20 attorneys who had direct
experience with hiring at large law firms in our audit study sam-
ple. During interviews, we presented participants with one of the
four résumés used in our audit study. We distributed the résumés
randomly but evenly, so that the same number of participants re-
viewed each applicant. We first asked attorneys to talk through
the assigned résumé aloud, discussing their overall impressions
of the candidate. We then followed up with targeted probes
aimed at tapping the six dimensions included in our survey.
By far, the most striking difference we noted was how our
respondents described the commitment level of the higher-class
woman versus other applicants. Almost all believed that she, un-
like other candidates, might be an attrition risk. John expressed
concerns about her commitment to legal practice:
Does this person really want to be a lawyer? Did this person
go to law school as a default or because they couldn’t think
 of anything else to do? People who go to law school as a de- In closing
fault or don’t really think about the law in terms of practicing Our findings highlight the persistent role that social-class signals
are the most vulnerable to leaving the profession. And par- play in accessing a profession’s most lucrative and prestigious
ticularly in a firm environment — it’s a difficult environment segments. They also inform a broader sociological understand-
— you have to really want to do it, even if you’re gonna last ing of how employers hire.
just a couple years. Despite myths of a classless society, social class of origin
plays an enduring role in shaping an individual’s economic tra-
More commonly, respondents worried that the higher-class jectory. As indicated herein, the interaction of social class sig-
woman might leave paid employment entirely. Viewing her nals and gender can powerfully affect the distribution of labour
through stereotypes of marriage and family, they described her market opportunities.
as potentially ‘looking for a husband’ or ‘biding time’, until she
would leave to become a stay-at-home mom. Respondents had a
very different reaction to the lower-class woman, whose commit-
ment they did not question. They believed she was ‘hungry,’ and,
unlike the higher-class female, would ‘work hard for the money’
over many years because she had debts to pay and would have
mouths to feed.
In fact, when we told participants about the main finding
from our audit study, the most common reaction was to sponta-
neously mention a bias against higher-class women, which many
(but not all) had personally observed in their firms. Some, like
Betsy, described this bias in terms of general societal expecta-
tions of affluent men and women:

An upper-class man is always going to be working. Chances

are he’s well connected, and that might be a good person to
have at your firm. But an upper-class woman might have all
of the entitled-jerk issues the guy does, plus you add in the
fact that she might not take the job that seriously. There’s
not the same societal pressure on women and to have a
high-earning job.

Outside resources, combined with expectations of intensive

mothering among privileged women, contributed to a perception
among some decision-makers that hiring a higher-class woman
was not always worth the risk. Even though higher-class men
also have outside responsibilities and high levels of attrition, they
were not perceived as flight risks. Likewise, lower-class women
seemed immune to such attributions because respondents be-
lieved they had no other options but to keep working.
András Tilcsik is an Associate Professor of Strategic Manage-
ment and a Fellow of the Michael Lee-Chin Family Institute
for Corporate Citizenship at the Rotman School of Manage-
ment. This article summarizes his research paper, “Class
Advantage, Commitment Penalty: The Gendered Effect of
Social Class Signals in an Elite Labour Market”, written with Lauren Rivera of
the Kellogg School of Management and published in the American Sociological
Review. The complete paper can be downloaded online.

rotmanmagazine.ca / 75
 How to Move
Millions Up
the Income Ladder
Five interventions have the potential to significantly
impact economic mobility.
by Debby Bielak and Devin Murphy
THE AMERICAN DREAM is not unique to America. Parents the world
over harbour the hope that if their children work hard and build
their skills, they can climb the income ladder and attain a higher
standard of living. However, the odds that children will rise above
their life’s station are more promising in many industrialized na-
tions than they are in the U.S.: According to the Economic Policy
Institute, Canada, Denmark, Norway, Finland and Australia of-
fer the greatest opportunities for upward mobility. Meanwhile,
the UK and the U.S. lag behind, just a couple of notches above
countries with much smaller economies like Slovenia and Chile.
In their 2016 study, “The Fading American Dream,” Stan-
ford Economist Raj Chetty et al. revealed that the probability of
children earning more than their parents has been declining for
more than 70 years. What’s more, according to the Pew Chari-
table Trusts’ Economic Mobility Project, seven out of 10 Amer-
icans who are born to parents in the bottom 40 per cent of the
income scale will never make it to the middle class.
Stasis at the bottom of the income ladder has implications
for everyone — not just those struggling to improve their lot. A
strong middle class bolsters economic growth and stability in
myriad ways. When families invest in children and companies
invest in workers, they lift the population as a whole, incubate
future generations of entrepreneurs and strengthen institutions.
Without these investments, pipelines for growth and stability are
compromised.
Putting Kids on an Upward Path
The Brookings Institution’s Social Genome Project shows that,
if they are to improve their chances at upward mobility, children
and young people must surpass a series of milestones as they
grow. These range from being born to parents who are financially
prepared to raise them to attaining a college degree or a family
income of $45,000 by their late 20s.
The project followed the lives of children from 1986 through
2010 and used its Social Genome Model (SGM) to predict where
those children will land on the income ladder by age 40. The
SGM allows analysts to examine how circumstances and actions
at certain life stages echo through a person’s life — and either
help or hinder future success. Today, just 17 per cent of low-
income children meet every benchmark; but for those who do,
their chances of becoming ‘middle class by middle age’ are al-
most as high as their better-off peers.
rotmanmagazine.ca / 77
 When employers evaluate candidates based
on their competencies rather than their
pedigrees, the talent pool gets a lot bigger.
Drawing from a year-long research effort, we have identified
five opportunities where $1 billion of targeted private funding
would have a chance to provide low-income individuals with an
equal opportunity to improve their life trajectories. We will dis-
cuss each in turn, categorized by stage of life.
1. BIRTH: Improve Access to Contraceptives
Unintended pregnancies — those that are either unwanted or ill-
timed — can lead to inter-generational cycles of poverty. Often,
these pregnancies occur before the parents have completed
their educations. Unplanned infants are more likely than other
babies to have low birth weights, according to the Guttmacher
Institute, and mothers in these circumstances are twice as likely
to suffer from postpartum depression, which may lead them to
drop out of high school or college.
Here’s the good news: From 2008 to 2011, unintended preg-
nancies dropped by 18 per cent in the U.S., reaching their lowest
level in decades. Thanks in part to popular TV shows like MTV’s
16 and Pregnant and Teen Mom, interest in contraception is high.
Today, there are far more effective options than were once
available — and with the expansion of public healthcare, many
of them are available for free. Long-acting reversible contracep-
tive (LARC) methods — specifically, intrauterine devices (IUDs)
and hormonal implants — require almost no daily effort, last for
three to 10 years, and have less than a one per cent failure rate.
However, less than half of low-income women are able to access
any sort of family planning services from publicly-funded clinics.
With access and information, everything changes. In 2009,
the state of Colorado offered 30,000 free LARC devices to wom-
en. Within four years, birth rates among teens and 20- to 24-year-
old women dropped precipitously. Medicaid also avoided nearly
$79 million in birth-related costs, making the initiative’s return
on investment $5.85 for every dollar spent. Colorado illustrates
that when clinics increase access to LARCs, unintended preg-
nancy becomes an almost entirely solvable problem.
ROI ON $1 BILLION: Applying the ‘Colorado effect’ would potentially
result in up to 124,000 more properly-timed pregnancies. Using
SGM’s estimate of increased lifetime earnings for the resulting
babies, the calculated return is between $3.2 billion and $6.4 bil-
lion in total increased earnings for these children.
2. EARLY CHILDHOOD: Use Technology
to Improve Early Learning
Last September, when children across the country entered kin-
dergarten, more than one million of them weren’t ready to be
there. Some lacked the cognitive skills required to do the work;
78 / Rotman Management Fall 2017
others hadn’t developed the emotional maturity that would help
them make it through long hours at school. Even more failed to
meet the requisite health indicators (such as physical well-being
and age-appropriate motor skills) to participate effectively in
classes. These kids will likely struggle to overcome their limita-
tions in kindergarten and beyond.
Experts now have a better understanding of how early de-
velopment and school readiness influences a child’s progression.
The Brookings Institution’s Centre on Children and Families re-
ports that 82 per cent of children who enter kindergarten ‘devel-
opmentally ready’ will master basic skills by the third grade — an
important indicator of continued success in middle school and
high school.
Research shows that a child’s development is significantly
influenced by life experiences—especially interactions with
adults. By equipping parents and other caregivers with the right
tools, we can foster development during the critical birth-to-
kindergarten years. This is where digital technology — in the form
of apps and computer programs — comes into play. For starters,
tech tools can help parents and caregivers assess children for
kindergarten-readiness and link them with the right services to
get them ready for school. For example, there are ‘nudge technol-
ogies’ like the text4baby app, which sends new moms free text
messages with personalized health and developmental informa-
tion from birth through the baby’s first year. Mothers can set up
reminders for doctor’s appointments and receive messages that
describe baby’s key developmental milestones.
Then there’s the Waterford Institute’s UPSTART, a com-
puter program that aims to close the kindergarten-readiness
gap for four-year olds. Children, and importantly, their parents
or caregivers, spend 15 minutes a day using the software, which
uses songs and games to teach things like the alphabet, spelling
and counting. A study in Utah showed that children who used the
program for one year saw “lasting positive results” on standard-
ized tests.
ROI on $1 billion: If approximately 350,000 to 700,000
more children enter kindergarten with a greater capacity to learn,
we estimate their cumulative lifetime earnings will increase by
$5.5 billion to $11 billion.
3. MIDDLE CHILDHOOD: Improve Schools
and Neighbourhoods in High-Poverty Areas
Where we are born has a lot to do with our lot in life. For in-
stance, according to research from the Equality of Opportunity
Project, children born in Salt Lake City, Utah and Pittsburgh,
Pennsylvania have a dramatically better shot of achieving a
better economic life than those born in Atlanta and Charlotte.
 Five Life-Stage Opportunities for Boosting
Upward Mobility
An Intervention
Age/Stage Key milestone That Can Help

In 2010, more than 77 million people lived in concentrated Birth Born at a normal birth Improve access to
poverty neighborhoods — areas where at least 20 percent of the weight to a non-poor intrauterine devices
married mother with (IUDs) and long-
residents live below the federal poverty level. One way to im- at least a high school acting reversible
prove their chances of becoming upwardly mobile is to give fami- diploma contraceptives
lies with children the chance to move to economically-diverse
neighborhoods. Early Childhood Demonstrates ac- Use technology tools
Consider Baltimore, Maryland, where a child who grows up ceptable pre-reading to improve early
and math skills and learning
in a low-income family goes on to earn less than children grow- school-appropriate
ing up in any of the 100 largest U.S. counties. In response to the behaviour
challenges they saw, public officials and community leaders in
Baltimore developed a promising program for moving people up Middle Attains basic reading, Improve school
and out of poverty. Since 2003, the Baltimore Housing Mobility Childhood math, and social- and neighbourhood
emotional skills environments for
Program has moved roughly 3,200 African American families kids in high-poverty
out of highly-segregated neighbourhoods into low-poverty, ra- communities
cially-mixed neighbourhoods with low crime rates, high-quality
schools and employment centres. Adolescence Graduates high Disrupt the school-
The Baltimore program is modeled after the 1990’s Moving school with at least to-prison pipeline
a 2.5 GPA; neither a
to Opportunity for Fair Housing (MTO) experiment, which ran- parent, nor a criminal
domly selected families living in high-poverty housing projects
in five U.S. cities to receive housing counseling and vouchers. Transition to Lives independently, Establish clear and
Kids who moved when they were 13 or younger went on to earn Adulthood receives a college viable pathways to
incomes nearly one-third higher than their peers who stayed be- degree, or has a careers
family income of at
hind. At the same time, housing advocates are working to create least 250% of the
opportunities for people to better their own blighted communi- poverty line
ties — by improving housing, housing policies, and social servic-
FIGURE ONE
es—even as they help people move to opportunity.
ROI on $1 billion: Providing housing vouchers to the fami-
lies of 45,000 to 85,000 children will lead to potential lifetime
family-earnings returns of between $4.5 billion and $8.5 billion,
according to our estimates. carceration of students, several states are reconsidering zero-
tolerance policies that suspend or expel students for single in-
4. ADOLESCENCE: Decrease Rates of Incarceration fractions. For example, Ohio—having seen how zero-tolerance
The U.S. is home to five per cent of the world’s population, yet it policies have contributed to economic and racial disparities—is
houses roughly 22 per cent of its prisoners. Over-criminalization promoting social and emotional learning and building student
has become a nationwide pattern that affects young people — support teams to respond early to disruptive behaviour.
and disproportionately, African Americans — in multiple ways. Another notable effort is the Safety + Justice Challenge’s
Children with at least one incarcerated parent are more likely work to support alternatives to jailing people who are neither a
to have lower family income and increased difficulty in school, threat to the public nor a flight risk. Backed by the MacArthur
both of which will affect their ability to climb the ladder to the Foundation, Safety + Justice is partnering with 40 jurisdictions
middle class. to demonstrate alternatives to ‘incarceration as usual’ practices
It’s not just parents who are crowding jails. Overly-punitive and create models for reducing the unnecessary use of jail. In
measures are funneling children — especially black children — Texas’ Harris County, which includes one of the nation’s largest
into the school-to-prison pipeline. Given that research shows that detention facilities, officials are using a $2 million Safety + Justice
any interaction with the criminal justice system produces nega- grant to expand pre-trial diversion programs and to reimagine a
tive outcomes for individuals, it follows that preventing brushes system that makes it easier for defendants to gain release without
with the law is critical for decreasing over-criminalization. posting bail. The goal is to safely cut the county’s jail population
School is a natural starting place. To combat the over-in- by 21 per cent within three years.

rotmanmagazine.ca / 79
 ROI $1 billion: If between 185,000 and 375,000 individu-
als avoid criminal convictions, we estimate that the resulting in-
crease in their lifetime earnings will be between $4.3 billion and
$8.6 billion.
5. TRANSITION TO ADULTHOOD: Establish Clear
and Viable Pathways to Careers
An estimated 5.5 million 16- to 24-year-olds in the U.S. are neither
in school nor working. These young people have been called ‘op-
portunity youth’ for their potential value to communities and the
economy. Half have been disconnected from work and school
since the age of 16.
Meanwhile, nearly six million entry-level jobs that are suit-
able for young people — including those who lack a college de-
gree — are being created across a range of industries. And labour
experts estimate that during this decade, the economy will gen-
erate 25 million openings for middle-skills jobs in computer tech-
nology, nursing and other fields that require more technical edu-
cation than high school, but less than a four-year college degree.
Key to matching opportunity youth with pathways to careers
is to focus on the skills and aptitudes that are needed to do a giv-
The Equality of Opportunity Project by Karen Christensen
‘The American Dream’ means different things to different people.
Professor Raj Chetty, who heads up Stanford University’s Equality
of Opportunity Project, distills it into a simple statistic: The prob-
ability that a child born to parents in the bottom-fifth of the income
distribution will make the leap to the top fifth — the classic notion
of ‘rags-to-riches’.
Today, according to Prof. Chetty, a child is more likely to attain
the American Dream if she lives in Canada or Sweden. Based on
the most recent data, in the U.S., a child has a 7.5% chance of
moving from the bottom quintile to the top compared to 9% in
the United Kingdom, 11.7% in Denmark, 12% in Sweden and
13.5% in Canada.
Prof. Chetty and his research team, led by Harvard Profes-
sor Nathaniel Hendren and Brown University Professor John
Friedman, have found that rates of upward mobility vary even
more within the U.S. Using tax records for 10 million kids born
between 1980 and 1982 — basically, every American child born
in the early 1980s — they calculated upward mobility for every
metro and rural area in the country; then, they looked at the
incomes for these same individuals in 2012 — when they were
in their early 30s.
What they found was startling: In the centre of the country,
rates of upward mobility exceed 16.8 per cent — higher than the
80 / Rotman Management Fall 2017
en job. While college degrees will always be desirable, companies
that maintain them as prerequisites for jobs potentially screen
out unemployed youth who could do the work, if only they were
given a chance.
When employers evaluate candidates based on their compe-
tencies rather than their pedigrees, the talent pool gets a lot big-
ger. New Mexico-based Innovate+Educate found that while just
one percent of the state’s unemployed young adults met criteria
for jobs that required a college degree, 33 per cent were qualified
when measured by sheer skill.
CVS Health is one company at the forefront of the shift to
skills-based hiring. The pharmacy chain hires 1,000 entry-level
workers per week to keep its more than 9,600 retail locations ful-
ly staffed. Working with Jewish Vocational Services and other
organizations, CVS’s workforce-development team reaches deep
into communities to find overlooked talent. Their efforts include
a training store at the Greater Lowell Technical High School in
the Tyngsborough, Massachusetts area, where three-quarters of
the students are low income.
In addition, partnerships between high schools, colleges and
local corporations are expanding to entire regions, such as the
rate for Canada, Denmark or Sweden; but, at the other end of the
spectrum, in cities like Atlanta and Charlotte, North Carolina, the
numbers were lower than for any country in the study. The patterns
were dramatic: The south east had much lower rates of upward
mobility than the centre of the country; and the west coast had
higher numbers: San Jose came in at 12.9% and Salt Lake City at
10.8%; but the rate for Chicago was much lower, at 6.5%.
Prof. Chetty and his team were able to determine that the
critical driver of these differences is childhood environment.
The team came up with five characteristics of mobility differences
between areas.
1. Segregation vs. Integration. Not surprisingly, places that
are more segregated by income or race tend to have lower
levels of upward mobility. Prof. Chetty refers to this as ‘residential
segregation’. Regardless of how you measure it, Atlanta is an
incredibly-segregated city, and as a result, Atlanta and places
that look like it tend to have the lowest rates of upward mobility
in the U.S. In contrast, if you look at Sacramento — which actually
has the same share of Blacks and Hispanics as Atlanta — you
find that there is much more residential integration — and
consistent with that, Sacramento has much higher rates of
upward mobility.
National Academy Foundation’s NAFTrack career program,
which thus far has secured 13 major corporate partners, includ-
ing JP Morgan Chase, Hewlett-Packard, Verizon and Lenovo.
These endeavours represent a growing set of exemplars of effec-
tive career pathways that are ripe for replication.
ROI on $1 billion: If between 66,000 and 132,000 indi-
viduals earn a credential with labour market value — such as a
certificate for completing a skills-based course — we estimate the
overall series of investments will lead to a cumulative increase in
their lifetime income of $7.3 billion to $14.7 billion.
In closing
Reversing a half-century of declining economic mobility won’t
happen overnight. And while the interventions we’ve identified
have the potential to help millions up the economic ladder, even
that number is dwarfed by the scale of the need.
That said, we are now armed with a deeper understanding
of what young people must do to get on an upward trajectory, and
we are poised to intervene in tangible ways. Each of the interven-
tions described herein are built on innovations that are already
delivering results. With $1 billion of capital behind them, they
2. Income Inequality. The second pattern detected by the
researchers was that places with more income inequality also
tend to have lower levels of inter-generational mobility. That is, if
you have a smaller middle class in a particular area, you also tend
to have less mobility, and insofar as there is a causal link between
those two things, that is potentially concerning: If inequality rises
over time, we might see an erosion in the rates at which people
move up across generations, as well.
3. Single-Parent Homes. The team found that areas with more
single parents have lower rates of upward mobility, and com-
munities with more two-parent households have higher upward
mobility. As a result, you might conclude that ‘growing up in a
two-parent household has beneficial effects relative to growing
up in a one-parent household’. That is part of the story, says Prof.
Chetty, but it’s not all of it: Even when the researchers looked at
the subset of children whose own parents were married, if they
were growing up in an area with lots of single parents, they were
less likely to move up in the income distribution. In short, it’s not
about whether your own parents are married or not: There is a
community-level factor involved.
4. Social Capital. This brings to mind the old adage that, ‘It
takes a village to raise a child’. Even if you’re not doing well,
might gain more traction against seemingly-intractable chal-
lenges — and point the way for both corporations and public
agencies to do much more.
Restoring economic mobility is far too essential not to bet
on it. But we can be smart about it and proceed in ways that are
backed by data and evidence — so that people who are crowded
in the economy’s basement stand a fighting chance of attaining
the dream of a better life.
Debby Bielak is a partner in The Bridgespan
Group’s San Francisco office. Devin Murphy
is a manager in the same office. They are
co-authors, with Jim Shelton, head of the
Chan Zuckerberg Initiative’s education divi-
sion, of the report, Billion Dollar Bets to Create Economic Opportunity for Every
American, which can be downloaded online. To learn how they crunched the
ROI numbers, see their Stanford Social Innovation Review article, “What’s the
Return on Investment on Reviving the American Dream?”, available online.
someone else in your community might be able to help you out.
Salt Lake City, Utah — with its vast Mormon Church followership
— is a classic example of a city with a lot of such ‘social capital’,
and the researchers found that it also has very high rates of
upward mobility.
5. Quality Public Schools. On this point, the researchers found
clear evidence of causal effects. While the first four elements can
be helpful in terms of where to focus policy interventions, in this
case, Prof. Chetty et al. definitively say that improving the quality
of public schools in specific ways can make a major difference. In
particular, they found that pro-actively ensuring ‘teacher quality’
— measured by ongoing improvement in students’ grades, year
over year — is imperative to changing these patterns.
For more on this ongoing research, visit equality-of-
opportunity.org. Raj Chetty is a Professor of Economics
at Stanford University and Co-Director of the Public
Economics group at the National Bureau of Economic
Research. This article is based on his presentation at
Stockholm University’s Institute for International Economic Studies.
rotmanmagazine.ca / 81
 LESSONS FROM
MOVEMENT MAKERS:
What Social Upheaval Teaches Us
About Engagement
Today’s most successful companies have strong networks
of highly-engaged people on their side — a strategy that social
movements have been perfecting for decades.
by Charlie Brown
AFTER JUST SEVEN YEARS IN EXISTENCE, Xiaomi, the world’s fourth-
largest smartphone maker, has carved out a successful, innova-
tive space in a category dominated by mega-sized tech firms;
GoPro makes rugged cameras for outdoor use that have earned
it a fervent following, even though it essentially replicates a fea-
ture your phone already has; and CrossFit has enjoyed explosive
growth for more than a decade, despite a steady stream of critical
press since its inception.
How did these companies pull it off?
The prevailing explanation for such successes has leaned to-
ward intangible qualities like purpose and culture. I am inclined to
agree. Companies are composed of people, after all, who spend
most of their time communicating with other people. The pur-
pose that unites them, and the culture that shapes their actions,
are crucial influences rarely discussed in business plans and
quarterly reports.
Let’s assume you’ve read the same articles I have, and you
jumped on the purpose-driven bandwagon years ago. Where ex-
actly did that lead? Did you gather upper management to brain-
storm a bold, authentic statement of purpose? Have you given
motivational talks explaining your company’s beliefs and why
they matter? Did it make any difference?
This is the problem with purpose: It’s not enough to have
one; you have to put it into practice — which means turning an
abstract concept into concrete actions. Not surprisingly, the
efficiency- and metrics-driven world of modern business isn’t
well equipped to do this. Social movements, on the other hand,
excel at it.
Think about the upheavals that have transformed the cul-
tural landscape over the past 50 years: Environmentalism, civil
rights and gender equality at the global level; or focused, regional
movements like the embrace of market capitalism in Eastern Eu-
rope and sub-Saharan Africa in the 90s. These movements don’t
have big marketing budgets and often struggle to attract endorse-
ments from celebrities or established political groups. What they
do have is a clear, coherent purpose. More important, they have
mechanisms for turning purpose into actions that transform their
network — and ultimately, the world.
It’s not common practice in the business world to look for
pointers from Black Lives Matter or the Idle No More First Na-
tions movement — but it really should be. Without formal chan-
nels for publicizing, motivating and directing the efforts of their
networks, these movements have learned to optimize purpose in
much the same way that corporations optimize capital.
Through projects with dozens of client partners involving
literally millions of relationships, we have found three recurring
principles in almost every effective social movement we’ve ex-
amined — and they are echoed by those few commercial organi-
zations that have truly turned their communities into a competi-
tive asset.
rotmanmagazine.ca / 83
 In the business world, it’s not common practice to look for pointers from
Black Lives Matter or the Idle No More movement; but it really should be.
PRINCIPLE 1: Shared Purpose
Ashoka is a non-profit that has been enabling and funding social
entrepreneurship since its founding by Bill Drayton in 1980. You
are probably familiar with the concept of social entrepreneur-
ship, which has transformed the way we view development ef-
forts — away from the exclusive domain of government-funded
mega projects and towards smaller, smarter projects that lever-
age existing technology and local resources.
It’s hard to overstate how fundamental Ashoka was in spark-
ing this fire. Rather than pursue only its own social innovation
projects, it created a network of interested, talented entrepre-
neurs and organizations, giving them the credibility of associa-
tion with an established brand, and linking them to one another to
share ideas and information. The network includes well-known
leaders like Grameen Bank founder Muhammad Yunus and
Nobel Peace Prize recipient Kailash Satyarthi. Ashoka also be-
came an access point for funding, helping to launch and even-
tually spin off dozens of entities that have influenced policy and
business practices around the world.
None of this could have occurred without a shared purpose.
In the case of Ashoka, that purpose is ‘Everyone a changemaker’
— the belief that entrepreneurs are not the heroes, but the ben-
eficiaries of a supportive community, and that every person has
the capability to enact positive change, if they are sufficiently in-
formed and enabled.
A shared purpose is altogether different from a mission
statement drafted by a senior committee in a corporate meet-
ing room. It’s something you discover within a community, not
something you impose upon one. And because everyone within
the extended Ashoka network buys into it — from loosely-linked
solo entrepreneurs to long-time collaborators-turned-employ-
ees, there is a level of automatic trust within the network, and a
clear understanding that everyone is aiming for the same goal.
While it might not be immediately obvious, consumer elec-
tronics powerhouse Xiaomi has benefitted from some of these
same insights — specifically, the power of a strong shared pur-
pose and the value of a well-linked network. Xiaomi was built
around a belief that customers should be vital partners in new-
product development. The company employs development pro-
cesses that translate user feedback into new product features in a
matter of weeks. This extraordinarily-tight linkage stems from a
shared purpose that sets Xiaomi apart from competitors: A belief
that user communities are wiser than designers in the long run,
and that innovation comes from real-world experience.
84 / Rotman Management Fall 2017
Xiaomi calls its purpose ‘Innovation everyone can enjoy.’
The purpose is somewhat top-down — having been established
at the company’s inception — and it essentially filters the kinds of
employees who choose to work there.
While Xiaomi is a massively successful seven-year-old, for-
profit Chinese company, and Ashoka is an American non-profit
pushing 40, their unique statements of purpose have three quali-
ties in common.
• Both statements are concise: ‘Everyone a changemaker’
and ‘Innovation everyone can enjoy’ are simple enough to
fit on a T-shirt;
• They’re both relational, expressing a vision that is larger
than just the success of the organization. You can believe in
social entrepreneurship as a group endeavour, for example,
even in the absence of a non-profit like Ashoka to encour-
age it; and
• Both purposes are timeless, as relevant now as they were a
decade ago, or (very likely) a decade down the road.
For Xiaomi, shared purpose has led to some unprecedented
practices around product development and marketing strategy.
The company’s intensely-communal approach is formalized in
a hierarchy of customer engagement: The more active a cus-
tomer is in attending meet-ups and critiquing new offerings,
the more access they get to early releases and limited-run prod-
ucts. At the highest levels of engagement, customers can even
become employees, further cementing the tight bonds between
users, designers and developers that has made Xiaomi such a
breakout success.
‘Innovation everyone can enjoy’ also generates extraordi-
nary buzz among the tens of millions of Chinese customers who
count themselves among Xiaomi’s active supporters — so much
buzz, in fact, that Xiaomi no longer uses traditional advertising
to promote its products, relying instead on social media exposure
and word of mouth. This effectively replaces the transactional re-
lationship between consumer and brand with a more egalitarian
bargain: Customers follow Xiaomi’s frequent releases, spread
the word and offer high-quality feedback, and Xiaomi acts on
that feedback quickly and faithfully, presenting new iterations
back to the network as something they can ‘own’.
Beyond just having a shared purpose with their respective
communities, both Ashoka and Xiaomi have embraced, codi-
fied and broadcast that purpose. This means that every policy
decision at Ashoka has to first pass muster as something that
supports the idea of joint entrepreneurship; and at Xiaomi, em-
ployees are told on Day One to treat customers as their friends
and family.
PRINCIPLE 2: Clear Roles
Not everyone within an organization will act on a purpose in the
same way; nor would you want them to. To optimize the actions
taken by network members, you have to know what they are good
at, and how they define success within the group. This entails
understanding a bit more about individual roles — another area
where social movements are way ahead of the rest of us.
In 2012, we were invited by the Knight Foundation to help
better understand the roles that black men play in civic leader-
ship, especially in U.S. cities with large African-American popu-
lations, such as Philadelphia and Detroit. In situations like these,
it is tempting to identify leaders and innovators by looking for
titles and formal achievements — conference speakers, political
leaders, corporate executives and so on. But within social move-
ments, the most connected and respected members may have no
title at all.
To find them, we had to talk to people — in this case, hun-
dreds of local citizens, over the course of a few months. And
we discovered that, while sometimes formal recognition mir-
rored community standing, they were just as often completely
unlinked. After processing these interviews and mapping each
city’s informal civic leadership network, we discovered that most
members were working in one of six specific roles.
• The Sharer, who quickly processes information, spots
emergent themes and disseminates them to the network.
• The Connector, who actively seeks out the capabilities and
needs in others, then matches the wants with the haves.
• The Curator, who sorts through new resources and oppor-
tunities to find the ones most useful and appropriate for the
network.
• The Innovator, who shakes things up and experiments, with
an eye toward untried solutions to long-standing problems.
• The Builder, who analyzes different options, spots opportu-
nities and risks, and is generally the first one to emerge with
a coherent, actionable plan.
• The Storyteller, who motivates other members of the net-
work by listening to current concerns and feelings, and or-
chestrating them into durable narratives.
In the Detroit and Philadelphia communities where we spent
time, Storytellers were especially influential, able to articulate
the issues of a particular group or neighbourhood and tell them
in a way that resonated and motivated others. These are the peo-
ple who are eager to get on stage or in front of a camera when
it’s time to spread the word. We also came to recognize the im-
portance of Connectors: The people who know everyone else and
keep a mental file of who’s available and interested in doing what
— indispensable when you’re trying to pull together an event or
start a project.
These types of role definitions are vastly more useful than
typical demographics like age, education level, income or even
(in many cases) position within a formal social structure. They’re
more accurate because they’re aspirational — they describe what
the person is capable of doing within the community and what
they want to be recognized for.
This role-driven process led to the creation of Black Male
Engagement (BMe), a social-change initiative that has grown
in the past five years to nearly a million members across several
U.S. cities. Establishing and growing BMe took several phases
over the course of more than a year, but each phase succeeded
by leveraging the specific roles we had identified early in our
research.
Every organization has aspirational roles, whether or not
they are explicitly defined. One company that has defied tre-
mendous odds largely on the strength of its community is
GoPro. Despite having dramatically different aims, the way
they’ve identified and empowered different roles within their
network has surprising similarities to BMe.
The GoPro team recognized early on that the people using
its cameras to record themselves snowboarding, surfing and
mountain biking were also going online to trade videos of their
exploits, leave comments and offer tips and suggestions: All
of the hallmarks of an emergent community. So, shortly after
launching its first device in 2004, it took the unorthodox step of
investing in the user community itself: They made it easy to set
up a profile on their online video-sharing platform, and easier
still to upload content, providing video hosting at a time when
this was not a trivial undertaking.
So far, this is pretty obvious community-support stuff: Make
it easy for users to share their experiences, and they’ll bend over
backwards to make you look good. But examine what happens
next, through the lens (no pun intended) of community roles,
and GoPro looks smarter than the average device-maker.
rotmanmagazine.ca / 85
 For these companies, recognizing the diversity of interests and capabilities
within their communities has created a competitive advantage.
For one thing, GoPro started addressing the needs of the us-
ers we call Innovators, who want nothing more than to use tech-
nologies and platforms in a novel way. So within the first couple
of years, GoPro introduced a wider range of camera mounts,
helping users strap a camera to their chest, mount it to their
dashboard, affix it to an airplane wing or even strap it to their
dog. GoPro Innovators are early adopters, and were among the
first enthusiastic users of the selfie stick. For a company founded
on extreme sports, it might seem odd to celebrate a video of a
little kid’s pool party, but that’s what Innovators were doing, and
by enabling and publicizing their videos, GoPro has continued to
grow its user base, year after year.
For both GoPro and BMe, recognizing the diversity of inter-
ests and capabilities within their communities has created a real
competitive advantage. By listening closely to what people were
already interested in doing — and putting money and effort into
enabling those desires — both groups managed to build commu-
nities that continue to grow, largely through the efforts of mem-
bers rather than organizers.
PRINCIPLE 3: The Right Rewards
The last principle concerns the ways in which members are re-
warded for doing things that help grow the community and/or
business. While their participation goals are quite different —
helping a classroom buy computers or lab supplies, versus losing
weight or doing a pull-up— both Donors Choose and Crossfit
have mastered the art of meaningful rewards.
Donors Choose is entirely web-based. Like many non-prof-
its, it persuades visitors to part with hard-earned cash by showing
a very real need among target recipients — individual classrooms,
in this case — and demonstrating how effectively their donated
dollars will be used. It differs from other non-profits, though, in
the way that it distributes those donations and rewards donors
for their generosity.
The company doesn’t distribute T-shirts or tote bags as
thank yous. Instead, it offers recognition and experiences unique
to donors’ interests. Because each donation is tied to a specific
classroom’s needs (‘My students need six iPads to participate in
a distance learning program’), teachers are able to follow up with
photos and videos showing the results in action — and often back
them up with letters of thanks from the students themselves.
Donors also receive recognition from peers within the net-
work. Any project that receives funding posts the names and
profiles of those who made it possible (pending donor permis-
86 / Rotman Management Fall 2017
sion), and encourages interaction among them. The result is an
instant online community of like-minded philanthropists, who
congratulate and support each other and who may end up form-
ing relationships of their own, deepening their connection to the
organization and driving loyalty and engagement.
CrossFit, by contrast, is defiantly analog: A typical gym con-
tains no TVs or digitally-connected exercise equipment, or even
mirrors on the walls. The most high-tech device is generally a
timer. And while most CrossFit-affiliated gyms have websites,
they tend to be limited to a blog listing the week’s workouts, and
perhaps photos of coaches and members.
Like Donors Choose, CrossFit favours intrinsic rewards that
arise from participation in the community over extrinsic ones be-
stowed by higher-ups. Both organizations have created a dense
hierarchy of rewards that acknowledge constructive action at ev-
ery level. This approach reflects a new understanding that mate-
rial rewards aren’t the most effective way to build long-lasting re-
lationships with your community. In fact, there are three distinct
categories of reward:
1. Material rewards are the type most people think of first: A
cash prize, a plaque, a T-shirt, an engraved watch.
2. Experiential rewards are those that give the recipients
access to an experience they might otherwise never have,
whether that’s meeting a personal hero, attending a class or
seminar, or even the opportunity to tackle a challenge only
available to the uniquely qualified.
3. Reputational rewards consist purely of recognition by
peers, leaders or other community members.
CrossFit offers material rewards, but just barely: Some gyms
hand out special T-shirts to long-standing members, but its ex-
periential rewards are far more significant, and begin accruing
the day you first walk into the gym. Every workout is an hour-
long group effort led by a coach, and mutual encouragement is
the default. The more-experienced members often finish earlier
and spend the last few minutes shouting encouragement to those
who are struggling.
There is also a clear progression for practically every exer-
cise, whether it’s a lift, measured in pounds, or a pull-up, which
comes with a tiered progression of increasing difficulty, start-
ing with simply hanging from the bar. Because of this, and be-
cause of CrossFit’s reliance on data and documentation, every
improvement becomes cause for celebration: Anyone setting a
personal record for a particular lift writes it prominently on attention to who is generally leading these efforts: They are your
a whiteboard, and a first strict pull-up or push-up is cause for Innovators, and they need support. If your success hangs upon
cheers throughout the room (and often a social media post). social media exposure, figure out who within your network (em-
Such reputational rewards, especially when bestowed by re- ployees, customers or others) are already sharing stories — your
spected peers, are motivating in a way that no branded freebie Storytellers and Sharers — and find out why they do this, and
can match. what they need more of. Better yet, encourage them to talk to
What these two organizations both offer is rewards that each other, and set aside some resources for them to do more of
come from within the community, not from an authority figure. what they’re already doing.
Measurement and transparency are central to both, and their As for rewards, there are a lot more options out there than
participants ability to track their progress — whether as donors or an end-of-year bonus or a Starbucks card. Consider what struc-
as athletes — creates ample opportunities for greater community tures you might create that inherently bring recognition to active
engagement. community members, whether they work for you or not.
If you can successfully address these steps, you’ll have an
Increasing Engagement in Your Network actual strategy to evolve the relationships you have with your en-
If there is a common theme to the above three principles, it is tire network, elevating them from purely transactional to genu-
listening. The organizations described herein have all succeeded inely engaged. Remember, your organization’s relationships
because they are sensitive to their members’ needs and aspira- aren’t just a competitive advantage: They are your greatest and
tions. They are active responders more than they are bold instiga- most renewable asset.
tors. If your organization is hoping to replicate their success, it
has to start with listening.
Start by exploring the network you already have: custom-
ers, employees, vendors and other stakeholders. What would
they say their shared purpose is, beyond simply making sales or
increasing shareholder value? The answer may present itself as
soon as the question is framed, but it’s more likely you’ll need
to do some digging. This can entail a series of casual conversa-
tions over lunch, if you’re a small, tight-knit entity, or it may take
a more formal process of interviews, surveys and secondary re-
search.
You should also make a clear-eyed comparison between the
shared purposes you discover and your own business objectives.
It’s unlikely that your network’s underlying desire is simply to
help you achieve your business goals. More likely, they’d rather
you help them with their goals first. So it may be that you focus in
on the purpose (or purposes) that best overlap with your business
aims. This need not be a dramatic sacrifice. Often, those who are
drawn to your organization perceive a purpose that is already
quite appropriate.
Once you’ve identified that purpose, how would you go
about codifying it? directive? And what immediate implications
does your organization’s purpose have for day-to-day policy? Charlie Brown is the founder and CEO of Context Partners,
based in Portland, Oregon. His clients include Microsoft, Lilly,
Discovering the roles within your network that can actually The Rockefeller Foundation and the Rainforest Alliance.
help you toward your business goals requires equal sensitivity.
Are experimentation and innovation crucial to your success? Pay

rotmanmagazine.ca / 87
 WHAT is the right funding
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Idea Exchange

90 IRIS BOHNET on gender equality by design

94 DANIEL TREFLER on the politics of inequality

98 BRANKO MILANOVIC on globalization’s winners and losers

102 STÉPHANE CÔTÉ on wealth, narcissism and leadership

107 LAURENCE BOOTH on inequality in Canada

112 JACKIE VANDERBRUG on investing with a ‘gender lens’

116 WILL MITCHELL on how market economies affect inequality

121 DAEHYUN KIM on gender diversity on corporate boards

125 TANYA VAN BIESEN on accelerating gender equality

130 ANDI ZEISLER a critique of marketplace feminism

133 SARAH KAPLAN + JAN MAHRT-SMITH

conversations that need to happen
 QUESTIONS FOR Iris Bohnet, Professor, Harvard Kennedy School

Q
&A A leading behavioural
economist talks
about removing
workplace biases
There is some disagreement about the ‘business case’
for gender equality. What is your take on it?
The disagreement is justified. The focus to date has largely
been on the diversity of corporate boards and senior man-
agement teams, and the problem is, we don’t have the data
required to make solid conclusions. Even when we find a
correlation between gender diversity on a board and a com-
pany’s performance, we have no way of proving that there is
a causal relationship going on.
Recently, a meta-analysis came out, summarizing abou
t 120 studies, and it did find a small positive correlation be-
tween gender diversity and overall firm performance. But
with ‘behavioural design’. again, this was a correlation, not causation. If we want to
establish causality, we will have to create teams randomly
Interview by Karen Christensen
and measure whether the more diverse teams outperform
the homogeneous teams. Some of the best work in this area
has been done in the realm of ‘collective intelligence’ (i.e.
the intelligence of groups). This research has found a strong
causal relationship between gender diversity and team per-
formance across many different tasks.

90 / Rotman Management Fall 2017

 I’d love to see us move this discussion beyond a numbers game,
and start to think more about fostering inclusive behaviour.
As a result, I believe we have enough evidence at the
micro level that a business case exists. However, I’d love to
see us move this discussion beyond a numbers game, and
start to think more about fostering inclusive behaviour.
How do you define ‘behavioural design’ ?
The research shows that we can’t help but put people into
categories, and behavioural design builds upon this ele-
ment of how our minds work. Basically, it uses behavioural
insights to de-bias organizational practices and procedures,
rather than focusing on changing mindsets. Within an indi-
vidual mind, biases tend to occur automatically and uncon-
sciously, and it’s really hard to change that. It’s much easier
to take steps to de-bias an organization.
Do diversity training programs work?
We don’t really know, because most organizations don’t
measure the results — and the few that do have generally
found that they don’t work. We have some correlational
data looking at whether or not a company has a diversity
training program and the actual diversity of its workforce,
and in short, that correlation does not exist. So the picture
is not optimistic.
A few companies are trying innovative approaches —
from implicit bias training to programs aimed at specific in-
equalities. Carnegie Mellon’s Linda Babcock and George
Loewenstein have researched the effectiveness of vari-
ous de-biasing techniques. One intervention they studied
is ‘perspective taking’, which simply means trying to walk
in your counterpart’s shoes, take their perspective and un-
derstand where they are coming from. For example, ‘walk-
ing in an elderly person’s shoes’ by writing an essay from
their perspective was shown to reduce stereotypes about
the elderly.
Babcock and Loewenstein also experimented with a
‘consider the opposite’ strategy, which involves being your
own devil’s advocate and questioning your assumptions
— actually coming up with arguments for why your think-
ing might be wrong. This has been shown to work — but it
requires a lot of maturity and self-awareness to be able to
question yourself. It’s easier if someone else does the ‘heavy
lifting’ for you.
Given all the evidence, I would urge companies to fo-
cus their training programs on capacity building and adopt
the ‘unfreeze-change-refreeze’ framework — a method bor-
rowed from my Harvard colleague, Max Bazerman. Suc-
cessful ‘unfreezing’ happens when people start to question
their current strategies and become curious about alterna-
tives. Once ‘unfrozen’, you spend some time on what your
organization is currently doing, and what could change. Fi-
nally, you think of ways to ‘refreeze’ the new insights gained
and the new behaviours learned. In the end, the pathway to
behavioural change may not be a change in individual be-
liefs, but instead a change in socially-shared definitions of
‘appropriate behaviour’.
One of the more recent applications of Big Data in the
workplace is ‘people analytics’. Please describe how it
works.
This basically entails bringing the rigour of your finance or
marketing department to HR, arguing that data can help us
better predict, for example, the future performance of a par-
ticular job candidate than the best interview ever could. It
involves moving away from intuition and building on data.
The question is, What kind of data? Organizations can
use all sorts of data points, but one powerful example is
‘looking backwards’: You can use data and machine learn-
ing to basically learn from the past. For example, you could
take a close look at the data points for ‘individuals who have
been highly successful’ in your organization: What are their
shared characteristics? You might look at which universities
they went to, and find that it’s a good thing not to come from
an Ivy League school — or maybe that it’s better to have an
Engineering background than a Math background.
rotmanmagazine.ca / 91
 We need to go into our schools and universities early on,
and start to nourish interest in the STEM fields.
Many industries still suffer from a ‘leaky pipeline’—a met-
aphor for the continuous loss of women as they climb the
career ladder. What can be done to address this?
The leaky pipeline argues that we don’t have, for example,
enough female engineers, or engineers with racially-di-
verse backgrounds, and that is still true. One critical use
of data is to use it to understand what is broken in your or-
ganization. For some — for example, law firms — the leaky
pipeline is no longer an issue in terms of gender. We now
have more than 50 per cent women graduating from law
schools — as well as an increasing number of people of co-
lour, so for law firms, we don’t have to talk about the leaky
pipeline anymore. It’s more an issue of progression within
each particular firm.
However, in sectors such as science, engineering and
technology — the STEM fields — women and people of co-
lour are still under-represented, so the leaky pipeline per-
sists. We need to go into our schools and universities early
on, and start to nourish interest in these fields. That might
include de-biasing our classrooms, de-biasing the way we
teach, and providing counter-stereotypical role models. For
example, bringing in a female Math teacher or engineer to
speak to a class — as well as male nurses or male English
teachers. For both boys and girls, these experiences can be
extremely powerful.
Google’s HR department has been referred to as an ‘em-
ployee science lab’. Describe some of its innovative prac-
tices.
In terms of using data to understand what is broken at the
company, Google has done great work, and it has also
92 / Rotman Management Fall 2017
made progress in terms of fixing what is broken. One ex-
ample relates to gender. By doing a data analysis, Google
realized that women were more likely to leave the firm or
quit. When they dug a bit deeper, they noticed that most
of these employees were young mothers, and this enabled
them to design an intervention targeting this group: They
dramatically increased parental leave, both for mothers
and fathers.
They also found some really interesting patterns in
terms of their hiring practices. Obviously, Google has grown
dramatically in recent years, and it has had to adjust to that
enormous growth. Initially, it would have groups of current
employees interview new job candidates. But when it did
some Big Data analytics, it found that the magical number
of interviewers was actually just four people — at which
point, the rankings started to converge, and a fifth person
didn’t add much value. Recently, they published some fas-
cinating work around, What makes an employee perform
well? They found that the biggest factor was psychological
safety within teams.
What are the initial steps involved in ‘designing diver-
sity’?
Instead of just throwing money at the problem, you should
start by using data to understand what is broken. Once you
understand whether the problem is a leaky pipeline or pro-
gression within your organization, you can start to design
and test interventions. I’m hopeful that organizations will
learn from their marketing departments and do more ‘pi-
lots’, A/B testing and other experimental approaches, to try
things out and measure the results.

Another thing you can do is move from unstructured
interviews to structured interviews, and see what happens,
or de-bias the language in your job postings. Maybe you
could take a traditional version of a job posting and a pro-
actively de-biased version, examine what difference this
makes to the type of people you attract, and learn from that.
If your problem is not attracting talent, but progression
within your company — which is still is a big issue for most
organizations — you might want to look at your performance
appraisals and promotion procedures and de-bias them, as
well. One idea is the practice of sharing self-evaluations
with managers before the manager makes up his or her mind
in a performance appraisal. Of course, behavioural insights
tell us that this will create an ‘anchor’ and influence the
manager; and when people differ in their self-confidence or
their willingness to brag, they will evaluate themselves ei-
ther less or more harshly, and that will translate to how man-
agers see them. In this regard, there are differences not just
across genders, but also across cultures — so there’s a lot to
look out for.
Looking ahead, are you optimistic that firms will become
more inclusive?
The good news is that a number of start-ups have embraced
behavioural insights and translated them into software,
making it much easier for organizations to do this kind of
work. Applied, for example, is a company that focuses on
de-biasing a company’s hiring procedures. For example,
blinding hiring managers to demographic characteristics,
and designing work sample tests and structured interviews.
They also have software that can debias the language in job
Behavioural Design in Action
As late as 1970, only five per cent of musicians perform-
ing in the top five U.S. orchestras were women. Today,
women compose more than 35 per cent of the most
acclaimed orchestras. This did not happen by chance.
Rather, it required the introduction of ‘blind auditions’.
The Boston Symphony Orchestra was the first to ask
musicians to audition behind a screen, and in the 1970s
and 80s, most other major orchestras followed suit.
When they did so, usually in preliminary rounds, it raised
the likelihood that a female musician would advance by
50 per cent and substantially increased the proportion
of women hired.
To make this change, no great technological feat
was required—just awareness, a curtain and an innova-
tive decision. More precisely, a design decision:
A simple curtain doubled the talent pool, creating amaz-
ing music and transforming what orchestras look like.
advertisements and evaluate the impact. Another company
is Pymetrics, which was started by a team of neuroscientists
and MBAs from MIT and Harvard. They are using gaming
tools to help people assess themselves and what types of jobs
might make them happy.
All of this work makes me optimistic about the future of
behavioural design. The bottom line is that bias is built into
our practices and procedures, not just into our minds, and
bad designs — whether consciously or unconsciously cho-
sen — lead to bad outcomes. Through behavioural design,
we can change behaviour by changing environments rather
than mindsets.
Behavioural Economist Iris Bohnet is a Professor of Public Policy at
the Harvard Kennedy School, director of its Women and Public Policy
Program, co-chair of its Behavioural Insights Group, an associate direc-
tor of the Harvard Decision Science Laboratory, and the faculty chair of
the executive program “Global Leadership and Public Policy for the 21st
Century” for the World Economic Forum’s Young Global Leaders. She
is the author of What Works: Gender Equality by Design, a 2016 Financial
Times Best Business Book of the Year.
rotmanmagazine.ca / 93
 FACULTY FOCUS Daniel Trefler, Economist, Rotman School of Management
The Politics
of Inequality
How would you describe the differenc-
es between inequality in Canada and in
the U.S.?
In both countries, at one end of the
spectrum, we have poverty, and on the
other, we have the 1%. Actually, I should
say the .01%, because that is the group I am most afraid
of. In the U.S., this rarified group of some 10,000 fami-
lies is frighteningly rich and powerful, and has increased
its share of wealth vastly since the 1960’s. That shouldn’t
come as a surprise to most people. We’re all used to read-
ing about the CEOs of companies like Google becoming
extremely rich. What is more disturbing is what is happen-
ing on Wall Street: In the last 30 years, its leaders’ share of
all available U.S. profits skyrocketed from a modest eight
per cent to 40 per cent. They now hold something like
$15 trillion dollars’ worth of assets. These are extremely
powerful individuals.
Is this not an issue in Canada?
It is much less of a problem here. In Canada, inequality has
grown substantially in comparison to Europe, but it has not
94 / Rotman Management Fall 2017
grown much relative to what is happening in the U.S. I actu-
ally just saw some numbers for China, and inequality there
is now almost as bad as in the U.S. This is a global issue.
How would you frame the inequality issue in Canada?
There are three aspects to it, and each has to be approached
in a different way. First, we are certainly seeing a hollowing-
out of the middle class. And looking ahead, the downside of
artificial intelligence (AI) and machine learning is that lots
of good white- collar jobs are going to disappear. Not tomor-
row, and not in a decade, but maybe in a generation. We
have to be concerned about that.
Secondly, there is the issue of the poor. Poverty is a hor-
rific outcome for any rich country. As much as poverty in
Canada is not as pronounced as some other countries, it is
still at unacceptable levels. In particular, child poverty in this
country is absolutely staggering.
Third, when we look at the people at the very top, we
have to accept that it’s okay to have some extremely rich in-
dividuals in society; what is not okay is for those individu-
als to have a larger say in the political system than anyone
else. Their views should not count any more than the rest of
 In both Canada and the U.S., the .01 %
is frighteningly rich and powerful.
us. What is ultimately important is that the political system
be allowed to function, shielded from the influences of the
super-rich.
Two types of inequality are discussed the most: Income
inequality and wealth inequality. Which is the most perti-
nent to the issues we face today?
The one we should focus on is wealth inequality — the un-
equal distribution of assets within a population. That’s be-
cause ultimately, as indicated, the ability of very powerful
individuals to sway elections and policy is driven not by what
they earn each year, but by how much they build up and sock
away in trusts and other tax-sheltered accounts.
Policymakers in every country must decide where to fo-
cus their attention. If it were up to you, where would the
Canadian government focus?
As indicated, we need three separate sets of policies. For the
very poor, we absolutely have to make sure that our educa-
tion systems are open, accessible and high quality — for all
of our children. That is essential. In large swaths of the poor-
est parts of the U.S., measures of educational quality in the
public school system are absolutely horrendous. We can’t let
that happen in Canada. We need to continue to make sure
that there are resources available for our most disadvan-
taged children.
For the middle class, as I’ve said, we have to worry about
the potential swing away from the kind of jobs that they are
currently holding. I don’t think any of us quite knows how to
approach that. Then, at the top end, we have to examine the
laws around campaign financing. We have to strengthen the
role of the Commissioner of Elections Canada, whose power
was diluted through the Harper government. It’s one thing
to violate campaign financing laws; it’s another to be able to
do something about it.
We also need to force the Trudeau government to do
what they promised during the election, which is to move
towards proportional representation. The current system
allows for a minority of 35 per cent of the population, rough-
ly, to have a majority in government. That means that, for
the most part, the majority is not represented by their own
government, and that is unfortunate, because it provides
a window for wealthy families to manipulate the political
system. I’m very concerned about that.
You have said that Canada’s banking system has a sort
of ‘quid pro quo’ with the federal government. Please
explain.
First, let me describe what the U.S systems looks like, to in-
dicate the starkness of the differences. On May 27, 2009, in
the depths of the financial crisis, President Obama called
in the top 13 bankers in the U.S. to the oval office for a chat.
His opening line was something like, ‘The only person who
stands between you and the pitchforks is me.’ By the time
the meeting was over, you would think Obama would have
extracted some enormous concessions from the banking in-
dustry — and that’s exactly what the banking industry was
expecting. But when those bankers walked out, they looked
at each other and asked, ‘What just happened in there?’ He
basically let them off the hook.
That was a lost opportunity, and it would never hap-
pen here. In Canada, either the Minister or the small num-
ber of regulatory bodies that govern the banking and fi-
nancial architecture of this country would have called our
most powerful CEOs, who would have all nodded their
heads and said, ‘We will implement what you are asking
for.’ The reason is simple: At the end of the day, banks make
a lot of money in our societies, for two reasons. First, we
live in a society where the rule of law is purchased, paid for
and developed by taxpayers; so, the banks have embedded
themselves in a tremendously powerful framework that al-
lows them to function. This framework allows investors to
trust that if they give them their money, the bank can’t walk
off with it — which allows the banks to grab all the more de-
posits, and invest them for even more profitability.
The second thing is that our banks receive ‘rents’, be-
cause they are regulated. You would think regulation would
put a damper on banking activity; but in fact, the banks are
rotmanmagazine.ca / 95
 often regulated by and for themselves, and that translates
into monopoly profits. In Canada, people recognize that
there are a small number of very large, regulated chartered
banks that are earning huge profits. But we live with that,
because we believe they are delivering something for those
profits. And what they deliver — not to shareholders, but to
Canadian society — is financial stability. As a society, we
have said that we are willing to pay for that.
The U.S. banking system has never attempted this ap-
proach; in your view, could it solve some of its problems?
In the U.S., the bankers regulate themselves. The greatest
evidence of that — and this speaks, I think, to the biggest
problems that we are going to face with President Trump —
is what is happening with the elimination of Dodd-Frank. It
is clear that we need some form of more extensive capital
requirements for banks. We can argue about the details of
what that should look like, but we need more of it, because
there has proven to be far too much financial instability.
If Dodd-Frank goes, basically, nothing will have
changed between 2007 and now — except for the fact that
the big banks have actually gotten bigger. By trying to get rid
of Dodd-Frank, Trump is caving in to special interests, and
Income vs. Wealth Inequality By Emmanuel Saez
Everywhere you look today, people are talking about
inequality in developed countries. One simple way to mea-
sure that is to estimate top-income shares: What share of
total, pre-tax income goes to certain groups—such as the
top 10% of families, the top 1% of families,
or the top 0.1% of families?
Advanced economies typically started their pro-
gressive income taxes a century ago. Thomas Piketty
first studied the case of France, and shortly thereafter,
together we studied the U.S. Since then, over 25 countries
have been studied through a collective effort involving
many researchers. The data are posted online in the
World Wealth and Income Database — a global project
that includes statistics covering North America, most of
Western Europe and a number of developing countries,
such as China and India.
As evidenced by this database, the U.S. has gone
through large variations in income concentration:
96 / Rotman Management Fall 2017
this, I think, is what we should fear the most about his ad-
ministration on the economic side: By example, he is saying
‘I am not going to divest myself of my own interests. I am
going to make political decisions that will enrich me and my
family, and that’s okay’. That message percolates out to the
rest of the economy, and it’s the same message Wall Street
is hearing.
The first piece of legislation that Congress passed under
Trump was getting rid of the requirement for fiduciary re-
sponsibility of brokers to their clients. So, the first thing the
Trump administration did was say, caveat emptor — buyer
beware. That is a mentality that harkens back to the crash of
1929: The first piece of legislation that was implemented in
1933 under Roosevelt was one demanding more transpar-
ency, not less.
Do we compare the U.S. and Canada too much when
we’re talking about inequality?
It’s great to understand and celebrate our differences, but it’s
also important to recognize that throughout history, there
has always been a battle between incumbent interests who
want to take control of governments, versus entrepreneur-
ial, innovative new sector players. The incumbents don’t
In recent years, the top 10 per cent’s income share has
grown from 33 to over 50 per cent, surpassing the peaks
of pre-World War II. The tax data allow us to disaggregate
further within the top 10 per cent. A simple way to do that
is to decompose it into three groups: The top 1%, the next
4%, and the next 5% (i.e., the bottom half of the top decile).
Using these measures, the top 10% gained 17 per-
centage points since the late 1970s, going from 33 to 50
percentage points; and almost all of those 17 percentage
points—between 12 and 13—have gone to the top 1%
(families with incomes above $443,000 in 2015). Their
share of total pre-tax income rose from nine percentage
points to somewhere between 21 and 22 in recent years.
The next 4% are families making between $180,500
and $443,000 in 2015, and this group has gained, but only
three or four points. The last income share series for the
bottom half of the top 10 per cent (families with incomes
between $125,000 and $180,000 in 2015) has not experi-
 The politics of inequality is a system with its own momentum.

want any competition, so they’re going to use any method
they can to block it — and one of their favourite methods is
government. We have seen this throughout history, and no
country in the world is immune to it — including Canada. So,
to look south of the border and see this process picking up
steam should serve as a notice for all of us to be on guard.
portunity of Occupy Wall Street.
Call me naïve and overly optimistic, but I firmly believe
that there will come a time in the not-too-distant future
when the popular voicing of discontent will have an influ-
ence in Washington, and we will see a major resetting of the
politics of inequality.

In terms of tackling inequality, what key lessons can we

learn from history?
One lesson is that the politics of inequality is a system with
its own momentum, and once it starts rolling down the hill in
a negative direction, there’s almost no stopping it. So, each
and every one of us has to stand up and say, ‘This is unac-
ceptable’.
One of the great ironies of my view of the United States
is that it is both heading in a horrific direction and the great-
est country on earth. When you look at the freedom of the
press in the U.S., and the ability for citizens to protest what
is happening in Washington, it’s really unparalleled. We’ve
seen great periods in American history where the vox populi Daniel Trefler is the Douglas and Ruth Grant Canada Research Chair
in Competitiveness and Prosperity and Professor of Economic Analysis
has been very effective in peaceful ways: We had the power
and Policy at the Rotman School of Management.
of the press in the muckraker movement; we had populism,
New Dealism; we had the 60’s; and we had the missed op- Rotman faculty research is ranked #3 globally by the Financial Times.

enced much gain at all since the 1970s. 90 per cent of families saved zero, on average, while top
Even within the top 1%, the gains are unequal and grow wealth holders have been able to save more and more.
larger, the higher you go. The share of income of the top 0.1% The result: A huge increase in wealth inequality that,
(families with more than $2 million in income today) has gone unfortunately, is likely to persist — short of adopting more
up from 3% in the late 1970s to 11 per cent in 2015. Therefore, drastic policies aimed at curbing the wealth at the top and
a big part of the increasing income concentration can be encouraging wealth accumulation at the bottom.
traced to this very top income group.
In the U.S. today, wealth is so concentrated that the
share owned by the bottom 90 per cent of families is only
slightly above 20 per cent, and hence about the same as
the share for the top 0.1%. That means that the wealth of the
top 0.1% of families is 900 times larger, on average, than the
average wealth of the bottom 90 per cent of families.
On the housing front, it is well known that the explosion
Emmanuel Saez is a Professor of Economics and
of mortgage refinancing has eaten into the equity of the bot- Director of the Centre for Equitable Growth at
tom 90 per cent. Combined with other forms of debt, includ- the University of California, Berkeley. For more,
ing consumer credit cards and loans, this explosion in debt visit the World Wealth and Income Database at
means, effectively, that over the last 30 years, the bottom http://wid.world

rotmanmagazine.ca / 97
 QUESTIONS FOR Branko Milanovic, Economist, City University of New York

Q
&A
Describe the difference between wealth inequality and
income inequality.
It’s useful to think about three types of inequality: Wealth
inequality, income inequality and consumption inequality.
Wealth inequality can be simply defined as ‘differences in
the total amount of marketable assets that people possess’.
Your wealth is calculated as the total amount of money that
you would receive if you sold all your assets — your house,
car, financial assets, etc. It does not include ‘accrued assets’,
such as pension rights, because they cannot be sold. On the
other hand, when we talk about income inequality, we gener-
A leading economist ally mean differences in disposable income — that is, after-
tax income.
explains the current The key difference between income and consumption
state of global inequality. measures is that lots people can have zero income over a
particular period, but your consumption can never be at zero
— or you would not survive. If you have zero income, there
are other ways to finance your consumption: Government
Interview by Karen Christensen
programs provide assistance to the poor, so consumption
inequality is muted relative to income inequality. Also, the
rich can lend to the poor through the financial system, keep-
ing the spending of the poor (i.e. their consumption rate)
relatively high, at least in the short term. In this sense, the
number of poor, according to consumption measures, is of-
ten lower than according to income measures.

98 / Rotman Management Fall 2017

 Greater participation of women in the workforce
reduces inequality between households.
At the other end of the spectrum are people with ex-
traordinarily high incomes who are able to save a lot of their
income, which increase their wealth. The implication is that
inequality of consumption is always less than inequality of
income, and inequality of income is always less than in-
equality of wealth.
Lots of people focus on income inequality as the key
issue today, but if you are trying to measure financial well-
being, it is much more useful to look at household wealth,
which, as indicated, is even more unequally distributed than
income.
Inequality of all types is rising within many nations, while
global inequality declines. Please describe the situation.
The reason inequality is going down globally is that very
large, populous and relatively-poor countries like India and
China are growing quickly. What is different between na-
tional inequality and global inequality is that for global in-
equality, you have an element to consider that is sometimes
forgotten: The relative growth rates between poor and rich
countries. For example, when China and India grow faster
(in per capita terms) than the U.S. and Europe, global in-
equality will tend to go down, even if inequalities within
countries themselves increases. Of course, increases in
within-nation inequalities exert an offsetting effect — push-
ing global inequality up — and then the question becomes,
which of the two effects (income convergence or rising with-
in-nation inequalities) will be stronger? In the past 25 years,
the former has been stronger.
Who has gained the most from globalization?
That is simple to prove empirically: During the period of
high globalization (1988-2008), people in the lower and up-
per middle classes in Asia gained the most. This is not sur-
prising, because we know that Asian countries — in particu-
lar China, but more recently India, Indonesia, Thailand and
Vietnam — have grown significantly, and they continued to
grow during the global recession.
The second group that has gained significantly from
globalization is the top 1%, both in rich countries and in oth-
er nations. However, their gains—and therefore their wealth
— was reduced somewhat by the financial crisis.
Are the gains of Asia’s middle class directly related to the
losses of the lower middle class in the rich world?
If you’re asking, Can we show that the gains of one group
are caused by the losses of another group?, that is a very
difficult proposition to prove, even in specific instances
like ‘China vs. the U.S.’ or ‘Asia vs. Europe and the U.S.’ As
a result, there have been very few studies of this. However,
there have been a number of studies looking at the role of
Chinese-import penetration on U.S. wages, and my read-
ing of that literature is that there is significant corroboration
that Chinese imports have had a long-term negative impact
on wages in sectors that compete with these imports. Many
people have either lost their jobs or their long-term wages
have been reduced, and in this sense, there is some causality
between the two.
Even if causality exists, it doesn’t mean that we should
reject globalization, because it has delivered many more
gains than losses. The situation simply calls for policies that
take into account who the ‘losers’ will be. The fact is, glo-
balization is not a win/win for everybody: Some groups will
lose, while many more gain.
Research shows that women’s increased participation in
the labour force has reduced inequality by some 19 per
cent. Why would this be the case?
That came out of an OECD study that looked at 25 rich
countries. What generally happens is, when you have great-
er female participation in a labour force, women are mostly
at the lower end of the wage scale — and this effect is en-
hanced by the 20 per cent wage gap that exists between
men and women. Essentially, the mid- and lower-wage
segments of earners have a lot more people in them than
high-wage segments, and as a result, overall inequality
goes down.
More importantly, women’s participation in the work-
force increases total household income, and we measure
total income distribution at the level of households. If you
have more households with two earners, overall inequality
goes down — and this is true despite the tendency of rich
male and female wage earners to marry and/or partner with
each other. The bottom line is that greater participation of
women in the workforce reduces both wage inequality
rotmanmagazine.ca / 99
 At least half — and possibly more — of your income
is determined by where you live.
among wage earners and inequality of disposable income
among households.
The ‘Kuznets hypothesis’ [that inequality is low at very
low income levels, then rises as an economy develops,
and eventually falls again at high income levels] is quite
different from Thomas Piketty’s view [that capitalism
itself yields rising inequality]. Do you agree with either
of them?
Both Piketty and I are big admirers of Kuznets’. Piketty
makes many references to Kuznets in Capital in the 21st
Century, but he rejects one important hypothesis: The so-
called inverted U-Curve.
Kuznets argued that at the very early stages of econom-
ic development, inequality is low. As a society industrializes,
inequality grows, and then, as the society becomes mature,
it should go down again. That hypothesis made a lot of sense
until 1980 — but since then, we have seen an increase in in-
equality in the rich world, which seems to disprove Kuznets’
hypothesis.
My argument is that we should instead think about
‘Kuznets waves’. The first wave that Kuznets described hap-
pened from the late 19th century until approximately 1980.
Then, the technological revolution occurred in the 1990s,
along with globalization, pushing us into a second Kuznets
wave. Remember, Kuznets wrote in the 1960s, so he saw
the first wave, but he could not have imagined — for obvi-
ous reasons — that it would be succeeded by other waves.
We now have historical data that he didn’t have in the 1960s,
showing that similar waves did occur in the past. By the way,
some followers of Piketty do not accept my wave argument.
They maintain that there are strong forces within capitalism
that push inequality up — obviously not forever, but certainly
to the levels that it attained in rich countries some one hun-
dred years ago.
I consider the current increase in inequality over the last
25 or 30 years to reflect the second technological revolution,
structural transformation of the economy away from manu-
facturing jobs and into services, and globalization. There are
strong similarities to the first upswing of the Kuznets wave,
100 / Rotman Management Fall 2017
because you can argue (as Kuznets did) that it was the prod-
uct of the Industrial Revolution and structural change away
from agriculture and into manufacturing.
In the 20th century, inequality was reduced by forces
including increased taxation and social transfers, hyper-
inflation, unionization, education and wars. Will these
same things be required to reduce inequality in the 21st
century?
I divide the forces that reduce inequality into malign and
benign forces, and the principal malign force in the modern
era is war. It has reduced inequality not only through the de-
struction of physical assets but also through the increases
in taxation that were necessary to finance war efforts. And
sadly, in today’s environment, we cannot rule it out.
The key benign forces that reduced inequality in rich
countries between the end of World War II and the 1980s
were mass education, trade unions, socialist political par-
ties, high taxes and social transfers, and technological prog-
ress (where it helped low-skilled labour more than high-
skilled labour).
I don’t think many of these forces will remain opera-
tive in the near future. Trade unions have been pretty much
decimated, not only by anti-labour legislation but also by
the movement away from the massive factories that brought
large numbers of workers together in one place. Mass educa-
tion will not play a big role either. It was a force for equal-
ization when rich countries moved from an average of six or
seven years of education to today’s average of 13; but we are
not going to see a massive move from 13 to 20 years of educa-
tion. That is why the quality of education, rather than a focus
on mass education, is crucial today.
Finally, I do not think that higher taxes and transfers are
accepted any longer by the majority of the electorate, and
that may be due to the skeptical view that today’s citizens
have of government’s ability to use money effectively.
What is the most powerful benign force to reduce in-
equality?
In my view, we should be focusing on the equalization of
endowments. This means first, better access to high-quality
education for all, so that the returns to education become
more equal, and second, what I call ‘de-concentration’ of
capital ownership. That means tax incentives to promote
wider ownership of capital and includes greater participa-
tion in Employee Stock Ownership Plans.
If wage gaps between workers decrease and distribu-
tion of income from capital becomes more equal, then you
can achieve relatively equal outcomes even without a great-
er government role in the redistribution of current income.
If this is not done, the danger is that with the heavily-skewed
distribution of property that exists today in the rich econo-
mies, any increase in the capital share of national income
translates directly into greater inequality in personal in-
comes. Then you either let inequality get worse or you need
to increase redistribution of current income — for which, as
I mentioned, there is little political appetite. You will be thus
left without instruments to offset underlying increases in in-
equality.
There are other tools that would help. For one, the taxa-
tion of wealth, including inheritance — which, strangely
enough, has actually gone down recently. However, I really
believe that we should pay more attention to equalizing the
assets that people own. And redistribution will remain as an
extremely important mechanism, but I doubt that it can be
significantly increased.
Talk a bit about the difference between ‘location-based
inequality’ and ‘class-based inequality’.
It turns out that 50 to 60 per cent of income differences be-
tween individuals in the world today are due simply to the
mean income differences between the countries they live in.
In other words, if you want to be rich, you had better be born
in a rich country — or emigrate there. The poorest people in
the U.S. have an income level that is equal to that of the low-
er middle class in China and the upper middle class in India.
Put simply, at least half and possibly more of your in-
come is determined by where you live, which for 96 per
cent of people in the world, is where they were born. Then,
about 20 per cent is due to the income level of your parents.
So, your citizenship plus your parental background explain
around 70-80 per cent of your income. Obviously, if I had
data for gender, race, ethnicity and other things that are sim-
ilarly ‘given’ to an individual at birth, that percentage would
go up. But the lion’s share of it is due to citizenship, and as a
result, this is what I call ‘the citizenship premium’ or ‘citizen-
ship rent’.
Does inequality threaten the sustainability of democratic
capitalism?
Yes and no. I wouldn’t say that it threatens the stability of
capitalism as such, simply because there are no alternatives.
When you look at it objectively, 50 years ago, slavery still ex-
isted in some countries and feudal relations were prevalent
in places like Afghanistan and in the early 20th century in
Iran and (what is now) Pakistan. But that is all practically
gone. Things have become much more commercialized. We
also faced the huge challenge of socialism, with the nation-
alization of property, central planning and so on; and that is
also gone. So we really have, for the first time in history, the
total domination of one mode of production, and it doesn’t
have any competition.
The issue is really about democratic capitalism, and
that is a very different proposition. Many regimes have been
capitalist, but not democratic: Spain, Greece, Chile, South
Korea, Brazil and historically, Germany, Austria, Russia and
many others. The kind of disenchantment with democratic
political processes that we are seeing today is something that
might lead to the strengthening of authoritarian tendencies
or to ‘illiberal democracy’, as it is called. I’m not sure that
this is something we will be able to avoid. There is no doubt
in my mind that capitalism will remain; but democracy is
more questionable.
Branko Milanovic is the author of Global Inequality: A New Approach
for the Age of Globalization (Belknap Harvard, 2016). He is on the faculty
of the Stone Centre on Socio-Economic Inequality, is a Visiting
Presidential Professor at the Graduate Centre, City University of
New York, and was formerly a Lead Economist at the World Bank.
rotmanmagazine.ca / 101
 FACULTY FOCUS Stéphane Côté, Professor of Organizational Behaviour, Rotman School of Management
Wealth, Narcissism
and Leadership
THE INCOME DISPARITY between the ‘haves’
and the ‘have nots’ is greater today than
at any time since the Great Depression.
As a result, children are spending their
formative years in vastly different envi-
ronments: Some grow up in resource-rich
environments; others, in poverty. Research indicates that
these differences matter: Parental income has important
consequences for people’s lives. Individuals with higher-
income parents exhibit better health and lower mortality
rates, but were found to be less generous than individuals
with lower-income parents.
These findings suggest an interesting possibility that
has received little attention in the management literature:
Growing up in a rich or poor environment may have implica-
tions for how people interact in organizations. In particular,
parental income may be important for leadership.
In my recent paper with Sean Martin of Boston College
and Todd Woodruff of the United States Military Academy
at West Point, we developed and tested a theory about how
102 / Rotman Management Fall 2017
parental income relates to the behaviour and effectiveness
of leaders. In this article I will summarize our results.
Parental Income and Narcissism
Because the basic life conditions of higher and lower-
income parents differ in fundamental ways, the set of be-
haviours that parents model and encourage likely depends
somewhat on their income. Research regarding the psycho-
logical consequences of income suggests a ‘self-sufficiency
hypothesis’, whereby high income allows individuals to pro-
cure the goods and services that are required to meet their
needs, thereby reducing dependency and increasing separa-
tion from others. Higher-income parents own larger houses
in safer neighbourhoods, have more reliable transportation
to shuttle children to various activities, and can pay for more
activities, such as lessons, camps, or tutors. These condi-
tions lead higher-income parents to feel independent and to
perceive little need for assistance from others.
By contrast, lower-income parents have smaller houses
in more dangerous neighborhoods and rely more on time-
consuming and unreliable public transportation. These con-
ditions cause lower-income parents to perceive that they
struggle to meet their needs on their own and increase their
dependence on others for access to resources (e.g., trans-
portation, childcare). This dependence, in turn, increases
closeness to others among lower-income individuals.
Independence from others, in turn, might create tenu-
ous relationships between higher-income parents and oth-
ers — relationships that are characterized by more self-serv-
ing behaviour and less sensitivity to others’ needs. Studies
show that higher-income individuals feel less compassion
and are less helpful to a stranger in need than lower-income
individuals. Higher income — but not higher education —
has also been associated with increased unethical behaviour
performed to benefit the self.
As a result, through mimicry and reinforcement, high-
er-income parents could transmit more self-serving behav-
iour to their children than lower-income parents. Support-
ing this reasoning, in one study, four-year-old children of
higher-income parents donated fewer stickers to friends
and fewer prize tokens to sick children than did children of
poorer parents. This line of reasoning suggests that leaders
who had wealthy parents might also be more narcissistic
— exhibiting grandiose self-views, impulsiveness, reduced
empathy, beliefs that they deserve special treatment,
strong feelings of uniqueness, and a dominant orientation
towards others.
Once established in youth, narcissism has been shown
to persist beyond childhood. A 20-year longitudinal study
found that narcissism identified in preschool-aged children
tended to remain through adolescence and early adulthood.
This suggests that narcissistic tendencies learned early in
life will persist and influence how people act as adults. Thus,
our initial hypothesis was that parental income is positively re-
lated to future narcissism.
We also posited that higher levels of narcissism are as-
sociated with less engagement in three broad facets of lead-
ership behaviour:
1. Relational-oriented behaviour;
2. Task-oriented behaviour; and
3. Change-oriented behaviour.
I will now describe how narcissism affects each aspect of
leadership behaviour.
RELATIONAL-ORIENTED BEHAVIOURS. Relational-oriented be-
haviours are actions in which leaders show concern for fol-
lowers, look out for their welfare, build their respect, and
encourage followers to focus on the welfare of the group. In
enduring relationships, grandiosity — a defining character-
istic of narcissism — might cause narcissists to acts in ways
that are less interpersonally sensitive than non-narcissists,
because, when individuals believe that they are more im-
portant and worthy than others, they might over-claim
credit and deny others the appreciation or recognition they
deserve. Narcissists also tend to derogate others in order to
rate their own traits more favorably. Impulsivity — another
defining facet of narcissism — causes narcissists to be arro-
gant and aggressive, and to belittle others and exploit their
weaknesses.
In past studies, narcissists have exhibited low levels of
empathy and low interest in establishing and maintaining
warm interpersonal relationships. These tendencies should
lead narcissistic leaders to show little concern for their fol-
lowers. Thus, we believed narcissism could negatively relate
to relational-oriented leadership behaviour.
TASK-ORIENTED BEHAVIOURS. Task oriented behaviours reflect
the extent to which a leader defines and organizes the work
and roles of team members, models and asks that others
follow standard rules and regulations, establishes well-
defined patterns and channels of communication, and re-
wards those who meet expectations. The grandiosity and
impulsivity that are hallmarks of narcissism are likely to
stifle engagement in task-oriented leadership behaviours in
enduring relationships between leaders and followers.
rotmanmagazine.ca / 103
 Findings suggest that higher-income parents model
and reinforce behaviours prioritizing the self over others.
Moreover, narcissists’ grandiose sense of self, com-
bined with their tendency to derogate others, should make
it less likely that these leaders delegate tasks to others, po-
tentially believing that they, and only they, are capable of
accomplishing tasks. These arguments suggest that, in en-
during relationships where narcissists engage in more nega-
tive behaviour, they will be less conscientious in structuring
tasks, more likely to deviate from plans, and more focused
on short-term motives for recognition than long-term sys-
tems, resulting in less task-oriented leadership behaviour.
CHANGE-ORIENTED BEHAVIOURS. Change-oriented leadership
behaviours are those that develop and communicate a com-
pelling vision and encourage innovative thinking and the
sharing of different perspectives. On the one hand, narcis-
sistic leaders might take more risks, helping them develop
creative ideas that make their vision compelling; on the oth-
er, their focus on their own priorities may cause them to ar-
ticulate visions that omit the goals of their organization and,
thus, fail to attract followers’ commitment.
Past findings suggest that narcissistic leaders encourage
less innovative thinking and sharing of perspectives among
group members, the other central aspects of change-orient-
ed leadership behaviour. Among the takeaways, narcissists
perceive and seek to show that they are smarter and more
capable than others; self-aggrandizing leader behaviours
may evoke obedience in some, but can also stifle followers’
self-initiative and reduce their desire to associate with the
leader; and narcissists’ combination of felt superiority and
impulsivity can make them aggressive communicators.
Thus, we hypothesized that narcissism is negatively re-
lated to relational-, task- and change-oriented behaviours.
104 / Rotman Management Fall 2017
We also proposed that leaders who engage in more re-
lational-, task- and change-oriented behaviours will role
model and create conditions that foster more organization-
al-citizenship behaviour and less counterproductive behav-
iour. ‘Citizenship behaviours’ are actions concerned with
helping others, going above and beyond, and taking more
responsibilities.
THE STUDY: We recruited leaders and followers who were ac-
tive duty soldiers in the U.S. Army, contacting two alumni
classes of the United States Military Academy at West Point
(USMA). At the time of data collection, these soldiers were
serving in one of two leadership roles: Lieutenants (‘Class
A’) and captains (‘Class B’). We sent an online survey to all
members of Classes A and B, asking them to complete a sur-
vey about themselves, and to nominate up to five followers
to complete a survey about their leadership.
Parental income was obtained from USMA archival
data, while narcissism was assessed using a nine-item scale.
Using a scale of ‘1’ (strongly disagree) to ‘5’ (strongly agree),
participants rated their level of agreement with statements
including, ‘I know that I am special because everyone keeps
telling me so’ and ‘Many group activities tend to be dull
without me’.
Followers rated leaders’ engagement in relational- and
task-oriented leadership behaviours by indicating their level
of agreement with statements concerning their leaders’ be-
haviours using a ‘1’ (strongly disagree) to ‘7’ (strongly agree)
scale. Example items reflecting relational-oriented behav-
iour included ‘Is friendly and approachable’ and ‘Does the
little things to make it pleasant to be a member of the group’.
Example items reflecting task-oriented behaviours included,
 Organizations can counteract narcissism
by prioritizing and valuing humility.
‘Lets group members know what is expected of them’ and
‘Encourages the use of uniform procedures’. Change-orient-
ed behaviours were assessed using four items including ‘En-
ables others to think about old problems in new ways’ and
‘Provides appealing images about what we can do’ using a ‘1’
(strongly disagree) to ‘5’ (strongly agree).
Followers then indicated their agreement with state-
ments assessing their leaders’ effectiveness compared
to other leaders with whom they had had experience. Rat-
ings employed a 7-point scale, with items including, ‘Com-
pared to others, this leader can do most tasks very well’
and ‘Even when things are tough, my leader can perform
quite well.’
Followers also rated the extent to which they perceived
people in their group engaging various citizenship behav-
iours. Example statements included, ‘People in my group
volunteer for things that are not required’ and ‘People in
my group help others who have heavy workloads’. Ratings
were done using a 5-point scale.
Counterproductive behaviours were then assessed us-
ing six items. Using a ‘1’ (never) to ‘5’ (all of the time) scale,
participants rated the frequency with which they witnessed
group members engage in each behaviour. Example state-
ments included ‘Put little effort into their work’ and ‘Ne-
glected to follow a leader’s instructions’.
RESULTS: The income of an individual’s parents was positive-
ly associated with later narcissism. Further, through higher
levels of narcissism, parental income was indirectly associ-
ated with less engagement in relational-, task and change-
oriented behaviours that are traditionally viewed as central
to strong leadership.
This suggests that there is a psychological ‘residue’ from
growing up wealthier or poorer that relates to future leader-
ship effectiveness. In addition, the findings advance the idea
that the macro social trend of increasing income disparity
— through the relationship between income and narcissism
— has implications for our understanding of management
scholarship and practice.
Our findings document pathways through which high
parental income may negatively influence leaders’ effective-
ness. Organizations might benefit from taking active steps
to curtail the entitlement and grandiosity that at least some
leaders with wealthy backgrounds are likely to exhibit.
One possibility consists of eliciting compassion in
leaders. In past research, an experimental manipulation of
compassion (a clip showing children in need) increased the
helpful behaviour of participants with higher parental in-
come to a level that was comparable to that of participants
with lower parental income. Similar interventions could be
designed to reduce the entitlement and grandiosity, and, in
turn, improve the effectiveness of leaders with higher paren-
tal income. Alternatively, organizations could potentially
counteract narcissism by prioritizing and valuing humility.
In closing
Our findings open the door to future explorations of how so-
cietal trends such as income disparity might influence lead-
er–follower relationships and other organizational dynam-
ics. They also suggest that macro trends such as increasing
income disparity can influence organizational life by alter-
ing the traits and behaviours of those entering the work-
place. After all, as economic inequality rises, we may expect
to see an increasing number of leaders who had wealthy
rotmanmagazine.ca / 105
 New from Rotman-UTP
Publishing

It’s Not Complicated

The Art and Science of Complexity in
Business
by Rick Nason
parents, are more narcissistic, and do not rely on classic
It’s Not Complicated offers a paradigm
shift for business professionals looking leadership behaviours to lead.
for simplified solutions to complex We also may come to see less-narcissistic leaders from
problems and presents actionable lower-income backgrounds in a different light, recognizing
models to identify, understand, and they might engage in these behaviours to a greater extent,
deal with complexity in business.
and that their style, if given the opportunity, may be particu-
larly well suited to some contexts.
Given the increasing gap between the ‘haves’ and the
‘have nots’, understanding the relational and leadership ten-
dencies of people from each income group is an important
question for the future of organizational — not to mention
Something’s Got to Give
Balancing Work, Childcare and societal — scholarship.
Eldercare
by Linda Duxbury and Christopher
Higgins
Something’s Got to Give provides
practical advice to managers and policy-
makers about how to mitigate the
effects of employee work-life conflict,
retain talent, and improve employee
engagement and productivity.

The Sustainability Edge

How to Drive Top-Line Growth with
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by Suhas Apte and Jagdish N. Sheth
In The Sustainability Edge, Suhas
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how business leaders can embed
sustainability in a truly holistic and
transformative way.

Stéphane Côté is a Professor of Organizational Behaviour & HR

Management and Director of the PhD Program at the Rotman School
of Management. This article summarizes his paper, “Echoes of our
Upbringing: How Growing Up Wealthy or Poor Relates to Narcissism,
Leader Behaviour, and Leader Effectiveness”, written with Sean Martin
(Assistant Professor of Management and Organizations at Boston Col-
lege’s Carroll School of Management) and Todd Woodruff (Academy
Professor and Director, Leadership and Management Studies at the
United States Military Academy at West Point). The paper was published
in the Academy of Management Journal and can be downloaded online.

utppublishing.com Rotman faculty research is ranked #3 in the world by the Financial

Times.

106 / Rotman Management Fall 2017

FACULTY FOCUS Laurence Booth
Does Canada
Have an Income-
Inequality Problem?
CHANGES IN WEALTH and income inequality
around the world are largely the result of
two structural changes in society: The role
of government and the dynamics of eco-
nomic change. Neither have been partic-
ularly controversial until the publication
of Thomas Picketty’s Capital in the Twenty First Century
(2014).
Picketty’s book is an exhaustive analysis of changes in
wealth and economic growth over time. Unto itself, the anal-
ysis is not that controversial, but his conclusion is: When the
return on capital exceeds the rate of economic growth, the
ratio of wealth-to-GDP inexorably increases over time. In
a free market economy, what inevitably follows is that ‘in-
equality’ naturally increases as the wealthiest sit back, clip
their coupons and live off of their growing wealth.
Picketty’s analysis touched a chord in many countries,
particularly in the UK and the U.S. — both of which were
still recovering from the worst financial and economic cri-
sis since 1937 as well as the political disturbances of the ‘oc-
cupy movement’ and railings against the ‘1%’. Just as John
Maynard Keynes became the voice of liberal intervention-
ist economic policy in the 1930’s, Picketty has become the
voice of left leaning policymakers and journalists after the
financial crisis.
This has been particularly true in Canada, where recent
Liberal governments in Ottawa and Queen’s Park have owed
much of their success to ‘strengthening’ the middle class by
increasing taxes on the 1%. As always, much of the analysis
flowing into Canada comes from rhetoric from the U.S. and
UK. But how true is it of Canada, and how concerned should
Canadians really be about inequality?
Although wealth and income inequality are different, I
will focus on income inequality. What matters here is where
you start, what you count, and how you factor in taxes and
government transfers. This is because inequality is insepa-
rably bound up with the growth of government spending
and debt. As most economists recognize, taxes are a cost
and tend to be pushed forward so that pre-tax inequality
is significantly different from inequality based on dispos-
able income — that is, after we adjust for taxes and gov-
ernment transfers. For example, in Post Capitalist Society,
rotmanmagazine.ca / 107
 The 1970’s in the UK and the 1990’s in Canada represented
unsustainable periods in financial history.
Peter Drucker pointed out that the U.S. experience up to the
early 1990s disproved the notion that taxes can permanently
affect the distribution of after-tax income.
Prior to World War I, there were no income taxes in
Canada and federal government revenues were almost en-
tirely derived from customs duties and excise taxes, with
spending focused on nation building. Yet between 1871 and
1918, the average rate of real economic growth was 5.4%
and real per capita income increased 2.5X — or an average
of 2.1% per year. There was significant income and wealth
inequality at the time because, to a great extent, inequality is
an inevitable side effect of a dynamic economy — as we will
see. All of this changed after World War I.
Between 1914 and 1919, Government of Canada debt
increased five fold, with personal and corporate income tax-
es introduced to pay the interest on the debt, which by 1919
had increased nine-fold since 1914.
In 1939, the second half of the German war started and
made things worse, as Government of Canada debt — which
had barely increased over its 1919 level — increased six-fold
by 1946. However, 1946 was not like 1919, as the Govern-
ment of Canada introduced a wide range of entitlement
programs such as Old Age Security, family allowances and
expanded employment relief. By 1952, this increase in so-
cial programs had quickly jumped from zero to cost 20 per
cent more than the cost of servicing the much bigger public
debt, while at the same time, the Korean War significantly
increased defence spending.
It is at this time that taxes started to dramatically in-
crease. In 1939, personal income taxes had raised $45 mil-
lion and corporate taxes $78 million, while in 1952, after the
passage of the Income Tax Act in 1948, they had increased
to $1,225 and $1,227 million, respectively. In 1949, the top tax
rate was 84 per cent, but more importantly, the tax rate hit
50 per cent at $25,000 a year — and despite rapidly-increas-
ing inflation, stayed about that level until tax reform in 1987.
In Canada, the U.S. and the UK, the early post-war
period is commonly referred to as one of ‘financial repres-
108 / Rotman Management Fall 2017
sion’, as the priority was to lower the burden of the public
debt in the face of increasing government spending. In the
UK, the situation was exacerbated by what Correlli Bar-
nett calls ‘Christian Socialism’, where out of a sense of
‘fairness’, the UK continued to subsidise the 19th century
industries that Great Britain’s wealth had been based on—
mainly coal, ship building and steel—long after they were
past their prime.
To finance this spending, the top income tax rate in the
UK as late as 1979 was 83 per cent on earned income and
98 per cent on unearned, that is, investment income. The in-
evitable economic problems with the effective confiscation
of capital led to an IMF bailout in 1976, and to paraphrase
Margaret Thatcher, a belated recognition that ‘The prob-
lem with socialism is, sooner or later, you run out of other
people’s money’. In 1974, the UK hit the wall in a similar
fashion to Greece in 2010, as other people refused to finance
continued government spending.
In Canada, the problems of the post-war period were
not as severe, but the inefficiencies introduced by the mount-
ing tax burden led to the Carter Commission report in 1966.
The basic recommendation was to lower personal income
tax rates to no more than 50 per cent on any form of income
and to broaden the tax base. These recommendations were
not adopted until 1987, when tax reform lowered the top rate
to 43.5 per cent and with a delay, introduced the GST.
However, reforming the Canadian tax system — while
simultaneously expanding social programs — only led to
mounting government deficits and ballooning debt. By the
mid 1990’s, Canada had run into the same problems faced
by the UK in the 1970’s: It had largely run out of money.
Financing the deficit was crowding out private investment,
with financing needs almost 10 per cent of GDP (almost
at Greece’s level). It was left to the Liberal government of
Jean Chretien to sort out Canada’s fiscal mess with across-
the-board cuts of 20 to 30 per cent in government programs
that moved the deficit into a surplus by 1997 and restored
some sanity to government finances.
 This short history lesson is important, because most
analyses of rising inequality use the 1980’s as a benchmark,
as in ‘inequality has increased over the last 30 years’. Fur-
ther, they simply look at the statistics without any discussion
of the underlying economic situation that generated them.
Yet the basic fact is that the 1970’s in the UK and the 1990’s
in Canada represented unsustainable periods in financial
history. Many of us remember inflation over 10 per cent,
Treasury Bill yields over 20 per cent, government deficits
near 10 per cent of GDP and a government committed to ex-
panding entitlements beyond its capability to finance them.
True, it was a period of relatively low inequality and ‘a chick-
en in every pot’ — but it was paid for with borrowed money
and could not continue.
The second problem is that inequality is a necessary
condition of a dynamic economy. To an economist, labour
has a price, just like any other commodity. When buggy-
whip manufacturers faced competition from cars, the mar-
ket signal was not just a loss in value for the firms involved,
but also differential wages, that is, inequality to encourage
workers to shift to car assembly lines. Only in a stagnant
economy will there be relatively few changes in inequal-
ity, since there are no new market signals. The buggy-whip
manufacturers and their employees would doubtless wish
that cars had never been invented, but for the rest of us,
we need income inequality to meet our needs, not those of
employees in dying industries. In this context, being ‘fair’
and taxing workers in the car industry to subsidize workers
making buggy whips is the most short-sighted economic
policy I can think of.
So, what are the disruptive changes that may have in-
creased income inequality today? The two main candidates
are information technology (IT) and globalization.
There is absolutely no question that IT is revolutioniz-
ing industries — particularly if you are a taxi driver (Uber),
a hotel owner (AirBnB), a retailer (Amazon) or in market-
ing (Facebook and social media). Notice the names of these
disruptive new firms: They are all American. Now ask your-
self a simple question: Would you like Facebook to have
been founded in Toronto rather than Boston, Microsoft in
Vancouver rather than Seattle, Google in Montreal rather
than Santa Clara? Of course, the answer is Yes, as they have
created thousands of very well-paying jobs and countless
multi millionaires. Equally obvious: Income inequality in
Canada would be far greater, because the more dynamic the
economy, the greater the income inequality.
There is an indirect effect of IT, as well as a direct ef-
fect. To illustrate, suppose you go into a pub in Manchester,
England and there are ten people having a beer, all earning
$40,000 to $60,000, so the average and median (middle)
income is $50,000. In walks Paul Pogba. For those who
don’t know, Pogba, at 24, is the world’s most expensive foot-
ball player, whose club, Manchester United, pay him about
$400,000 a week, even when there are no games, and who,
with celebrity endorsements, probably makes at least $30
million a year. As a purely statistical matter, the average in-
come in the pub immediately jumps to $2.77 million ($30.5
million/11) even though the median (middle) and modal
(most likely) income is still $50,000.
In this case, the pub has immediately gone from hav-
ing very low income inequality to one with a highly unequal
distribution of income. However, what is important is that
the ten people having a beer before Pogba walked in are no
worse off after he came in than they were before. What really
matters is not whether income is unequal, as that is a quag-
mire of statistics, but individual standards of living.
The Pogba example is also important because football
is an industry. The Football Association (FA) in 1885 initially
restricted players to amateur status, then to professionals
within a six-mile radius, then to salary caps and finally to
contracts that restricted them from joining other clubs. Re-
moving these constraints were victories won in the face of
fierce opposition from the clubs, who saw an obvious threat
from market wages to their profitability. In the end, it took a
decision by a UK High Court Judge to allow market wages
and for Pogba to earn his market value.
rotmanmagazine.ca / 109
 Free trade and globalization have not affected Canada
to anywhere near the extent they have affected the U.S.
If you think this bankrupted English football clubs,
think again. In 2012, Forbes ranked Manchester United as the
richest professional sports franchise in the world. English
football has gone from a six mile franchise around the club
to a regional fan base, a national fan base and now thanks to
the Internet, a global franchise. In the process, football play-
ers have gone from amateurs, to being paid twice average
industrial wages, to super star salaries.
In a 1999 article in Rotman Management, I wrote:
“The rewards for being better than others will be phe-
nomenal, and the costs for being ‘a bit off ‘ are going
to be disastrous, just as a perfect market tells us they
should be. Disappearing market barriers and rapid
advances in information technology have created the
economies of superstars.”
This forecast was only too accurate. Notably in the latest rich
list for the UK, only two of the top ten were born in the UK
and Manchester United’s Swedish centre forward Zlatan
Ibrahimovic entered the top 1,000 with a wealth just less
than $200 million. That is a phenomenal return for a foot-
ball player; interestingly, Adele and the stars of the Harry
Potter franchise were also on the list.
The impact of IT on global franchises is one aspect of
globalization. The other is the shift of manufacturing and
outsourcing to cheaper locations. David Ricardo’s trade
theory from almost 200 years ago showed that as countries
specialize where they have a comparative advantage, every-
one gains — and this is as true now as it was when the UK
moved to free and open trade and unilaterally repealed the
Corn (wheat) Laws in 1846. In the process, a cheap food pol-
icy devastated English farming to the great benefit of lower
income groups, who spent a greater proportion of their in-
110 / Rotman Management Fall 2017
come on food. (think about the impact of farm support pro-
grams in Canada!)
The situation today is no different from England in the
1820s, when Luddites destroyed textile equipment that was
taking away their jobs. You can’t halt technological change.
When I was growing up, ‘Made in England’ was a sign of
quality; today, it is near impossible to find. Americans are
going through the same process, as ‘Made in China’ has be-
come ubiquitous. In reaction, they have elected a President
who promises to ‘Make America great again’ and bring back
jobs; but this isn’t going to happen—anymore than the Lud-
dites were going to prevent industrialization in England.
Sure, under pressure from President Trump, Carrier
has agreed to maintain production in Indiana, but make no
mistake: all those jobs are not going to stay! As Greg Hayes,
CEO of United Technologies, Carrier’s parent recently
said: “We will take a lot of those jobs that today require very
low skill and …. eliminate [them] through automation.” The
fact is, the U.S, Canada and the UK should not want jobs in-
volved with putting three screws into a gas furnace every 27
seconds. Such jobs can and should go to low-skill economies
and improve their standard of living.
The World Bank points out that in 1981, 43 per cent of
the world’s population was ‘extremely poor’; but by 2013,
that had dropped to just 10.3 per cent. It took Great Britain
100 years to make the adjustment, but China is on track to
see its number drop from 660 million in extreme poverty to
25 million in 35 years, despite an increase in population. The
reason for this drop, of course, is free trade, and the shift of
manufacturing jobs from the developed world to China. It is
a moral question whether getting 635 million Chinese out of
extreme poverty is worth more or less than the consequenc-
es felt in Rust Belt, U.S.A.
So, how important have the two trends of globalization
and IT been to inequality in Canada?
 The answer: Not very. In 2015, the OECD issued a ma-
jor report on changes in income inequality from 1985 to
2015. Apart from the fact that the start date and tone of the
report reflect an obvious bias, the data for Canada do not
reveal any obvious problems: The OECD notes that inequal-
ity has generally increased, but the change for Canada has
been minimal and less than average. The main focus of the
OECD report was on the U.S, where inequality was already
amongst the highest and increased even more, exceeded
only by Mexico.
The question is, why has inequality increased steadily
in the U.S., whereas in Canada, any changes have been be-
low average for a developed country?
The answer lies in the two aforementioned causes of
increased inequality: Free trade and globalization have not
affected Canada to anywhere near the extent they have af-
fected the U.S, for the simple reason that manufacturing is
less important to Canada. Further, people forget that the
Canadian dollar was down to US$0.65 before China was
admitted to the World Trade Organization in 2001. Since
then, commodity prices have dramatically increased, and
with them, the Canadian dollar, as China has industrial-
ized to manufacture all those things exported to the devel-
oped world.
In other words, it doesn’t matter to Canada whether it
imports from the U.S. or China, but by industrializing, China
has been buying Canadian raw materials and creating jobs
in Canada. The massive expansion of the Oil Sands in Alber-
ta would not have occurred if China had not been admitted
to the WTO.
And now, back to IT: Would Canada be better off with
Google, Facebook, Microsoft, Amazon, Apple etc. based in
Canada? Obviously the answer is Yes, but our income in-
equality would then be much closer to that of the U.S. As it
is, and unlike the U.S., Statistics Canada reports that me-
dian income in Canada increased from $46,700 in 2000 to
$55,600 in 2014 (constant 2014 dollars). Put simply, there is
no indication of stagnating middle-class incomes in Canada.
In closing
To avoid U.S.-style inequality, left leaning politicians and
journalists would probably indicate that they would regulate
or tax. But the first thing you learn in a tax course is, you tax
the immobile factor for the obvious reason: The mobile fac-
tor leaves, and then you don’t get any tax revenues at all. In
2010, the UK government increased its top tax rate from 40
per cent to 50 per cent, but seriously missed its revenue tar-
gets. In 2012 the top tax rate was rolled back to 45 per cent
and the Chancellor of the Exchequer, George Osborne,
claimed the UK raised more money due to the more com-
petitive tax rate.
Way back in 1901, the football clubs tried capping sala-
ries in England, but the result was the formation of a com-
petitive league without salary caps. If it tried that now, the
English Premier League would no longer be the dominant
global sports franchise. Many of the clubs have no or very
few English players, with little loyalty to their clubs except
for their pound sterling pay cheques, so they would simply
move to the Continent. The fact is, Pogba is French, and he
is as mobile as any other talented professional.
Laurence Booth is the CIT Chair in Structured Finance and Professor
of Finance at the Rotman School of Management.
Rotman faculty research is ranked #3 globally by the Financial
Times.
rotmanmagazine.ca / 111
 QUESTIONS FOR Jackie Vanderbrug, Co-chair, Impact Investing Council, Bank of America

Q
&A The woman who wrote
the book on gender-lens
investing describes how
important it is to a thriving
How do you define ‘Womenomics’?
We think of it as a lens on how the growing economic power
of women is fundamentally changing our world. The metrics
of Womenomics range from the growing number of female
entrepreneurs to women’s growing purchasing power. With-
out this lens, people — and investors in particular — can eas-
ily miss how quickly things are changing.

Describe what it means to invest with a ‘gender lens’.

Those of us who have been immersed in developing the
global economy. practice of ‘gender lens investing’ chose the term because
it encompasses biology and culture, and it invites analysis
Interview by Karen Christensen that is inclusive of men and women. We wanted to broaden
the conversation from ‘investing in women’ (i.e. women-
led or owned businesses) to looking at all types of invest-
ment opportunities and how gender knowledge — includ-
ing biological and cultural attributes — can inform better
investing decisions.

112 / Rotman Management Fall 2017

 Men’s caregiving hours rose by a factor
of three from the late 1960’s to 2013.
A gender lens can add perspective on nuanced geo-
graphic and cultural differences. For instance, a bank may
find that sharpening its analysis of ‘the lifetime value of
male and female banking customers’ — including loan size,
loyalty and referrals — reveals unexpected insights on profit-
able new segments. And by using a gender lens, a consumer
goods company operating in India would recognize that an
Indian mother-in-law’s significant role in family purchasing
decisions differs by geography and class.
You can think about it as pointing the lens of a camera
and the way in which you can open and close the aperture
to control the depth of field; one gender may move into
the foreground or become blurred, depending on how you
manipulate the aperture. Either way, a gender lens helps
you frame the context, the issues and your response more
accurately.
A recent report found that all of the income gains that
middle-class American families have experienced since
1970 are due to the rise in women’s earnings. Please ex-
plain.
That was in Barack Obama’s final Economic Report of the
President, and it has to do with women’s increased partici-
pation in the labour force. The report found that median
family incomes were $11,000 higher in 2013 than they were
in 1970; and without women’s increased participation they
would have been $9,000 lower. Another way of looking at
it is that our economy is two trillion dollars larger and has
seen a 13.5 per cent expansion due to the increased partici-
pation of women.
One thing to note is that this is also due to men’s in-
creased caregiving roles. While there is still significant in-
equality of unpaid work, men’s caregiving hours rose three
times from the late 1960’s to 2013.
Over the next 40 years, we will see the largest-ever in-
tergenerational transfer of wealth, as women receive 70
per cent of inheritances from their Baby Boomer parents.
What are the implications?
For a long time we’ve been hearing about ‘the power of
the purse’ — the fact that women make 75 to 80 per cent of
consumer purchasing decisions. Yet, very little thinking has
been done about human-centred design from a gender per-
spective. What is going to happen is, women will continue to
make a lot of consumer purchases, but there will be a differ-
ence in terms of women’s understanding of their ownership
of assets, and that will drive many things differently — from
their choice to own property earlier, to investing differently.
In your book you talk about the importance of raising the
‘Gender IQ’ of products and services. What does a high
Gender IQ look like?
An organization that is thoughtful about how its products
and services work for all is thinking about human-centred
design from the beginning. They’re thinking about differ-
ences in needs and the particular realities and talents of
men and women, and how they differ, depending on what
the company produces.
For example, take transportation. Women use public
transportation quite differently than men do. They tend to
do what’s called ‘trip chaining’. When they leave work, they
often stop to do an errand on the way home; or they may
drop the kids off at daycare on the way to work. There is less
of a straightforward commuting model there. Medical is-
sues are another example: Treating diseases and looking at
the desire for physical improvement can also be considered
from a gender perspective.
My favourite example right now is thinking about soft-
ware design from the perspective of how men and women
rotmanmagazine.ca / 113
 The 10 Metrics of ‘Womenomics’
1. Labour force participation. The greater the number
of women participating in the formal economy with paid
jobs, the greater the opportunity and upside for eco-
nomic growth.
2. Rising education levels. In many parts of the world,
girls now outperform boys academically and more
women are getting college degrees than men.
3. Purchasing power. The global purchasing power of
women was estimated at $15 trillion in 2015.
4. Gender pay gap. Women working full-time in the U.S.
earned 79 per cent of what men earned in 2014.
5. Unpaid work. Women still do far more unpaid work
than men. The OECD defines unpaid work as “an impor-
tant aspect of economic activity” that is indispensable to
the well-being of individuals.
6. Women entrepreneurs. Even with challenges in
accessing capital, 200 million women started or ran
businesses in 2014.
7. Corporate gender diversity. Evidence continues to
mount that the spectrum of women’s representation in a
firm and a strong pipeline of women helps drive superior
results.
8. Paid family leave. With rapidly-aging populations
worldwide, it is more imperative than ever to keep work-
ing moms and dads formally engaged in the economy.
9. Women in politics. The more women participate in
the political decision-making process, the more diverse
the debate.
10. Women and technology. This sector presents
game-changing potential for both women and the global
economy.
114 / Rotman Management Fall 2017
use software differently. The idea of ‘designing for inclusion’
is essential for companies that want to succeed in the future.
We’ve definitely moved on from ‘pink it and shrink it’—just
making a product smaller and pink.
There are lots of opportunities for levels of nuance in
terms of financial services. For instance, understanding
how women in an emerging market context may or may
not feel comfortable walking into a bank branch, making a
complaint, etc. These kinds of human factors are essential
to designing services.
The McKinsey Global Institute has reported that if wom-
en’s participation rates were the same as men’s, it would
add up to $28 trillion (26 per cent) to annual global GDP
by 2025. How would this happen?
That report [“The Power of Parity: How Advancing Wom-
en’s Equality Can Add $12 Trillion to Global Growth”] was
fantastic, because it put into context the potential benefits
for all of us of women’s economic participation — and it also
unpacked some of what would be required to achieve that.
It’s one thing to say, ‘If women worked more, the econ-
omy would expand’. The reality is, there are a lot of reasons
why women don’t work more — and some of them are very
important. This is not about saying that the existing unpaid
work that women do is not valuable to society. What I appre-
ciated about the McKinsey Report is that they came up with
15 outcome-based indicators of global gender equality, and
said, ‘Here are the precursors to enabling sustainable eco-
nomic expansion and gender equality in society.’ All of these
things collectively are required in order to unleash the kind
of sustainable economic power that we need.
Tell us a bit about Japan’s ‘gamble’ on Womenomics.
Japan faces a real challenge with respect to its working popu-
lation: There are indications that by 2030, it will be 21 per
cent below what is needed. Prime Minister Abe announced
that if the country tapped its most underutilized resource —
Japanese women — it could increase its GDP by as much as
15 per cent. It’s a similar kind of model to the McKinsey Re-
port, recognizing that women are an under-leveraged eco-
 The idea of ‘designing for inclusion’ is essential for
companies that want to succeed in the future.

nomic asset that we have to engage in order to prosper.
They put together a range of initiatives to try to close
this gap, including targets and measurement in terms of
women’s workforce participation and professional advance-
ment, supported by the increased availability of daycare and
after-school care; childcare leave benefits, paternity leave,
and a more family-friendly overall workplace culture —
which means making it clear that no one should be at their
desk 70 hours a week.
There are areas that are already showing results, includ-
ing increased places at daycare facilities and a slight drop in
the percentage of women leaving the workforce after the
birth of a child. But these changes will not happen overnight.
There is a societal shift required, along with corporate cul-
ture shifts and the time required to build a solid pipeline of
talent. In the most recent World Economic Forum Report,
Japan actually dropped in rank from 101 out of 144, to 111,
and some people looked at that and said, ‘Womenomics is
failing’; others — and I am in this camp — say, ‘No, these
things just take time’.
In Australia, we have seen an increase in diversity at board
levels — not after a mandate for it, but after mandated dis-
closure. The ways in which laws allow for checks and bal-
ances, and enhancing investors’ awareness of these issues,
can make a big difference going forward.
What are the consequences for economies when enter-
prising women don’t receive funding to start and build
businesses?
We all lose. Clearly, our global economy is facing some un-
precedented challenges — whether it be the growth of cli-
mate change and extreme weather, terrorism or challenges
in the political realm. There is, as never before, a demand for
innovation across the board, and one thing we know for sure
about innovation is that it thrives on diversity. Not having
women at the table as you think about how to address your
organization’s challenges does a disservice to us all.

BlackRock CEO Larry Fink has said that responsible

investing strategies are the only way to change unsus-
tainable corporate behaviour. How does gender fit into
the picture?
I agree that responsible investing is one of the strongest ways
to shift corporate behaviour, because companies care about
what investors care about. Increasingly, investors are de-
manding disclosure on corporate practices from an environ-
mental standpoint, from a social and workforce standpoint,
and from a governing standpoint, so corporations are aware
that these are factors they need to be monitoring. Many are
already moving in this direction — but there is nothing like
investor demand to ratchet that up.
Responsible consumption also makes a difference. The
way that consumers choose to purchase particular brands
Jackie Vanderbrug is the Managing Director at U.S. Trust and co-chair
and services is watched very carefully by corporations. Gov-
of the Impact Investing Council for the Global Wealth & Investment
ernment regulations matter, too. To be listed on many stock Management division of Bank of America. She is the co-author of Gender
exchanges around the world, you now have to provide a dis- Lens Investing: Uncovering Opportunities for Growth, Returns and Impact
closure of diversity at different levels of your organization. (Wiley, 2017).

rotmanmagazine.ca / 115
 FACULTY FOCUS Will Mitchell, Professor of Strategic Management, Rotman School of Management
Are Market-Based
Economies
More Equitable?
ARE STRONG MARKET-BASED ECONOMIES
more socially equitable? My current re-
search looks at whether the strength of
market economies — based on factors
such as the robustness of capital and la-
bour markets — relates to income equal-
ity and life expectancy in those countries. According to my
analysis of current patterns in more than 160 countries, the
answer is Yes: On average, a stronger market orientation
correlates with both more-even income distribution and
greater longevity for people born in that country.
These results stand in the face of recent populist argu-
ments in the U.S. and Europe that are seeking to overturn
market-based institutions. At the same time, though, the
patterns I have observed highlight limits in market-based
institutions and point to a need for more thoughtful social
policies as complements to market activity.
Before I discuss the patterns identified in my analysis,
it is important to remind ourselves of what every student of
statistics learns in their first class: Correlation does not im-
ply causation. As a result, we need to be careful in explain-
ing why market economies might help create more equity.
116 / Rotman Management Fall 2017
Nonetheless, in this article I will attempt to provide some in-
sights about opportunities for achieving both market-based
activity and social equity—while highlighting limits that
point to a need for effective social institutions as comple-
ments to market activity.
First, let’s consider two measures of social equity. One
is the Gini index, which measures the income distribution of
a country’s residents. In the Gini index, 0 represents ‘perfect
equality of income distribution’ and 1 represents ‘perfect in-
equality’. Hence, a lower number indicates greater income
equality. Countries with low Gini values (i.e. evenly spread
incomes) include Ukraine, Slovenia, Norway, the Czech Re-
public, Sweden, Iceland and Denmark, all with scores below
0.30. Countries with high Gini ratings (i.e. uneven income
distribution) include South Africa, Namibia and Haiti (all
above 0.60).
A second indicator of societal equity is life expectancy:
How long can a person expect to live if they are born in a par-
ticular place, and what is the country’s rate of infant mor-
tality? Countries with longer average lifespans and lower
infant-mortality rates have greater ‘life expectancy equity’.
Currently, Hong Kong has the longest life expectancy in the
 Market-Based Institutions and Income Equity
0.50
world (84 years), while Swaziland is lowest (48 years). Lux-
embourg has the lowest infant-mortality rate (1.5 deaths per
1,000 births), while Angola has the highest (96 per 1,000).
The question is, does the strength of a country’s market
institutions relate to either income equity or life expectancy? 0.25
To measure the strength of a country’s market institu-
tions, I developed what I call the index of Voids in Market-
Based Institutions, VIMBI for short. The VIMBI index in-
cludes six aspects of market activity:
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high value on the index indicating stronger market orienta- Inc

ity,
tion. In 2017, Singapore and Hong Kong rate highest (0.94), qu
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tries include Denmark, New Zealand and Australia; while

others with a low market orientation include Afghanistan FIGURE ONE

and Eritrea.
As a first step in studying whether stronger market-
based economies are more equitable, I calculated correla-
tions between the VIMBI and Gini indices. Figure One
reports the correlations. As indicated, there are positive rela-
tionships with the degree of income equality (reverse scaling
of the Gini index) and the strength of the aggregate VIMBI
index (the green column in Figure One, with correlation
equal to 0.38), as well as with each of the six components of
the VIMBI index (the blue columns in Figure One). There-
fore, countries with stronger market-based institutions tend
to have more evenly- distributed incomes.
Before we discuss why strong market economies might
be more equitable, it is useful to address a question that
thoughtful readers may well raise: Does greater income eq-
uity simply mean that people equitably settle for lower aver-
age incomes?
The two columns on the right hand side of Figure One
help to dispel this idea: These positive correlations (0.24 to
0.30) demonstrate that countries with greater income equity
also tend to have higher average incomes (gross national
income per capita, based on purchasing power parity) and
higher growth in per capita income over the past quarter
century. Thus, greater income equity tends to occur in coun-
tries with higher — rather than lower — average incomes.
As we discuss how market strength might contribute to
income equality, it is important to recognize that any causal-
ity in these relationships is complex. It is possible that great-
er equity influences the formation of market institutions, for
instance, as well as the other way round. And other factors,
such as social norms, likely influence both equity and mar-
ket institutions. Nonetheless, it is useful to consider how the

rotmanmagazine.ca / 117
 The greater dispersion of income in the U.S. partly reflects
lesser integration of immigrants into its core economy.
presence of strong market institutions might contribute to
social equity.
I will now discuss each of the six VIMBI elements re-
lates to income equity.
STRONG LABOUR MARKETS. The labour market indicator in-
cludes three factors: The extent of post-secondary educa-
tion in a country, the flexibility with which businesses can
add or subtract employees, and the extent to which employ-
ees receive support if they lose employment. I found that,
of the six VIMBI elements, strong labour markets have the
strongest correlation with income equity (0.38). Stronger
labour markets mean that it is easier for businesses to cre-
ate high quality jobs and for people to shift between jobs.
In turn, greater employment quality, flexibility and support
mean that more people have access to well-paying jobs.
Clearly, some executive positions will earn far above aver-
age wages—and those disparities sometimes create substan-
tial social tension. Nonetheless, opportunities for desirable
employment tend to extend throughout an economy, im-
proving income equality.
CONTRACT EASE. This element also has a substantial corre-
lation with income equity (0.38). The easier it is to create
and protect contracts, the easier it is to create and change
businesses, and in turn, this creates more employment op-
portunities. Moreover, the ability for businesses to adapt
means that business activities tend to remain innovative,
so that employment is more likely to offer well-paying op-
portunities for a larger number of people, again promoting
income equality.
GREATER TRANSPARENCY/LOWER CORRUPTION. A high degree of
transparency encourages new investment, including invest-
ment that can create market-leading opportunities. The new
investments then create new jobs, including those in higher
margin new businesses. This again promotes both higher in-
come and wide-ranging employment opportunities. As a re-
sult, lower corruption has significant correlates with income
equity (0.30).
118 / Rotman Management Fall 2017
ROBUST PHYSICAL INFRASTRUCTURE. Roads, airports, energy
availability and other key support for business activity also
correlate with income equality (0.26). Such infrastructure
also promotes business activity, and that activity again cre-
ates desirable employment opportunities.
SIMPLICITY OF RULES. The simplicity of a country’s business
rules also correlates with income equity (0.26). Countries
with straightforward rules — such as streamlined construc-
tion permits and clear tax systems — facilitate business cre-
ation and adaptation. This business dynamism, again, offers
broad-based employment opportunities.
ROBUST CAPITAL MARKETS. Finally, the presence of robust capi-
tal markets correlates with income equity (0.24). Ease of ac-
cess to capital and the ability to protect investors facilitate
business creation and growth. Once again, the dynamism
helps create broad-based employment.
Overall, then, we can say that the presence of a strong set of
market-supporting institutions promotes business activity,
and that activity not only generates employment opportuni-
ties but also helps businesses in a country stay on the lead-
ing edge of their markets, so that many of the jobs are well-
paying. The most visible part of that activity is often high
executive compensation, yet even if it is less visible, there
also tends to be a broad base of employment opportunities.
Hence, robust market-based institutions can help to facili-
tate income equity.
At the other end of the VIMBI scale, countries with
limited market-based institutions often have both lower
per capita income and highly unequal incomes. The high
dispersion in income distribution arises because a small
proportion of the population, often politically connected,
controls many of the resources and opportunities in the
country.
Figure Two shows that the VIMBI Index also correlates
with both longer life expectancy at birth (0.72) and lower in-
fant mortality (0.71). Let us briefly consider why robust mar-
ket institutions might contribute to these health outcomes.

The simplest explanation is that more active business activ-
ity generates wealth that can be invested in healthcare, ide-
ally widely available to a population.
Again, we need to be cautious in interpreting life-ex-
pectancy patterns, because reverse causality can also apply:
Healthier countries, as reflected in longer life expectancy,
can facilitate business activity by providing healthy employ-
ees. In turn, growth in business activity will often encour-
age the development of strong market-based institutions.
With this explanation, the causality would run from health
to business activity to market-supporting institutions, rather
than the other way around.
In practice, it is likely that both directions of causal-
ity arise: Market institutions facilitate business activity and
health; and, in turn, health facilitates business activity and
market institutions. This combination creates a virtuous
cycle, with mutual reinforcement of market-supporting in-
stitutions, business activity, income and health — leading to
the development of robust, equitable economies.
Exceptions to the Rules
The patterns I have discussed so far are general tendencies;
they are not set in stone. Indeed, some countries are notable
exceptions to the trends.
The two countries with the highest VIMBI ratings in
2017, Singapore and Hong Kong, have relatively high recent
Gini scores (0.46 and 0.54), well above the average score
of 0.40 for the 164 countries with recent Gini ratings from
the World Bank. For these two countries, the exceptions
partially reflect the recency of the development of market
institutions, as both have undertaken strong market orienta-
tions during the past half century. Both countries also have
extensive ‘guest worker’ populations, many of whom have
incomes far below that of citizens of the countries.
Nonetheless, people in both Singapore and Hong Kong
enjoy high life expectancy (83 and 84 years) — well above
the global average of 72 years, partly as a result of social in-
vestment in healthcare services. Hence, although the strong
market institutions in a country may not have generated in-
come equity, they are consistent with life expectancy, par-
Market-Based Institutions and Life Expectancy
Correlations of VIMBI (2017) with Life Expectancy
1.00
0.50
0.00
Infant mortality, 2015
Life expectancy at birth, 2014
-0.50
-1.00
FIGURE TWO
ticularly when reinforced with social policies.
Comparing the United States and Canada is also in-
triguing: The U.S. has a relatively high VIMBI rating (0.83)
and a Gini score (0.41) slightly above the average of the
World Bank estimates. By comparison, Canada has a simi-
lar VIMBI rating (0.82) and a substantially lower Gini score
(0.34). The greater dispersion of income in the U.S. partly re-
flects lesser integration of immigrants into its core economy.
In addition, the somewhat weaker social safety net in the
U.S. — and in particular, more limited availability of health
insurance — has made it more difficult for some people to
remain employed. The lower availability of health insurance
also likely contributes to the somewhat lower life expectan-
cy at birth in the U.S. (79 years vs. 82 in Canada) and higher
infant mortality rate (5.6 per thousand births vs. 4.3 in Cana-
da). In this comparison, once again, greater equity reflects a
combination of market and social institutions.
Exceptions also arise at the other end of the VIMBI
scale. São Tomé and Principe, Niger, Guinea, Cambodia
and Burundi all have low VIMBI scores (0.25 to 0.30) and
rotmanmagazine.ca / 119
 The reshuffling of position—including the very process of creating
greater equity—can generate anger and opposition.
Gini ratings well below average (0.31 to 0.34). These coun-
tries also have low per capita income (from less than $700
to about $3,300). In these cases, a lack of market-based in-
stitutions has translated into few opportunities for almost all
people in the country.
In closing
Unquestionably, there is a substantial statistical relationship
between market orientation (the VIMBI Index) and social
equity, as measured by the Gini index of income disparity
and life expectancy measures. As noted, the causality under-
lying these relationships is multifaceted. Nonetheless, part
of the explanation stems from the ability to create dynamic
businesses that, in turn, create widespread employment op-
portunities and support for good health. In turn, healthy em-
ployed people help to foster business opportunities, creating
a virtuous cycle of commerce and equity.
These patterns both defend market-based capitalism
and illustrate its limits. Market institutions help to create eq-
uitable societies, with widespread benefits; yet, these same
institutions are now under attack by populist revolts in mul-
tiple countries — including countries in which market insti-
tutions first took root, such as the U.S. and Western Europe.
The patterns discussed herein should serve as a warn-
ing about the risks of destroying the benefits of the market.
Nonetheless, these equity patterns do not support the idea
of an unfettered market, dominating social activity in a
country. Indeed, over-reliance of market domination within
countries and via global strategy has contributed to the rise
of populism in the U.S. and Europe. While, on average, mar-
ket activity may help to facilitate equity, market economies
also create losers, as some people suffer real declines in wel-
fare. Others, perhaps more commonly, do not face lower liv-
ing standards in absolute terms but face relative declines, as
others catch up and sometimes move ahead. Hence, the re-
shuffling of position — including the very process of creating
greater equity — can generate anger and opposition.
In order to defend market-based capitalism, we need
to recognize and address its limits. Social equity within a
country does not stem solely from business activity: Social
120 / Rotman Management Fall 2017
engagement in support mechanisms is also critically im-
portant. In this regard, policies that facilitate broad-based
healthcare are critical.
Similarly, it is essential to invest in institutions that help
people stay abreast of changing employment needs and op-
portunities, and to catch up when their industries and jobs
are displaced. As a result, ongoing support for education in
grade schools, community colleges, and other post-second-
ary institutions is critically important, as is income support
that helps people retain dignity and provide time to go back
to school when needed. Programs that help immigrants
quickly engage in the economic and social fabric of a coun-
try are equally important.
Indeed, many of the market-based institutions that
make up the VIMBI Index depend on social investments.
Support for education and policies that support employees
when they lose jobs (labour), legal policies that promote
transparency (corruption), public investments in roads, air-
ports, and other infrastructure (physical infrastructure), and
regulations that seek a balance of risk and reward in finan-
cial services (capital) are central to the Index. Hence, at the
core, strong equitable economies reflect a thoughtful mix of
both business and social institutions.
Will Mitchell is the Anthony S. Fell Chair in New Technologies and Com-
mercialization and a Professor of Strategic Management at the Rotman
School of Management.
Rotman faculty research is ranked #3 globally by the Financial Times.
FACULTY FOCUS Daehyun Kim, Professor of Accounting, Rotman School of Management
Why the Most
Valuable Companies
Have Women on
Their Boards
Interview by Jaren Kerr
Describe the current state of ‘women
on boards of directors’.
The average proportion of women direc-
tors on the boards of S&P 1500 firms has
steadily increased, from seven per cent
in 1998 to 16 per cent in 2015. Neverthe-
less, women are still significantly underrepresented in cor-
porate boards, given that 47 per cent of the U.S. workforce
consists of women. As of 2015, about 17 per cent of S&P
1500 boards still had no women directors and 35 per cent
had only one.
A number of OECD countries are addressing this issue
through various forms of regulations. Some countries have
either mandated or established voluntary quotas for corpo-
rate boards; others, including Canada, require disclosure
explaining the reason for the lack of gender diversity. These
efforts are based on an argument that gender-diverse boards
improve firm value.
However, whether gender diversity actually leads to
higher firm value has been actively debated, and the litera-
ture documents mixed empirical evidence. One important
aspect of understanding the relation between board gen-
der diversity and firm value is identifying the mechanisms
through which gender diversity impacts firm value. This was
the objective of my research with Professor Laura Starks.
Based on your findings, what does a company lose if it
doesn’t have any women on its board?
A board of directors without any women is more likely to be
missing some key skill sets — in other words, functional ex-
pertise — that could improve the board’s advisory effective-
ness; and a less effective advisory board, in turn, is associat-
ed with lower firm value. We identified 16 skill sets that have
been deemed critical for corporate boards to effectively ad-
vise management. When we examined the relation between
these skill sets and individual directors, we found that some of
these skills are much more likely to be possessed by women,
while others are more often found in men. More importantly,
we found that most of the current cohort of corporate boards
already possesses the skills that tend to be male-dominant;
however, not many have the skills that are more likely to be
offered by women. Therefore, if a board doesn’t have any
rotmanmagazine.ca / 121
 Heterogeneity in opinions among group members
improves a group’s decision making.
female directors, it is missing some critical skills that would
improve its advisory capacity.
Describe which skill sets women tend to excel in.
The types of expertise that women are more likely to possess
include risk management, human resources, sustainability,
corporate governance, regulatory/legal/compliance, and
political/government. As I mentioned earlier, these skill sets
are currently lacking on most boards, particularly at smaller
firms: Less than half of S&P SmallCap 600 boards have a di-
rector with expertise in risk management, human resources,
sustainability or political/government. By contrast, all four
of the male-dominated skill categories — finance, mergers &
acquisitions, operations, and technology — can be found in
the majority of those boards.
You indicate that smaller firms are even worse off than
bigger firms. Is there a particular reason why smaller
firms struggle more with this issue?
Indeed, the lack of gender diversity is more severe in smaller
[S&P SmallCap 600] firms. Perhaps it’s because investors
don’t put as much pressure on these firms: The smaller a
firm, the less scrutiny it receives from the public. Also, from
an investor’s point of view, the same governance change will
have a much greater valuation impact when the change takes
place at a larger firm. That is why corporate governance im-
provements usually start with the big firms. The effort to di-
versify boards hasn’t reached all the way down to the smaller
firms yet — at least, not in the U.S.
That said, the situation isn’t much better for larger
[S&P 500] firms. Even though many S&P 500 firms now
have one or more women on the board, an average S&P 500
board consisted of only 20 per cent female directors as of
2015. Clearly, we can’t call that ‘diverse’.
What barriers and biases are preventing gender parity—
or anything close to it—on these boards?
The primary barrier is the belief that women don’t have the
required knowledge or experience to serve on corporate
boards. This ‘belief ’ is sometimes disseminated by incum-
122 / Rotman Management Fall 2017
bent directors with no supporting evidence backing up such
a claim. In fact, there is already a significant and growing
number of women in senior management with the required
experience and expertise. Knowing this through data, I find
it difficult to accept the claim that there aren’t enough quali-
fied women to become board members.
Since corporate directorships can enhance one’s status
and reputation in the business community, it is understand-
able that existing directors can be very protective of their
‘turf.’ Informally, this so-called ‘old boys’ club’ consists of
members of a specific gender and race. Unless you resem-
ble the other members of the club, it is extremely difficult
to penetrate.
Broadly speaking, your research finds that heterogene-
ity tends to increase firm value. Is this widely accepted
in business circles?
Organizational behaviour studies document that heteroge-
neity in opinions and perspectives among group members
improves a group’s decision making. Corporate directors, in
general, tend to agree with this argument and believe such
heterogeneity increases firm value. However, to my knowl-
edge, no prior studies have empirically examined whether
heterogeneity in opinions among board members actually
improves firm value. Prof. Starks and I have been working
on another study that attempts to answer this question. In
that study, we find that heterogeneity of board members’
functional expertise — the source for their professional opin-
ions at board meetings — does indeed improve firm value,
as measured by Tobin’s q [the ratio of the market value of a
company’s assets divided by the replacement cost of its as-
sets (book value)].
Do you think your findings would be similar if you ex-
plored other types of diversity, such as ethnic or racial
diversity?
I haven’t examined the valuation effect in terms of other
diversity categories as of yet, but that is something I am
interested in doing. The reason we first examined gender
diversity is because gender is currently the primary focus
of the board diversity debate, not just in North America but
worldwide.
Faced with this resistance, what can proponents of di-
versity do to convince boards that this is not just a moral
argument but a newly-established benchmark that will
improve the health of their business?
That’s an important question, because as indicated, one
thing gender diversity proponents have been struggling
with, is the lack of causal evidence in prior studies. We tried
to address this issue by showing a mechanism through which
women directors could contribute to corporate boards.
Corporate laws in the U.S. require boards to act in the
best long-term interest of the corporation. Based on that,
boards have been vehemently opposing the push for gender
diversity when it is presented as a moral or social argument.
Oftentimes, the primary argument against gender diversity
is that the board must seek diversity not in terms of gender,
but rather with respect to expertise, opinions, and perspec-
tives, since it is heterogeneity in these traits — not gender
per se — that improves a firm’s long-term value.
The premise of our study is consistent with the argu-
ment that heterogeneity of expertise is what matters. That
said, our results show that female directors are likely to
possess specific types of expertise that are often missing
in incumbent boards, and that when added, this broadens
the opinions and perspectives in the boardroom. These re-
sults, coupled with the results from the other working paper
I mentioned earlier, suggest that appointing more women to
corporate boards makes financial sense: Women directors
are more likely to bring new perspectives, hence improving
the quality of a board’s strategic discussions and the result-
ing decisions; this, in turn, is associated with a higher firm
value.
Is it possible that men simply don’t value the particular
skill sets that women tend to hold? That they, for exam-
ple, prioritize finance over human resources?
I cannot answer why men or women tend to be more domi-
nant on a certain set of skills, because I don’t have data on
that. I think it may be due to differences in career paths.
What I can say is that corporate boards do not perceive
female-dominant skill sets as unimportant. The 16 critical
skill sets were determined by organizations that represent
and advocate for corporate boards, such as the Conference
Board and the National Association of Corporate Directors.
These are organizations who recommend best practices
from the corporate boards’ point of view.
It would be difficult to argue that the female-dominant
skills are not crucial for corporate boards. Take, for example,
risk management: most boards want to have a risk manage-
ment expert, but argue that it is difficult to find qualified
candidates. If the boards expand their search to include
more women, I think they would find these experts more
easily. Arguably, expertise in HR is one of the most crucial
needs for any corporate board. All boards have governance
or nominating committees that nominate or appoint direc-
tors as well as CEOs, and compensation committees that
set executive compensation. Sustainability is also becoming
a very important issue. Many firms nowadays are very fo-
cused on their corporate social responsibility activities: hav-
ing a director with sustainability expertise would enhance
the firms’ long-term strategic direction on corporate social
responsibility.
In every discussion about the importance of embracing
diversity, there is an implicit debate about whether the
issue is a ‘pipeline problem’ or a recruitment problem. It’s
not that companies don’t want women on their boards;
they just can’t find them. Or, is it a recruitment issue,
whereby people are only looking within their pre-existing
networks, which tend to be homogenous—i.e. ‘white men
recruit more white men’?
I think it’s both. The results of our study suggest that a
recruitment problem exists, where incumbent corporate
boards fail to tap into potential female director candidates.
That said, even though my expertise is in corporate boards,
I know that there is also an imbalance of gender in senior
management roles, and in that case, it is mostly about the
pipeline. Then the implicit question becomes: Should we
rotmanmagazine.ca / 123
 Proportion of S&P SmallCap 600 Boards
Possessing Each Expertise
Financial
M&A
Accounting
International
Operations
Technology
Marketing
Risk Mgmt.
H.R.
R&D
Sustainability
Corp. Gov.
Regulatory
Political
Strategy
Leadership
0.0 0.2 0.4 0.6 0.8 1.0
Proportions of Boards Possessing Each Expertise

FIGURE ONE

women on boards?
If we take a bottom-up approach, we would be saying
the pipeline is the main problem. To solve this problem, we
have to increase the proportion of female employees along
the corporate hierarchy, including senior executives; and
then, hope that such a change will lead to more women serv-
ing on boards. Alternatively, we could take a top-down ap-
proach by, for example, implementing a quota that increases
the number of female corporate directors, with the hopes
that diversity at the top will trickle down to the entire firm.
Personally, I think the bottom-up approach is very dif-
ficult to achieve, and I make that claim based on a historical
fact on labour statistics: In the U.S., the proportion of women
in the total labour force has gradually grown from 38 per cent
in 1974 to 46 per cent in 1997; since then, this number has
stayed constant at 46-47 per cent. If the bottom-up approach
were effective, we would have expected a convergence be-
tween the proportion of women on boards and in the labour
market. After 40 plus years of experiment, we now know
that this convergence did not happen naturally.
In my view, it’s better to focus on achieving diversity
from the top-down — by starting to gradually add more
women on corporate boards over time, like the French
Daehyun Kim is an Assistant Professor of Accounting at the Rotman
model, to minimize a sudden, disruptive change in board School of Management. His paper “Gender Diversity on Corporate
composition. That sends a clear signal, not just to employ- Boards: Do Women Contribute Unique Skills?”, co-written with Laura
ees, but to the next generation of business leaders. If they T. Starks of the McCombs School of Business at the University of Texas
at Austin, was published in the American Economic Review and can be
see diversity at the very top of our most successful corpora-
downloaded online.
tions, our next generation will grow up believing that diver-
sity in corporate leadership is the norm. Rotman faculty research is ranked #3 globally by the Financial Times.

124 / Rotman Management Fall 2017

QUESTIONS FOR Tanya van Biesen (Rotman MBA ’00), Executive Director, Catalyst Canada

Q
&A
You are known for your ongoing dedication to advancing
inclusive workplaces. When did you first embrace this
challenge?
About 10 years ago, when I was a partner at Spencer Stu-
art, I noticed that many of my clients were asking me to help
them bring more female candidates to the table at the Board
and executive level. It quickly became clear to me that this
was no easy task — both as it related to developing candi-
dates and convincing board members and senior executives
that a female candidate might be the best candidate. Soon
after that, I took on the leadership of the firm’s Canadian
Diversity Practice, where I was responsible for ensuring that
we were putting forward diverse candidates. I actually co-
led the search to place my predecessor, Deborah Gillis, in
The Executive Director the role that I occupy today; Deborah has gone on to become
the global CEO of Catalyst.
of the leading non-profit
working to accelerate Much has been said about the ‘business case’ for diver-
sity and inclusion. How do you define it?
progress for women At Catalyst, we see diversity of talent as being equal to diver-
talks about the power of an sity of thought; and if you are not tapping into 50 per cent of
the workforce, you are clearly missing out on huge talent op-
inclusive workplace. portunities. On a more micro level, our research shows that
having women in the boardroom and on executive teams
Interview by Karen Christensen
is linked to better business results. Some of the benefits
we have seen through our research include stronger finan-
cial performance on core indicators; a greater ability to at-
tract and retain top talent; more innovation and creativity;

rotmanmagazine.ca / 125
 In effect, we are building a lower-skilled workforce
than we could have.
greater client insight; and better performance on non-
financial indicators such as social responsibility, corporate
reputation and productivity. We have found that all of these
things correlate with having more women in positions of
power.
Currently, 65 per cent of Fortune 100 boards have 30 per
cent board diversity, compared to just under 50 per cent
for Fortune 500 companies — and the Canadian data is
similar. What are big companies doing differently?
If you look at Canada’s 100 largest publicly-traded compa-
nies by revenue, over the past five years, they have moved
The Top 10 Issues Women Face At Work
1. FLEXIBLE WORK ARRANGEMENTS . Once seen as an employee
benefit or an accommodation for caregivers (primarily women),
FWAs are now an effective tool for organizations to attract top
talent as well as a cost-savings measure to reduce turnover,
productivity and absenteeism.
What can leaders do?
• Switch the focus to productivity and results, and not time
spent at the desk.
• Seek out managers who currently work flexibly and find
out what works and what doesn’t.
• Encourage your own team to be a role model and consider
utilizing FWAs.
2. EQUAL PAY. It’s 2017, and women around the world continue
to face a wage gap. In fact, women on average will need to work
more than 70 additional days each year just to catch up to the
earnings of men.
What can leaders do?
• Ensure that there are no gaps in your workplace by doing
a wage audit.
• Implement a “no negotiations” policy.
• Support pay transparency.
• Evaluate recruitment, promotion, and talent development
systems for gender bias.
3. RACE AND GENDER BIAS. Everyone has unconscious
biases—even the best-intentioned people—which play out
in their everyday lives and interactions in the workplace.
126 / Rotman Management Fall 2017
the dial on female representation on their boards from 15 to
25 per cent, on average. That is substantial change among
Canada’s 100 largest companies. On the flip side, 45 per
cent of publically-traded companies in Canada did not have
a single female board member in 2016.
So, what are the largest companies doing differently?
A number of things. First, there is very intentional, active
leadership on the topic of diversity and inclusion, and that is
probably the number one, two and three reason for the prog-
ress we are seeing. There is also a growing belief in the busi-
ness case. Frankly, these companies are also under greater
scrutiny — whether it be regulatory or shareholder scrutiny
What can leaders do?
• Don’t shy away from talking about uncomfortable or difficult
topics. Each of us—regardless of our race or gender—has a
role to play.
• Be open to feedback and learning.
• If you see harmful behaviour in your workplace, say some-
thing. Otherwise, your silence makes you complicit in it.
• Confront inequities head on through organization-wide
strategies.
4. ACCESS TO HOT JOBS. Not all leadership opportunities are
created equally, and not all jobs provide the same degree of
career advancement.
What can leaders do?
• Make a deliberate investment to help women colleagues.
• Model inclusive leadership behaviours.
• Empower employees to negotiate their roles.
5. ROLE MODELS. You can’t be what you can’t see.
What can leaders do?
• Be intentional about appointing highly qualified women to
your executive team, corporate board, C-suite, and/or CEO
position.
6. SPONSORSHIP. Not enough leaders are sponsoring highly
qualified women by speaking up on their behalf.
— and increasingly, they are being asked about their plans
from a diversity and inclusion perspective. All of these fac-
tors are having on impact.
In a recent study, Catalyst found that just one year out
of an MBA program, women were earning $35,296, com-
pared to $42,918 for men. What are the implications of
this gap?
Ensuring equal pay and opportunities for women and men
boosts growth, promotes diversity and reduces economic
inequality. That’s the most important thing, and that would
be true whether we were talking about MBA grads or work-
What can leaders do?
• Recognize that sponsorship is something anyone can do.
• Carefully and humbly listen to women colleagues, which
can help them feel more included.
• Take a look at your “go-to” people at work; is it a diverse
group? Are you looking broadly and deeply for talent?
Are women included in the informal activities and socializing
that is also important for advancement?
7. SEXUAL HARASSMENT. Sexual harassment remains a wide-
spread problem, with at least one-quarter of women having
reported some sort of harassment on the job.
What can leaders do?
• Develop and implement prevention strategies such as
a highly-visible community education campaign.
• Ensure access to workplace reporting mechanisms.
• Train managers to report any complaints or observations
of harassment.
• Thoroughly investigate all complaints and take corrective
action.
8. NON-INCLUSIVE WORKPLACES. When women (or any employ-
ee) feel like outsiders in the workplace because of their unique
qualities or differences (e.g., gender, race/ethnicity, nationality,
age, religion, sexual orientation), they feel excluded.
What can leaders do?
• Create conversation ground rules and hold yourself and
your team accountable for following them.
• Develop a shared understanding and language about
inclusion and exclusion.
ers in the developing world. Simply put, income inequality is
bad for any economy.
In the research you cite, we followed 3,345 post-MBA
grads, and in addition to a substantial wage gap, we found
that women also, on average, started at a lower level than
men after completing their MBA. This is problematic, be-
cause it has knock-on effects. The wage gap starts out at
$8,167 dollars, but it widens over time. If you layer on top
of that the fact that woman generally get less access to ‘hot-
jobs’, like profit-and-loss responsibilities and international
assignments — jobs that get the attention of senior manage-
ment — many women tend to lower their ambitions and ‘opt
• Sign up for a free CatalystX/edX course, “Communication
Skills for Bridging Divides,” to learn simple skills to build
more inclusive workplaces,.
9. DOUBLE-BIND. The stereotype that ‘men take charge’
and ‘women take care’ puts women leaders in various
double-binds.
What can leaders do?
• Challenge yourself as to whether you are judging people
fairly. Reverse the gender of the person in question and see
if it makes a difference in your thinking.
• Expose employees to peers—including men—who are
willing to advocate for women leaders.
• Provide diversity and inclusion training to help employees
understand the effects of gender stereotyping.
10. LGBTQ+ PROTECTION. Misperceptions and exclusionary
behaviour can make LGBTQ women feel like the ‘other’ at work,
leading them to choose to stay in the closet by not disclosing
their sexual orientation.
What can leaders do?
• Take steps to be a visible ally so LGBTQ women and others
will know they can come to you.
• Protect the psychological safety of LGBTQ women at work
(and all employees), which will help them feel more included.
• Learn more about LGBTQ rights to help build a more inclusive
workplace culture and society.
rotmanmagazine.ca / 127
 The CEO of 3M ties the promotion and advancement of women
to a doubling of its share-price in the last five years.
out’ over time.
When women leave the corporate sector, they often go
into government, entrepreneurship or the non-profit sec-
tor, and when that happens, it is very difficult to re-attract
them to the corporate sector. At a broad economic level, this
means that, in effect, we have a less robust workforce at a
global level than we could have.
BMO Financial Group won a 2017 Catalyst Award for its
diversity and inclusion program. What makes it an exem-
plar?
The only way to win that award is to have undertaken a sig-
nificant initiative that shows sustainable progress over time.
It can’t just be a one-off, type of exercise. BMO has been
working on this for many years, and they are a great Cana-
dian story.
In terms of key take-aways from BMO, I would high-
light a couple of things. First, they have integrated diversity
and inclusion fully into their business strategy. Second, they
have had a huge commitment from senior leadership. The
Board — and in particular, CEO Bill Downe — talk about di-
versity and inclusion constantly, so it has become very much
part of the day-to-day culture. Third, they have embedded
this mindset into their performance management system:
There are now diversity and inclusion measures at all levels
of the organization, so people are being held accountable.
This approach has been critical to BMO’s success in mov-
ing its diversity and inclusion numbers at the Board, senior
executive and mid-management levels.
Other leading companies, like Tata Motors, GE Health-
care and 3M, have also been recognized by Catalyst. Talk
a bit about the lessons they offer.
In the case of Tata, what stands out for me is that they have
prioritized diversity and inclusion for a simple reason that
applies to most organizations: Because they recognize that
they have to start mirroring their customer base. In the re-
tail car business, 75 to 80 per cent of purchase decisions
are either made by, or heavily influenced by, women. Tata
realized that it did not have nearly the number of female
sensibilities throughout its value chain that it needed. For
them, that was the business case. They changed all of their
processes, whether it was at the plant level, product devel-
opment or various technical roles, to bring in more women
128 / Rotman Management Fall 2017
because they wanted to mirror their customer base. That’s
just smart business.
At GE-Healthcare, they were able to tie greater diver-
sity — and in particular, gender diversity — to their ability
to be more creative and innovative. They wanted to change
up their brainstorming processes to be more disruptive, and
they believed that by bringing in and promoting women into
different roles, they could achieve that. And they found that
to be true.
Another interesting example is 3M. Their CEO Inge
Thulin has spoken publicly about how they tie diversity and
inclusion — in particular, the promotion and advancement
of women — to a doubling of their share price in the last five
years. Thulin is very clear that this is not the only reason
the share price doubled; but he believes that the market has
looked at 3M’s practices and is rewarding it with a higher
share price. He recognizes that expectations of 3M’s perfor-
mance will continue to go up over time, but it is clear to him
that this is one of the top five reasons for the company’s im-
proved valuation.
What is the best way to build a strong pipeline of diverse
talent?
Fundamentally, you have to have a solid business model
with great leadership, so that people will be attracted to what
your company stands for. What is your corporate reputation?
What is the reputation of the leaders of your organization?
That is job one.
A second factor is, through our own millennial research,
we are seeing that younger people really want some sense
of purpose in their role. They want to see that what they’re
doing is adding value to the world. As a result, being able to
demonstrate that you are socially responsible will help you
to attract better, more diverse young talent.
Third, as far as the recruitment process goes, I would
advise people to think more broadly. Take a look at the pub-
lic sector, and maybe look to other countries for candidates.
Then, ensure that you remove as much unconscious bias
from your recruitment process as possible. If that means re-
moving names from résumés, do it; ensure that you’ve got
checks and balances in place.
Fourth, ensure that you’re offering the hottest job as-
signments to candidates beyond the usual suspects. Make
sure that you are reaching down into the organization,
looking for different ‘pockets’ of talent. And obviously, get
rid of any wage gaps that exist: Make sure there are clear ac-
countability systems for eliminating these gaps.
Many people believe that we have hit a plateau in terms
of progress on gender-diverse leadership. Do you agree?
I don’t, actually. To return to the statistic I quoted at the
beginning — regarding the movement of the top 100 com-
panies in Canada, from an average female board represen-
tation of 15 to 25 per cent — I believe progress is still being
made. There is lots of work to be done, but I don’t think
we’ve flat-lined.
The facts is , this type of change happens much more
slowly than people would like. That’s why we need to be
working inside organizations, identifying barriers and
breaking them down. If anything, Canada is well positioned
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to be the global leader in terms of workplace diversity and
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political climate today, the tone of our Federal and Provin-
cial Governments and the will shown by our largest compa-
nies, I am hopeful we can achieve that.
Tanya van Biesen (Rotman MBA ’00) is Executive Director of Catalyst
Canada, which she joined in October 2016 after more than two decades
of corporate leadership. She previously co-led the Financial Services
Practice at Spencer Stuart and was a key member of its Canadian
Boards Practice, focusing on executive search assignments. She also
led the firm’s Canadian Diversity Practice.
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 QUESTIONS FOR Andi Zeisler, Author and Co-Founder, Bitch Media

Q
&A A feminist thought
leader provides a critique
of ‘marketplace feminism’.
The term ‘feminism’ used to have negative connotations,
but today it seems to have mostly positive connotations.
How did this occur?
I wouldn’t say that is true across the board. In many places,
feminism still has the same — or even more — negative con-
notations. But a big part of the shift we are seeing is due to
who is identifying with feminism. In the last decade or so,
the Internet and social media have had a huge impact on
how young women learn about feminism, the context in
Interview by Karen Christensen which they learn about it, and the associations they have
with it. In the past few years, a lot of celebrities have begun
claiming it, so it’s become a much more of a popular way to
define yourself.
When I think about growing up in the 1980’s, my first
association with feminism was people making fun of femi-
nists — characterizing them as dowdy, humourless and

130 / Rotman Management Fall 2017

 Capitalism co-opts things that should be about
humanity and makes them about commerce.
frizzy-haired. Today, many young people are having their
first experiences with feminism through celebrities like
Beyoncé, Emma Watson or Taylor Swift. That is huge,
because these are positive associations. Being able to link
feminism to people who are successful, glamorous and
conscious about women’s issues is powerful, and that is a
huge change from previous generations.
You have described yourself as having a bad case of ‘fe-
male-empowerment fatigue’. Please describe this condi-
tion.
I have worked in this field for a long time, so I’ve been privy
to many of the debates around feminism — what it means,
who gets to be one, who doesn’t get to be one. I’ve definitely
had a lot more time than most people to consider what ‘em-
powerment’ really looks like. I think the fatigue has come
from seeing the concept of empowerment being co-opted
by market forces. When you consider the world in which
the word ‘empowerment’ developed, it was really about en-
abling under-served and marginalized populations to obtain
the tools required to change their situations. But over time,
empowerment slowly became a word that is largely defined
by how women consume products. That is kind of deflating,
but it’s a clear illustration of how capitalism works — how
it co-opts things that should be about humanity and makes
them about commerce.
Describe how some corporations profit off of women.
Through their advertising, these entities spend millions
of dollars trying to figure out how best to leverage their in-
fluence to lots of different demographic groups, and femi-
nism has been a very fertile ground for them. They basi-
cally employ people to help them figure out what people
care about. Ten or 12 years ago, it was environmentalism,
so that’s what they capitalized on; and in the past four or
five years, it’s been feminism and other more general pro-
gressive movements.
I’m of two minds about this. On the one hand, none of
it is new. Every social movement becomes vulnerable to
cooptation at the same time as it becomes highly visible —
which, of course, is important for social movements. But it
is kind of a double-edged sword. In general, companies have
made women feel that they are lacking in some fundamen-
tal ways — whether it be as mothers, as wives, as attractive
people, as sexual beings, etc. The sales pitch might have
changed — becoming more about being feminist or progres-
sive — but to me, that is just another sales pitch, because
these corporations don’t really care about progress. They
don’t have a mandate to make women feel good about them-
selves; in fact, they probably don’t want that to happen!
What is the smarter approach for companies to take?
I don’t know if a better approach exists, because it would
presuppose that corporations actually care about anything
other than capturing women’s eyeballs and dollars. When
people say to me, ‘Aren’t those Dove advertisements great?’,
my response is, ‘Well, what is the actual institutional stake of
that corporation in women’s equality? Where are their prod-
ucts made? How are they sourced? What is the staffing like?
Who’s on their board? What are their social practices? Do all
of those things line up with them actually caring?’
You can’t just look at the surface, because it doesn’t tell
the whole story. If a company is truly interested and has a
stake in gender equality, it has to come from its leadership.
You have said that when Dove’s ‘campaign for real beau-
ty’ started in 2004, it was very exciting; but since then, it
has fallen out of favour with you. Why?
When the campaign started, I noticed some really striking,
full page ads featuring women unlike any I’d ever seen be-
fore: There was a 90-year-old woman with lots of wrinkles, a
woman whose face was covered in freckles, and an extreme-
ly dark-skinned black woman. These images were startling
at first, because they so explicitly departed from western
rotmanmagazine.ca / 131
 Every social movement becomes vulnerable to cooptation
at the same time as it becomes highly visible.

cultural norms of beauty. The ads were meant to challenge
the idea of ‘how we look at women’, and how we use their
physical attributes to decide their value. There was no tradi-
tional branding copy on the ads — just questions like, ‘When
you look at this woman, do you see wrinkles or do you see
wonderful?’ That was definitely an interesting approach.
Dove even put out a position paper when it first
launched the campaign, and it was co-authored by Nancy
Etcoff, a Harvard researcher who has studied the culture
of beauty and consumerism for decades. So, the campaign
had some institutional heft. Over time, however, there was
more of a product push: The images were linked to the ac-
tual products Dove was selling, and it soon became clear
that the ads were just a new way to ask women to ‘measure
up’. Suddenly, they weren’t doing much to change the cul-
ture that they had purportedly set out to change. The mes-
sage seemed to change from, ‘Let’s redefine beauty,’ to ‘You
as an individual are more beautiful than you think you are’
— which shifted the onus to change mindsets from our cul-
ture back to individuals. It was basically saying, ‘If you don’t
think you’re beautiful enough, that’s on you, and your per-
ception of yourself needs to change; we can help you do that
with our products’. That is very different from, ‘We need to
change how we as a culture connect standardized beauty
with the value of women’.
In the U.S., the ascension of Ivanka Trump is an amaz-
ing example of how this idea has penetrated mainstream
culture. Ivanka has a new book out that is purportedly about
women and success at work, but all the reviews I’ve read are
noting the fact that the kind of feminism she’s talking about
is not in line with most women’s reality. The fact that reviews
in The New York Times and The Wall Street Journal are ac-
knowledging this — that never would have happened, even
10 years ago. So, feminism has evolved and the way that it’s
happening right now is exactly as I would want it to be.
For far too long, educated, white middle-class women
have set the terms with respect to what other women should
be concerned with. I don’t want feminism itself to look any
different: I just want people to make an effort to understand
it in all of its complexity and nuances.

If you had your druthers, what would the next wave of

feminism look like?
I feel like much of what feminism should look like actually
exists already; it’s just that it’s still not what the mainstream
culture wants to buy. If you look online, especially on social
media, at the way feminist discourse exists right now, there
is much more of a sense that feminism is not this mono- Andi Zeisler is the author of We Were Feminists Once: From Riot Grrl to
Covergirl, the Buying and Selling of a Political Movement (PublicAffairs,
lith that people have to pledge their faith to; instead, it’s an 2016). She is the co-founder and editorial director of Bitch Media,
evolving set of ethics that people have to constantly learn a non-profit feminist media organization whose mission is to provide
about and shift their expectations of. and encourage an engaged feminist response to pop culture.

132 / Rotman Management Fall 2017

FACULTY FOCUS Sarah Kaplan + Jan Mahrt-Smith, Rotman School of Management
Conversations
That Need to Happen
Two Rotman School of Management professors
have the type of conversation we need more of.
SARAH KAPLAN: Most of us recognize that
there is lots of inequality out there. My
thought is that in order to make change,
we’re going to have to talk about it — and
it can’t just be the people who are be-
ing disadvantaged talking amongst our-
selves; we also have to have conversations with the people
who have historically been in positions of privilege.
JAN MAHRT-SMITH: I fit the bill: I don’t think
I could have come from a more privileged
position in society — yet I never even re-
alized that I was privileged. I guess true
privilege is when you don’t even recog-
nize that you’re privileged.
SK: You do fit the bill, but at the same time, that doesn’t mean
you need to speak on behalf of all white straight men.
JMS: Great; I’ll speak for myself, then!
SK: I think we should view this conversation as a type of role
modelling, because it’s a difficult conversation for people to
have. Part of what I want to do is show how hard it is—but
also, that it’s worth trying. So, tell me, first of all, why you
were interested in having this conversation with me? What
is motivating you — given this background of privilege that
you have just illuminated?
JMS: It was triggered over the last two years or so by feeling
like there was an increasingly negative slant to efforts for
change by those with privilege — and how many of the things
we do as white men are either to correct a wrong, to avoid
a mistake or to liberate either side from the shackles of soci-
ety. As males, we’ve created this society where we’re sort of
‘stuck’ in our privilege, where we have to act in certain ways.
We have to defend ourselves and constantly worry about
somebody taking something away from us — but I don’t ex-
perience that. Every time I’m part of a conversation, I walk
out happier, because I have more tools, so the next time
I walk into a situation, I’ll be less stressed. I make friends.
I understand what relationships are about. So, I want to have
a conversation about how much less stressful and how much
richer my life is when I address my privilege.
SK: Can you tell me a little bit more about what makes it
stressful to be in these conversations?
JMS: It’s the fear of messing up — of saying something that
indicates that I’m still full of learned biases and prejudic-
es. Personally, I don’t like to be shown to have biases and,
of course, professionally, what if I say the wrong thing and
rotmanmagazine.ca / 133
 you turn around and report me to my boss? Are you going
to not talk to me for a couple of weeks because I’ve used the
wrong terminology? Now, I’m less worried about that, sim-
ply because I understand something about both who you
are, in terms of what groups you belong to, and where your
obstacles are, and also about who I am. I’ve learned that I
can mess up and I will be forgiven. And I’ve learned that if
you mess up, I can go to you and say, ‘This felt wrong, please
don’t talk to me like that.’ And that’s normal.
SK: I agree. I think it would be so much more powerful if we
all had the ability to engage in these conversations with an
understanding that we will make mistakes. I’ve had conver-
sations with other men who have also talked about it being
stressful in the ways that you described. And there’s a part
of me that wants to celebrate the men who are trying; but
there’s another part of me that feels like, ‘Oh, boohoo. You
feel bad; meanwhile, I’ve spent my entire life having to take
on board weird critiques, sexist comments, not getting the
promotion, being sidelined’. That other part of me thinks,
‘Why should I glorify or even appreciate those efforts, be-
cause they are small relative to the damage that the current
system has done?’ I personally really struggle with how to
balance that, because I’ve had so many conversations with
men who’ve said, ‘I felt at risk’ or ‘I’ve been criticized for try-
ing, so I don’t even know if I want to try anymore’. Do you
have a thought about that?
JMS: I do, and I worry about the same things. I walk in and
I’m welcomed with open arms to a discussion, and I walk out
thinking, ‘Okay, so now what am I supposed to do next, so
that this is not an empty gesture’? My two thoughts on that
are: First, I actually need to keep getting more involved. It’s
not a one-time thing where I get to say, ‘Okay I’ve spent my
time understanding, I have leant my voice of support, and
that’s it’. Sometimes I don’t see people going to the next step.
They feel like, ‘I’ve reached this minimum level of being a
champion for inclusion’, and they get stuck there. Second, I
have to start taking some real risks. I have to put something
of myself out there and be willing to go and be criticized.
SK: I agree. There’s a lot of movement right now to ‘involve
men’, and they do it with things like #GoSponsorHer or
whatever…
134 / Rotman Management Fall 2017
JMS: …which are non-risk kinds of activities…
SK: Exactly. To me, what’s so frustrating about those efforts
is that they are cost-free for the people undertaking them;
and what you’re saying is, ‘If I’m really going to participate
in this conversation, I have to do things that are actually
costly to me, or risky, or take my valuable time, or refocus
my attention away from other goals that I might want to
achieve’.
JMS: That’s right. And that’s what gets a little scary but maybe
that is where I just need to go next and realize ‘Hey, there is
a reward associated with this, as well’. I might lose, but there
will be something good and positive there, as well.
SK: I recently saw an interesting quote: When you’re accus-
tomed to privilege, equality can feel like oppression. Mean-
ing that, if you’re the one in a privileged position, making
equality happen may mean that you get fewer opportuni-
ties, and that there’s a different kind of language being used
that’s not the comfortable language for you. It may entail a
new way of interacting, a new way of characterizing what
leadership means, for which you don’t fit the definition. So,
some men…
JMS: …they would experience that as a taking away of oppor-
tunity…
SK: For them, the cost is real. What I don’t know how to ad-
dress are men who are just trying to get jobs, and maybe
they are the men who historically would have gotten the
job more easily. They feel stressed out. They think they’re
working hard and they probably are. But there are others —
women, ethnic minorities — who are working even harder or
are smarter and those people don’t want to lose out on those
opportunities either. I think what’s so beautiful about the
way you’ve been talking about it is that you’re saying it’s not
zero-sum, it’s just a good way to be in the world. But if we’re
really going to make this change, some people who have got-
ten where they’ve gotten because of privilege may not get
there anymore.
JMS: I think the only thing we can do is talk to them as in-
dividuals and say, ‘You, personally have a lot to gain by be-
ing part of this conversation’. I think the only real loss is if
you’re not trying to be part of it. If there’s any non-zero-
sum part to it, it is being engaged and viewing it as a skill
set to being able to navigate whatever the future landscape
looks like. For somebody to say, ‘I didn’t get this job be-
cause some woman got it,’ is basically admitting, ‘I don’t
yet understand what it takes to become a leader today and
that’s why nobody wants to hire me.’ One of the reasons
some people say equity and inclusion are important goals,
but then don’t act on it at all, is because deep down they do
not believe that this is the best way to run society.
SK: One approach comes from Kenji Yoshino who wrote
the book Covering… He’s a gay man, and he wrote about all
the different ways that you can be out, but still experience
pressure to not act ‘too gay.’ ‘So, you’re out, that’s cool, but
don’t wear a purple tie.’ Or, ‘You’re out, that’s cool, but don’t
teach about gay issues.’ This is called ‘covering.’ One of the
insights he offers in the book is that, if people can connect
to how they in their own lives have ‘covered’ in other ways
— whether it’s interest in a kind of music that’s not cool or
whether it’s being Jewish, or other ways that you cover for
characteristics that are out of the norm — then you can be-
come empathetic. You can find a way to see how, in your own
life, you have also not been able to be your fully authentic
self. So that’s one idea.
Another approach, which elementary school teachers
have taken on, is simple exercises such as having all the kids
wad up pieces of paper and throw them into a basket in the
front of the room. Of course, the kids who are in the front of
the room make the basket more often than those in the back.
When the teacher declares the winner to be a person in the
front, the kids in the back protest that ‘it’s not fair’ because
the winner was closer. Then, the teacher can have a conver-
sation about privilege. I feel like we should think about an
equivalent set of real experiences that we could give our stu-
dents or executives so they can empathize from the inside
and not just pay lip service.
JMS: I like the idea of actual experiences as opposed to con-
versations about ‘Go re-examine your life.’ We need to put
people in situations, where there’s something at stake but it’s
still safe enough for them to want to engage. Actually, I don’t
know if it needs to be safe enough, that’s a good question.
Does that defeat the purpose? Do you need to put something
at stake?
SK: If we think about ally-ship as leadership — and it is pretty
clear that it is — if you are not acting like an ally, then you
don’t have the required leadership skills. For me, the rub-
ber’s going to hit the road if — as a result of those conversa-
tions — people are, as you said, taking risks and doing things
that are different.
JMS: That’s my biggest worry: Can I live up to risking some-
thing? But that’s also where you come in. You’re going to
have to make us feel like we’re part of this struggle in some
way. I need to feel like I’m taking the risk as part of a group
that is there to be supportive.
SK: When you say, ‘You have to make us feel welcome’ or
‘you have to invite us,’ there’s a part of me that wants to say,
No: You need to go the extra mile to show me that you are
fighting the fight. Yes, I want to be in the conversation with
you, but at the same time, I don’t want it to be a situation
where, just because you took a little baby step, you deserve
some kind of award.
JMS: And I don’t want that award. I want, if and when, hope-
fully, I do take those risks, and I screw up …
SK: …I have to appreciate that that’s part of the experiment
and to be along for the ride with you.
Sarah Kaplan is Director of the Institute for Gender + The Economy,
University of Toronto Distinguished Professor of Gender and the
Economy and Professor of Strategic Management at the Rotman
School of Management.
Jan Mahrt-Smith is Academic Director of the Full Time MBA
Program and an Associate Professor of Finance at the Rotman School
of Management.
rotmanmagazine.ca / 135
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 Learn from
Each year, the Rotman School of Management
the best hosts almost 100 public talks by bestselling
authors, management executives and other
thought leaders.
Highlights of Fall 2017
September 21, 5:00-6:00pm
Behavioural Insights Speaker Series
Speaker: Anindya Ghose, Professor of Information, Operations,
and Management Science and Professor of Marketing, Stern School
of Business, New York University and Author
Topic: Tap: Unlocking the Mobile Economy (MIT Press, 2017)
September 25, 5:00-6:00pm
Gender and the Economy Speaker Series
Speaker: Anjuan Simmons, Technology Translator, Speaker and Author
Topic: “Being an Ally and Lending Privilege”
October 2, 5:00-6:00pm
History Speaker Series
Speaker: Steve Paikin, Anchor, “The Agenda with Steve Paikin”,
TVOntario and Author
Topic: Bill Davis: Nation Builder, and Not So Bland After All
(Dundurn, 2016)
October 3, 5:00-6:00pm
Rotman Management Magazine Speaker Series
4 Speakers: Stéphane Côté, Professor of Organizational Behaviour
and Director - PhD Program, Rotman
Sonia Kang, Assistant Professor of Organizational Behaviour, Rotman
Sarah Kaplan, Professor of Strategic Management and U of T
Distinguished Professor of Gender & the Economy and Director -
Institute for Gender & the Economy, Rotman
Tanya van Biesen (MBA ’00), Executive Director – Canada,
Catalyst Inc.
Topic: Inequality is the theme of the Fall 2017 issue of Rotman
Management. Four experts whose expertise is featured in the issue
will each present a 12-minute TED-style talk.
October 4, 8:00-9:00am
Health Sector Speaker Series
Speaker: Dr. Danielle Martin, Vice-President, Medical Affairs &
Health System Solutions and Family Physician, Women’s College
Hospital; Assistant Professor, University of Toronto and Author
Topic: Better Now: Six Big Ideas to Improve Health Care for All Canadians
(Allen Lane, 2017).
October 17, 5:00-6:00pm
Leadership Speaker Series
2 Speakers: Richard Nesbitt, Adjunct Professor of Finance and Advisory
Board Chair, Mind Brain Behaviour Hive, Rotman; former COO, CIBC
and Co-Author
Barbara Annis, Founding Partner, Gender Intelligence Group and
Co- Author
Topic: Results at the Top: Using Gender Intelligence to Create Breakthrough
Growth (Wiley, 2017)
October 24, 8:00-9:00am
U of T India Innovation Institute Speaker Series
Speaker: Anya Manuel, Co-Founder and Partner, RiceHadleyGates
LLC Strategy Consulting; Lecturer, Stanford University; former
Official Responsible for South Asia Policy, U.S. Department of State
(2005-2007) and Author
Topic: This Brave New World: India, China, and the United States
(Simon & Schuster, 2016)
November 2, 4:30-5:30pm
Integrative Thinking Speaker Series
2 Speakers: Roger Martin, Professor, Rotman and Co-Author
Jennifer Riel, Adjunct Professor, Rotman and Co-Author
Topic: Creating Great Choices: A Leader’s Guide to Integrative
Thinking (HBS Press, 2017)
November 13, 5:00-6:00pm
Behavioural Insights Speaker Series
Speaker: Adam Alter, Associate Professor of Marketing, Stern School
of Business, New York University and Author
Topic: Irresistible: The Rise of Addictive Technology and the Business
of Keeping Us Hooked (Penguin, 2017)
Never Miss an Event
Sign up to be notified about upcoming events at
rotman.utoronto.ca/events
©2017 Steelcase Inc. All rights reserved. Trademarks used herein
are the property of Steelcase Inc. or of their respective owners.

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