Mandating change: The impact of court-ordered policy changes on managerial diversity

Although complying with and monitoring court-mandated changes in organizations' policies following employment discrimination lawsuits can be costly to both employers and taxpayers, little is known about the impact of such mandates on increasing sex and race managerial diversity in organizations. Using data on approximately 500 high-profile employment discrimination lawsuits resolved in U.S. federal courts between 1996 and 2008, the authors estimate the impact of court-mandated policy changes on shifts in the presence of white women, black women, and black men in managerial positions. Policies designed to reduce bias expand opportunities for white women but not for other demographic groups. By contrast, opportunities in management for all groups expand when policies are designed to increase organizational accountability by establishing specific recruitment, hiring, or promotion plans and monitoring arrangements. Policies designed to increase rights' awareness are associated with declines in managerial diversity. Notably, compared with verdicts and settlements with modest penalties, those with the most costly monetary payouts do not expand managerial diversity; and in fact, they can backfire.