Supply Chain Management

Are Companies Sincere When They Wave the Pride Flag?

What companies can do to prevent their strategies for diversity from ending in a PR disaster

Jan Walsken - June 09, 2022

June is here again! And that means that companies are giving both their social media logos and products a splash of rainbow color to promote tolerance. But as Jan Walsken (of the Chair of Logistics and Services Management at WHU – Otto Beisheim School of Management) knows, such actions alone are not enough to earn credibility. His pilot study, summarized in “Wirklich besser als nichts? Das Risiko von Virtue Signaling in der Unternehmenskommunikation über Diversitätsmanagement” [Truly Better Than Nothing? The Risk of Virtue Signaling in Corporate Communication on Diversity Management], concludes that poor diversity management can lead to a company’s actions being deemed disingenuous—and that can quickly turn into a PR nightmare.

Successful diversity strategies are multidimensional, requiring a certain level of social tact and a future-focused perspective. And planning starts with the various ways that diversity itself manifests.

Companies underestimate the complexity of diversity management

The non-governmental organization Charta der Vielfalt notes seven core “dimensions” of diversity: age; ethnic origin and nationality; gender expression and gender identity; physical and mental abilities; religion and world view; sexual orientation; and social background. Each of these dimensions requires its own strategy. Participants in the pilot study were able to choose the dimensions that best interested them. They then received a detailed diversity and inclusion (D&I) statement, in which they could select separate factors that were most relevant to them. For example, the participants who showed interest in the LGBTQ+ perspective chose the factors “unconscious bias training,” “blind recruitment,” and “advisors for LGBT+ and queer people” more than other participants did. Comparatively, those who showed interest in the POC (person of color) perspective attached importance to the “zero tolerance for discrimination” factor.

Communicate engagement and avoid doing harm

In the pilot study, participants were also shown various D&I statements from a fictitious company and asked to determine which content was particularly important to them. They were also asked whether they thought the company committed to the cause, was indifferent to it, or showed signs of virtue signaling. Then, they were shown fictitious newspaper articles describing discriminatory actions that allegedly took place at these companies. Those who felt the company was truly committed to diversity were more likely to attribute the allegations to isolated incidents of misconduct. By contrast, when the participants deemed the company’s D&I statement superficial or considered it evidence of virtue signaling, they were more likely to blame the organization as a whole for the misconduct.

The D&I statement regarded as insincere echoed what many companies typically communicate on their website: these companies advocate openness and equality and want all employees to be able to live up to their full potential. As the pilot study has shown, such statements can backfire. In particular, participants who noted their interest in LGBTQ+ issues were more thorough in their assessment. In fact, they tended to judge the superficial statement more strongly, deeming it a clear sign of non-commitment.

A poorly conceived diversity strategy can be damaging—and also help the competition

Any diversity strategy that fails to address the individual needs of the people is insufficient and could be interpreted as virtue signaling. This alone makes diversity management more complex and costly than many companies may imagine. Competitive factors are often the driving force behind the conception of many diversity strategies—and companies often only do the bare minimum, e.g., painting their corporate logo in pride colors to show support for the LGBTQ+ community. The results of the pilot study, as well as numerous case studies concerning UEFA, Ben’s Originals (originally known as Uncle Ben’s), Nike, and Barilla, show two things: First, any company risks enormous damage to its reputation the second the public sees it behaving in a socially unacceptable way that contradicts the promises they may have made earlier. This can lead to the end of advertising campaigns and the discontinuation of whole product lines or a coerced rebranding. Second, such controversies give competitors a chance to prove their own level of commitment and present themselves as being morally superior. In the end, the damage caused by an undetailed diversity strategy (i.e., one that does not take all parties into account) can become a marketing opportunity for the competition.

Tips for practitioners
  • Don’t promote using social symbols unless there is true commitment behind your actions! You would be running the risk of a PR nightmare.
  • If your company is active in diversity, the opposite will apply: Make your commitment known to the public to bolster its authenticity. Show on your website or social media how you distinguish yourself from others through your engagement, how this is implemented in a target-group-specific way, and where it is reflected in your company’s daily proceedings.
  • Take into account the evaluations performed by reputable organizations such as Charta der Vielfalt or PRIDE Champion when assessing your strategy for diversity. By doing so, you can avoid any misguided strategies and send a positive signal to the outside world.
Literature reference and methodology

Jan Walsken contributed the chapter “Wirklich besser als nichts? Das Risiko von Virtue Signaling in der Unternehmenskommunikation über Diversitätsmanagement” [Truly Better Than Nothing? The Risk of Virtue Signaling in Corporate Communication on Diversity Management] to the book Statussymbole im Wandel [Changing Status Symbols], published by NOMOS. The text summarizes both a pilot study and a discussion on the scandal surrounding the city council of Munich’s request to illuminate the famous local stadium in pride colors. The UEFA denied this request and received massive backlash. The “Sign for an Equal Game” campaign initiated in 2019 by the UEFA to promote tolerance in soccer—which made use of the pride flag—was dismissed as hypocritical.

  • Walsken, J. E. (2022): Wirklich besser als nichts? Das Risiko von Virtue Signaling in der Unternehmenskommunikation über Diversitätsmanagement, in: Gierke, L. A. & Gerpott, F. H. (Hrsgg.), Statussymbole im Wandel. 143-168. Baden-Baden.
Author

Jan E. Walsken

Jan E. Walsken is a doctoral student at WHU’s Institute for Logistics and Services Management and a member of the PRIDE Champion advisory board. During his time studying at WHU as an undergrad, he founded the Diversity at WHU group to give topics relevant to diversity a platform on campus. In his dissertation project, he focuses on experimental motivation theory.

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