The business case for diversity and the perverse practice of matching employees to customers

Purpose – The typical “business case” for workforce diversity management in the USA implies that matching the demographic characteristics of sellers to buyers increases firms' productivity and profitability. This paper aims to explore the consequences for both employers and employees of following that guidance. Design/methodology/approach – The paper statistically analyzes employment data on African Americans from one large US retailer and from the US advertising industry. Findings – In both cases analyzed, a badly conceived business case for diversity perversely translated into discriminatory employment practices, starting with stereotype‐based segregation in work assignments and spreading to consequent inequality in other employment outcomes such as earnings and promotions. Such patterns illegally limit employment opportunities for women and race/ethnic minorities. Simultaneously, they fail to promote customer relationships and sales. Practical implications – To avoid negative effects on both business and societal objectives, employers need to be guided by a business case promoting workplace inclusion, not “diversity without inclusion”, which buyer‐seller matching represents. Originality/value – The business case for diversity is often considered unimportant “boilerplate”. This paper alerts employers to the importance of articulating, and then following, a correct business case.