Companies frequently focus on racial diversity in their hiring practices. But hiring is not enough—retention is critically important. And the composition of teams at work can impact that retention in surprising ways.
Evidence from a new study suggests that Black women in teams with a greater number of white peers may have worse job outcomes. This finding may offer a starting point for improving retention and diversity in elite firms.
Elizabeth Linos, the Emma Bloomberg Associate Professor for Public Policy and Management, and colleagues Sanaz Mobasseri from Boston University and Nina Roussille from MIT studied 9,037 inexperienced new hires in a large, elite professional services firm from 2014 to 2020, focusing on the effect of the racial makeup of coworkers on employees’ turnover and promotion.
The researchers examined administrative employment data and billing records over the course of those seven years for Black, Asian, Hispanic, and white women and men. Studying retention and promotion rates, they saw that the largest turnover gap was between Black and white women, at 8.9 percentage points. In addition, Black women were the only group whose turnover and promotion were significantly affected by the racial identity of their coworkers. The study found that a 14 percentage point increase in the share of white coworkers was associated with a 10.6 percentage point increase in turnover for Black women. Linos and her colleagues write, “No other employees of color, even similarly sized numerical minorities such as Black men or Hispanic women and men, were negatively affected by their initial white coworkers.”
These negative job outcomes may be due to several reasons. “Black employees, and particularly Black women, reported numerous ways in which interacting with their majority white coworkers negatively influenced their participation, and identified challenges related to their task assignments and performance evaluations,” the researchers write. All these factors can lead to Black women being labeled as low performers in their careers and can result in more turnover over time. In the administrative data, the researchers find that Black women who were initially assigned to whiter teams report fewer billable hours and more training hours in subsequent periods, and were more likely to be labeled as low performers in their first performance review.
However, turnover rates for Black women decreased when they worked in groups with more Black colleagues. “We find that having more Black coworkers significantly decreases the turnover of Black female employees, and no other gender and race group,” Linos and colleagues write. “This is in line with a common finding in the literature that having more similar peers (in this case, Black coworkers) can have a positive effect on retention.”
“Retaining Black employees in elite jobs is as important as recruiting them,” the researchers conclude. “Our findings call for an increased scholarly and managerial focus on the longer-term impact of conventional staffing and promotion systems that inherently rely on peers, shedding light on their role in perpetuating racial inequalities in the workplace.”