Why Employer Discretion May Lead to More Effective Affirmative Action Policies

Abstract

A serious problem with existing affirmative action policies, and the emphasis here, is the difficulty of signaling workers of their relative standing within the organization. Not only does this adversely affect worker incentives, but it fosters discord in the workplace as unsuccessful nonminority candidates are allowed to believe, frequently in error, that in the absence of affirmative action they would have advanced. We contend that the long-run effectiveness of affirmative action policies can be enhanced by allowing employers to choose between minority promotion and minority education. By granting employers greater discretion, promotion decisions will now reveal information that credibly informs workers about their relative qualifications for advancement. A truly outstanding nonminority candidate will advance regardless of the affirmative action constraint, whereas a mediocre or inferior nonminority will probably not. In this manner, successful minority candidates can infer with some probability that they were no less qualified than the unsuccessful, nonminority candidates. Symmetrically, a unsuccessful nonminority candidate can infer with some probability that they would not have advanced even in the absence of the affirmative action constaint. The net effect is less discord and higher productivity in the workplace coincident with what workers will perceive as a reward-for-performance criterion for advancement.