Discrimination is an important moral concern for all of us.
In the business world, the issue of discrimination goes beyond moral grounds. Although businesses’ main concern is profits, discrimination is also bad for business and the economy. U.S. Federal Reserve Chairman Alan Greenspan said in a recent speech that discrimination is unprofitable: “To the extent that market participants discriminate—consciously or, more likely unconsciously—credit does not flow to its most profitable uses and distribution of output is distorted,” said Greenspan. “In the end, costs are higher, less real output is produced, and national wealth accumulation is slowed.” In other words, everybody is better off without discrimination. When I speak to clients about globalization, I tell them that the concept implies respect and non-discrimination. We can never have a truly global economy if there are people in the world kept from taking part.
Discrimination exists and is a reality in the world of international business. In fact, much of the opposition to the globalization process comes from groups of people who feel they are being excluded unfairly from the benefits of more dynamic international trade. One example of inefficient discrimination is the way companies that operate in Mexico recruit their professionals. The typical preference is for bilingual college graduates from a private university. The vast majority of Mexicans cannot dream of paying the tuition of a private university. Because students from private universities have a special advantage, this preference creates a de facto class/race discrimination. Firms also lose out by practicing this policy of exclusion. In many fields, the best professionals in Mexico have been trained in public universities, as is the case with engineers, doctors and architects.
Another typical discriminatory practice is ageism, probably the most widespread form of discrimination in Mexico. It is virtually impossible to get an interview with a firm or institution if you are over 35 years old. Placement agencies seem to hold true the old-fashioned myth that “you can’t teach an old dog new tricks.” They seem to forget that old dogs often already know many of the tricks needed in order to be an efficient employee. What is worse, this age discrimination is often practiced in educational institutions, where one would hope higher moral values reign. One well-known university, for example, does not hire anyone over 35 as a permanent faculty member. An insider told me that the official reasoning behind this policy is that these applicants’ retirement pensions would not be sufficient to support a decent standard of living. That must be great comfort to the person not getting the job, but the practice also means that many highly qualified professors are not even considered. The university ends up offering a lower-quality education.
Greenspan is right. Discrimination is a drag on the economy and an obstacle to a successful globalized world. Management must learn to see this issue as crucial to their business, and not simply as a public image concern. Managers should evaluate their daily actions, their assumptions, and discover if they are unconsciously practicing discrimination. Doing this is not easy, as it requires a major shift in thinking. But we have no choice: It’s a business imperative.