Business

The Diversity Hire Dilemma: How To Get Paid Based On Identity, Not Merit

Now that the Supreme Court has outlawed affirmative action in college admissions, it’s time to look at the next layer of affirmative action: getting a job based on identity versus merit. This is the diversity hire dilemma some of you or your children might one day face.

At the end of the day, the whole point of getting into the best college possible is to get the best job possible. Sure, some might argue the purpose of college is also to gain status, grow a powerful network, and find a spouse with similar goals. That works too.

However, all roads lead to being able to make enough money to live a good life. Isn’t it fascinating how almost everything is personal finance related?

Personally, I wouldn’t want to be a diversity hire because that would be insulting if I found out. I’d rather be hired based on my skills and achievements.

But as a parent, maybe I wouldn’t mind if my kids were diversity hires so long as they didn’t find out. Ah hah! What a contradiction!

The goals of this post are:

  • To explore where each of us draws the line between getting ahead based on identity or merit
  • To question whether our actions are consistent with our thoughts or whether we are just virtue signaling
  • To recognize not everybody has the same opportunities and to have a discussion on how to make things more equitable
  • To understand how far parents are willing to go to give their children a leg up in society
  • To provide a big picture framework on how to take advantage of what society wants
  • To help do away with the stereotype that all underrepresented people are diversity hires

During a parent outing one day the topic of being a diversity hire came up. The question was whether you would be OK being hired based on your identity versus your performance and skills.

Everybody responded they’d rather be hired based on their merits. After all, we can’t control how we were born. We’d rather be hired based on what we can do and have our efforts recognized. To be hired to help fill some quota would feel icky.

At the same time, due to structural inequities and economic disadvantages, many people simply don’t have the same opportunities. Therefore, we should actively seek to give these people a chance. Otherwise, the rich and privileged simply get richer and more privileged.

One parent chimed in that if they were a diversity hire, they’d fear their colleagues might discredit their skills. The same thing goes for their kid getting into college.

The parent would hate to have an aura of suspicion from other parents and students thinking her kid got in based on her identity or legacy status versus her kid’s achievements.

Transparency In Grades, Test Scores, Salaries

She argued the easiest way to eradicate the suspicion of people getting into college based on identity is to publish every student’s grades, SAT scores, and extracurricular achievements for everyone to see. This way, students who feel scrutinized can prove they deserve to be there just like anybody else.

With full transparency, the admissions office is also held accountable to following a meritocratic process. Parents, students, and outsiders can judge for themselves how much of a student’s admission was due to identity or achievement.

The parent also argued the same transparency can be taken a step further with job salaries, consulting rates, book advances, speaking fees, and more. If we publish what everybody makes and the revenue they bring in, pay anomalies can be rectified.

With full money transparency, those who are getting underpaid can gain more ground. However, those who are getting paid far above average may object.

Example Of Transparency

Stanley Zhong earned a 3.97 unweighted and 4.42 weighted GPA, scored 1590 out of 1600 on the SAT’s and founding his own e-signing startup RabbitSign in sophomore year and was rejected by 16 out of the 18 colleges he applied to. Tough!

On the other hand, oftentimes when the media profiles students who get into all the top universities they apply to, they don’t reveal the student’s grades, test scores, and extracurricular activities. But to avoid the students facing suspicions about whether they are diversity admits, the media should reveal the details.

Diversity hire dilemma - Stanley Zhong, high school student with 4.42 GPA and 1,590 SAT got rejected from 16 colleges out of 18

Pride Says I Don’t Want My Kids To Be Diversity Hires

I’m worried about my kids getting their first good jobs. Therefore, maybe I’m OK with them being diversity hires. As someone currently looking for a job after years of retirement, I understand firsthand how difficult landing one can be today. I shudder when thinking about what competition may be like 20 years from now.

I just want some organization to give my kids a chance to compete. Once they’re in, it’s up to them to flourish.

However, I don’t want my kids to be hired or advanced due to their identity. This may be pride talking, but it is also to protect them from feeling like frauds if they one day realized they hadn’t made it on their own.

If they found out a big reason why they were hired was due to their identity or connections, I fear it would hurt their self-confidence. Maybe they would feel grateful for getting an undeserved opportunity. At the same time, however, maybe they’d feel guilty for taking a spot from a more deserving individual.

It is also possible they could convince themselves they weren’t diversity hires. Or they might not care one bit given they’re getting ahead. The mind has a fantastic ability to trick us into believing anything.

Don’t Be So Naive About The Way The World Works

Although I’m assuming most of us don’t want to be rewarded based on our identity or connections, that’s simply not the way society works.

Even in a capitalistic society, where meritocracy supposedly reigns supreme, people are always trying to find ways to get ahead beyond plain old hard work.

I’ll give you a perfect little example below. Although it sounds nice to want a level playing field, it is never going to happen. It is only rational to use your money and network to get ahead.

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Learning How To Ride A Bike

On October 1, 2022, I made a promise to teach my then 5.5-year-old son how to ride a bike by the new year. If necessary, I would take him to an open space every Saturday for 13 weeks in a row.

It didn’t matter how much my back would kill me from hunching over while pushing and holding him from behind. I would help him learn how to ride a bike, gosh darn it!

One day, I arranged a playdate to have some kids learn how to ride bikes together. It turned out all of the other boys already knew how to ride bike. As the boys were riding around the blacktop, my boy was just chasing after them on foot.

Yikes, I felt bad he was behind. Learning how to ride a bike simply hadn’t been a priority for us until then.

Private Lessons Route Instead

It turns out all of the parents had hired a bike teacher to teach their kids. The parents spent between $100 – $250 to teach their boys how to ride and save their backs at the same time.

One of the mothers sheepishly asked if I wanted the bike teacher’s contact information. I stubbornly said no. I told her, “I’m determined to teach my boy how to ride a bike by the end of the year. And only if I fail will I reach out.”

My pride was talking.

I didn’t want to make the parents feel bad for hiring a bike teacher. So I tried to joke, “If my boy learns how to ride a bike from me, then he can never say I didn’t do anything for him in the future!”

A couple of moms laughed.

Don’t Be Stubborn, Utilize Your Resources

What I realize now is that my stubborn pride held back my son from learning how to ride a bike as fast as others.

By not learning how to ride a bike more quickly, he missed out on bike riding playdates. That stinks to be excluded. Maybe I should have hired a bike coach. I could afford it.

Will my son feel bad that I paid someone to teach him? I doubt it. Instead, he’d probably feel happy to learn how to ride a bike sooner and ride around with his friends!

Didn’t Give In To Peer Pressure

Too bad I’m selfish.

I didn’t want to miss out on the magical moment where he thinks I’m still pushing him from behind, but I’ve already let go.

Some believe families should wait until all families can afford to pay a bike teacher $100 before paying for one themselves. This way, all kids will compete on a level playing field. But we all know this will never happen.

Families will use whatever resources they have to give their children a leg up. Hence, from a competitive standpoint, it’s probably best if I stop being so stubborn.

Take Advantage Of The System As A Diversity Hire

Most people will say they don’t want to be a diversity hire. But I bet most people will happily accept outsized pay for their identity. If companies want to overpay for diversity, then let them!

For example, let’s say the average salary for your job is $100,000. But because a company is looking for more people who look like you, they are willing to pay you $200,000!

Are you really going to turn down a much higher salary even though you aren’t getting paid based on merit? Probably not. Most people will rationally take the money, whether they think they deserve it or not.

As a financial freedom seeker, one of your goals is to try and earn as much money as possible, by whatever legal means necessary. If the system wants to reward you based on your identity instead of on merit, then it is up to you to take advantage!

As A Diversity Hire, Seek To Join Large Organizations

The best way to take advantage of the system is to be a diversity hire at a large organization.

Large organizations have more resources, larger balance sheets, and greater profitability. Large organizations are also much less efficient. Hello meetings upon meetings! Therefore, they are more willing to pay diversity hires far above average to meet diversity objectives.

If you are a diversity hire in a large organization, you are more easily able to camp out or quiet quit. You won’t be as heavily scrutinized for not performing up to your pay. You could be well qualified, but you don’t have to be.

Think about the character Big Head posing as a professor in the TV show, Silicon Valley. He just kicked back in his office and made big bucks!

As A Diversity Hire, Do Not Join Small Organizations

The smaller the organization you join, the more responsibility you will have. Think being a startup employee who has to juggle multiple roles at a time. If you work at a small organization, it is much harder to hide poor performance.

If your performance does not meet standards, after a while, your colleagues will start resenting you. More importantly, business will suffer. During bad times, the people without the best skills tend to get laid off first.

Also be careful about becoming a solopreneur. As a solopreneur, there is absolutely nowhere to hide. Stuff only happens if you make it happen. You can’t rely on your firm’s reputation or huge marketing budget to do your job for you. You can only depend on your own ingenuity and hustle.

The same thing goes for being a professional investor. You’re either outperforming and making money or you’re underperforming and losing money. The stocks, real estate, and other risk assets don’t care what you look like!

I Was Probably A Diversity Hire And It Created Self-Doubt

When I joined Goldman Sachs in 1999, I knew I was a nobody. The only reason why clients picked up the phone was because I was calling from Goldman Sachs.

I probably was a diversity hire given there weren’t many Asian people in the equities department. I also interviewed at a career fair in Washington D.C. where most of the students were minorities.

In 2010, I had the opportunity to join CICC, a nascent Chinese investment bank that had recently set up shop in New York City. Even though I had 11 years of experience, part of the reason why I didn’t take the attractive pay package was my fear of underperforming. If I had been more confident in my abilities, I probably would have returned to New York City for more money.

In the back of my head, I always had some self-doubt about my abilities. Just the thought I could have been a diversity hire undermined my confidence. The only way I could find out whether I could earn on my own was to take a leap of faith in 2012 and do my own thing!

The negative of being aware you may be a diversity hire is potential impostor syndrome. As a result, you might be afraid to try new things.

Make More Money By Being Rational, Not Delusional

If you believe everything is rational long term, like I do, then you might as well rationally take advantage of the system. If you don’t, someone else will. Having honor and pride may only throttle your full potential.

If companies want to overpay someone to create more diversity, take advantage. Nobody is forcing the company to do anything. The company is acting rationally because it believes diversity will attract more talent, create a better work atmosphere, and ultimately boost business. You can use the extra money to get one step closer to financial freedom.

The key is to be aware that you could be a diversity hire. While you’re earning more than others, do your best to improve your skills and stay humble. Think of your diversity hire role as an incubation period for you to catch up to non-diversity hires with greater skills.

If colleges want to set different admissions criteria for different identities, take advantage. Once you get in, gain all the spoils of a prestigious degree.

You don’t have to prove to anybody your academic achievements are worthy because your school achievements are private. In fact, you might become more coveted by employers and make more money once you graduate.

The only benefit of going the 100% meritocratic route is the feeling of self-satisfaction. Unfortunately, self-satisfaction can’t pay the bills!

Life isn’t fair. You’re either going to complain or you’re going to do something about the situation.

Reader Questions and Suggestions

If you knew you could make a lot more than average for being a diversity hire, would you accept the role? What’s the best way to take advantage of your identity to earn maximum money? Are you OK with your children being diversity hires?

If you’re looking to retire early or leave a job with money in your pocket, pick up a copy of How To Engineer Your Layoff. It will teach you how to negotiate a severance so you can do what you want. Use the code “saveten” to save $10 at checkout.

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