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As Starbucks closes stores for racial bias training, experts warn the effort may fall short

While the coffee chain gets kudos for managing a P.R. crisis, a bevy of research suggests that culture can't be changed in one afternoon.

Starbucks Chairman and CEO Howard Schultz presents during the Starbucks 2016 Investor Day meeting, in New York, Wednesday, Dec. 7, 2016. CREDIT: AP Photo/Richard Drew
Starbucks Chairman and CEO Howard Schultz presents during the Starbucks 2016 Investor Day meeting, in New York, Wednesday, Dec. 7, 2016. CREDIT: AP Photo/Richard Drew

Later this Tuesday afternoon, java cravers across the country won’t be able to pop into one of their local Starbucks for a caffeine jolt because the company’s baristas will be on a break from serving up lattes, cappuccinos, and steaming cups of joe. Instead, every U.S. employee of the Seattle-based chain will be learning how to spot hidden biases and prejudices that risk the reputation — and the profits — of the company.

The company was recently exposed to just such a risk in the middle of April, when an employee at a Philadelphia Starbucks called the police two deal with two black men — Donte Robinson and Rashon Nelson — accused of “loitering” in the coffee shop. The men said a store manager called the police after they were denied the use of a key-code locked restroom and they sat down without ordering anything. Robinson and Nelson, who were actually awaiting a third colleague to join them for a sit-down meeting at the coffeehouse, were collared by police on the scene, their embarrassing arrests making national — and viral — news.

Robinson and Nelson reached a settlement with the city for $1 each and will partner with city leaders and a nonprofit organization to develop a program to award $200,000 to young entrepreneurs, said city spokesman Mike Dunn. Separately, Robinson and Nelson reached an undisclosed financial agreement with Starbucks that included a deal for the coffee chain and the men to “develop specific actions and opportunities.”

And so, in a show of its corporate contrition and resolve to combat racial discrimination in its stores, the Seattle-based chain will temporarily close some 8,000 company-owned locations — forgoing an unknowable millions of dollars for an afternoon’s lost sales — to administer a four-hour diversity training session to every single one of its 175,000 employees.

But is this sort of racial bias training really the solution for what ails Starbucks, or other firms, who find their operations threatened by disclosures of racism?

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Experts with broad experiences in corporate crisis management and who have counseled firms dealing with charges of racism similar to those leveled at Starbucks have praised the company’s top executives — notably, CEO Kevin Johnson and Executive Chairman Howard Schultz — for mounting an aggressive public relations campaign that has profusely signaled both the company’s outrage over the arrests and their desire to seek a means to contain any damage to the company’s image.

But those experts with whom I recently spoke were nonetheless uniform in their belief that Starbucks will need to do much more than simply force employees to swallow a single-shot, mandatory diversity class to inoculate its operations from future damage. What’s needed, they say, are broad, sweeping culture changes that foster a corporate-wide understanding and embracing of the nation’s growing multiculturalism.

“Diversity training in isolation does not work and there’s some evidence that it creates a backlash in the workplace,” Cyrus Mehri, a Washington, D.C.-based civil rights lawyer, said in an interview.

Mehri knows what he’s talking about, having litigated some of the nation’s largest and most significant racial and gender disparity cases, including the Roberts v. Texaco Inc. case which led to a $176.1 million award in 1997 for discrimination, and Ingram v Coca-Cola Company, which in 2000, resulted in a $192 million settlement.

Both of those cases set records for amounts paid by companies in discrimination claims but didn’t include mandatory diversity training programs. Instead, Mehri said, other forms of accountability — such as diversity task forces and linking employee pay to equal opportunity performances — were key components of the settlements.

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“There has to be accountability for diversity trainings to work,” Mehri told me. “There has to be game-changing interventions from the top all the way down. All too often, diversity training is effective at some consciousness raising, but lacks the accountability. If diversity training comes across as blaming or checking the box of legal compliance, then it won’t work.”

Indeed, there’s ample evidence — both academic research and anecdotal accounts — that suggests diversity training fails to prevent racial bias from damaging the interactions among companies, employees, and customers.

Researchers have been interested in diversity training programs for decades. Their concerns have reflected similar anxieties within C-suites as a rash of expensive bias-based lawsuits savaged corporate balance sheets.

For example, in their landmark 2016 study of diversity programs, titled “Why Diversity Programs Fail,” Frank Dobbin and Alexandra Kalev noted that in the early 1990s and early 2000s, “Morgan Stanley shelled out $54 million, and Smith Barney and Merrill Lynch more than $100 million each to settle sex discrimination claims.” And yet, Dobbin and Kalev discovered, “in 2007, Morgan was back at the table, facing a new class action, which cost the company $46 million.”

“In 2013, Bank of America Merrill Lynch settled a race discrimination suit for $160 million,” they noted, “Cases like these brought Merrill’s total 15-year payout to nearly half a billion dollars.”

Such big-ticket suits have prompted Wall Street firms and other bastions of traditional white exclusivity to dabble in diversity training programs and other schemes to mitigate against bad publicity and expensive settlements. Yet, as Dobbin and Kalev reported based on their analysis of 30 years of data and more than 800 interviews with executives and managers in some 800 U.S. firms, as more and more companies have implemented diversity programs, few can actually demonstrate significant results in terms of truly diverse workforces or improved customer relations. Dobbin and Kalev write:

It shouldn’t be surprising that most diversity programs aren’t increasing diversity. Despite a few new bells and whistles, courtesy of big data, companies are basically doubling down on the same approaches they’ve used since the 1960s—which often make things worse, not better. Firms have long relied on diversity training to reduce bias on the job, hiring tests and performance ratings to limit it in recruitment and promotions, and grievance systems to give employees a way to challenge managers. Those tools are designed to preempt lawsuits by policing managers’ thoughts and actions. Yet laboratory studies show that this kind of force-feeding can activate bias rather than stamp it out. As social scientists have found, people often rebel against rules to assert their autonomy. Try to coerce me to do X, Y, or Z, and I’ll do the opposite just to prove that I’m my own person.

An examination of the history of diversity programs offers insight as to how and why these programs continue to exist, despite their unproven track record of results. The earliest diversity programs in U.S. companies arose in the years following World War II, as servicemen returned home to find women doing the jobs they’d left behind to fight overseas.

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In her recently published book, That’s What She Said, author and journalist Joanne Lipman recounts a 1959 employee training film called “The Trouble with Women,” in which a male employee expresses displeasure to his male boss for hiring a woman. “You’ve had your little joke,” he says. “I asked for a man.” The McGraw-Hill film was an early attempt — if antiquated by today’s standards — to help men accept the fact that, in 1950, women accounted for a then record 33.9 percent of the civilian workforce, according to Bureau of Labor Statistics figures.

Lipman told me in an interview that diversity training programs gained increasing favor among corporate executives during the 1970s, as black Americans, spurred on by affirmative action programs, encountered hostile work environments as they entered previously all-white workplaces and brought suits to force their employers to treat them more equitably.  “Diversity training started as a reaction to their lawsuits,” Lipman said. “Companies embraced them for reasons of legal compliance.”

Early into the 21st century, as the nation’s top executives began to recognize the demographic changes sweeping across the nation, their efforts to foster diversity morphed from merely avoiding court settlements toward developing strategies to attract new markets, all of which meant fostering improved relationships among previously overlooked customers. For example, Lipman noted that Silicon Valley companies, properly criticized for their lack of diversity in hiring, have redoubled their efforts to to do better on that front because of insistent customer demand. “What they need to do, really need to do, is overhaul their culture,” she told me. “Culture change needs to be set at the top of the organization and it needs to be set everyday, all day. It’s a business necessity.”

This is particularly true at Starbucks, which relies on a constant flow of customers eager to belly up to its counters on seemingly every urban street corner, airport concourse, and suburban strip mall. The company’s marketing strategy has, in recent years, tilted toward progressive causes including environmental concerns and, ironically, improving race relations. In 2015, the company mounted an ill-fated “Race Together” campaign that encouraged its baristas to encourage racial dialogue with customers as they waited for their beverages. It didn’t go as they hoped: Fast Company described the effort as “a PR disaster.”

“We made a tactical mistake. So what?” Schultz told Fast Company. “We’re moving forward.”

Now, in the wake of last month’s police-involved overreaction in Philadelphia, Starbucks has embarked on a yet another, full-scale effort, hoping to avoid its past mistakes in the troubled waters of American race relations. Starbucks’ executives made a big show of announcing today’s diversity training as its response to the arrests, effectively putting an end to calls for a boycott and budding protests in the immediate aftermath of the incident.

“I’ve spent the last few days in Philadelphia with my leadership team listening to the community, learning what we did wrong and the steps we need to take to fix it,” Starbucks CEO Kevin Johnson said in the news release announcing the diversity training sessions. “While this is not limited to Starbucks, we’re committed to being a part of the solution. Closing our stores for racial bias training is just one step in a journey that requires dedication from every level of our company and partnerships in our local communities.”

Similarly, Schultz, who stood with Johnson and other corporate executives to meet with the arrested men and others in Philadelphia, said:  “The company’s founding values are based on humanity and inclusion. We will learn from our mistakes and reaffirm our commitment to creating a safe and welcoming environment for every customer.”

An early glimpse into the training session curriculum, offered last week by Starbucks officials to employees and media, revealed several components to this public relations strategy, including a voluminous guidebook, video presentations, and changed technologies for future, in-store anti-bias training programs.

The video provided by the company for public consumption in advance of Tuesday’s training sessions shows Johnson and other unnamed Starbucks employees discussing the challenges of dealing with diverse groups and individuals who may come to the firm’s coffee shops. Regardless of who enters the stores, Johnson said at one point in the video, “my hope in gathering us is that Starbucks can become a place of welcoming, of warmth and of inclusion for all.”

The training video also includes messages from Schultz, hip-hop recording artist Common, and a short documentary film produced by Stanley Nelson, who specializes in reporting on the historic experiences of black Americans. The company has denied all media requests to sit in on the actual training sessions.

John Relman, founder and director of Relman, Dane & Colfax, a Washington, D.C. public interest law firm, applauded Starbucks’ leadership team for its deft response. “It was a smart move and a text book case for how to deal with a crisis,” he said in an interview. “[Schultz] closed down that controversy pretty fast by going whole hog on day one.”

But he cautioned that Starbucks can’t stop with just shrewd public relations moves to navigate these waters. “If Howard Schultz thinks he’s going to close down Starbucks for one day and fix the problem, then he’s mistaken,” Relman said.

Relman does say that diversity training can be a part of a long-term strategic plan to bring about corporate culture change. “This has to be a big change in all of their lives [at Starbucks],” he said. “The executives have to make the case to every employee that culture change is good for business and it’s good for the employees because that’s the only way it’s going to work.”

Relman said his successful 1994 discrimination suit against the Denny’s Restaurant chain proved to his satisfaction that diversity training can work, but it’s still just the first step to compelling companies to act fairly toward employees and customers.

In the Denny’s case, Relman told me, six black Secret Service agents — who entered the South Carolina-based chain’s Annapolis, Maryland, location on April 1, 1993 — and were denied service while 12 of their white colleagues were seated and served. All of the agents involved were, at the time, assigned to then-President Bill Clinton’s security detail and were preparing for his visit to the Naval Academy. Days later, the agents shared their story with Relman, then a young lawyer with the non-profit Washington Lawyers Committee for Civil Rights, who discovered that on the same day the agents were denied at the Annapolis restaurant, Denny’s reached an agreement with the U.S. Justice Department to settle a racial discrimination claim in San Jose, California.

In the San Jose case, 17-year-old Kristina Ridgeway went to a Denny’s restaurant with 17 other teens after attending an NAACP meeting. The restaurant demanded a cover charge and prepayment for their meal, even though the white teens in their group weren’t subjected to a similar imposition. While the subsequent lawsuit did not ultimately results in Ridgeway receiving monetary compensation for her claims, it did bind Denny’s to an agreement with the U.S. Justice Department in which the company was subjected to federal monitoring.

Relman’s suit against Denny’s, filed in Baltimore, reopened the San Jose case and led to surprising legal discoveries. Denny’s had deliberately trained their managers in this prepay policy — codenamed “blackout” — because they suspected African-American customers didn’t tip and would run out without paying. “They didn’t want African-American customers and that was their way of demonstrating to managers how to get rid of them when they did come in,” Relman told me.

As a part of their $54 million settlement with Denny’s, the chain was forced to hire Sharon Lybeck Hartmann, a Los Angeles civil rights lawyer, to enforce the federal consent agreement and to investigate every racial bias complaint for seven years. Relman saw her response first-hand, as Hartmann hired 40 compliance officers and conducted racial bias training for every one of the companies employees in 1,700 restaurants.

“There was a lot of role playing and putting people in real-life situations that simulated what do you do and what do you say to people,” Relman said. “The focus was on breaking the self-reinforcing loop of a stereotype.”

High-profile and expensive settlements also spawned academic studies of implicit or unconscious bias, which emerged in the 1990s partly as a means to fine tune diversity training sessions and to counteract some of the perception problems associated with compelling people — notably white males — to sit through compliance lectures or storytelling sessions led by women or members of racial minorities. Proponents of unconscious bias studies argue that all humans hold stereotypical views toward people who are different or unfamiliar to them, and while people are often unaware of these biases, they nevertheless can shape a person’s thinking and behavior in powerful ways.

“The theory is that unconscious bias is nobody’s fault and that these feelings stem all the way back to our caveman days,” said Lipman. “Unconscious bias training is intended to counteract some the problems of standard diversity training because there’s a minority of white men, loud white men, who believe that it’s [their] rights that are being infringed upon.”

Mary-Francis Winters, president and founder of The Winters Group, a 24-year-old consulting firm that specializes diversity training for corporate clients, said in an interview that many companies are reluctant to bring in consultants to run diversity programs for fear of offending its white male employees. She estimates that her firm is one of about a half dozen or so boutique firms in the nation that do this kind of work and that few large consulting firms do it because their time is too expensive for companies to hire them. 

As a result, budget-minded firms are more likely to pawn off diversity training to already overwhelmed human resource departments. “Some firms see the necessity,” Winters said, estimating about half of the firms she encounters value the trainings and half don’t. “Some think they don’t have a problem or don’t think its worth the trouble to be doing all this diversity stuff.”

Obviously, Starbucks finds this effort to be worth the trouble. Nevertheless, it’s the sentiments expressed by the firm’s top executives, which filter from top to bottom within the company, remain Starbucks’ enduring challenge. Indeed, as Starbucks officials made the final preparations for today’s anti-bias training sessions, they were blindsided by yet another racial incident in suburban Los Angeles, where a barista printed a racial slur to identify a Latino customer’s coffee cup.

With or without diversity training, repetitive outbreaks of these racist incidents demonstrate just how difficult it will be for Starbucks — or any company — to effectively stop them from occurring in the future.

CORRECTION: This story has been corrected to note that Mehri’s settlements in the Texaco and Coca-Cola cases didn’t include mandatory diversity training programs.