An Agent-Based Simulation of How Promotion Biases Impact Corporate
Gender Diversity
Abstract
Diversity & Inclusion (D&I) is a topic of increasing relevance across
virtually all sectors of our society, with the potential for significant
impact on corporations and more broadly on our economy and our society.
In spite of the fact that human capital is typically the most valuable
asset of every organization, Human Resources (HR) in general and D&I,
in particular, are dominated by qualitative approaches. We introduce an
agent-based simulation that can quantify the impact of certain aspects
of D&I on corporate performance. We show that the simulation provides a
parsimonious and compelling explanation of the impact of hiring and
promotion biases on the resulting corporate gender balance. We show that
varying just two parameters enables us to replicate real-world data
about gender imbalances across multiple industry sectors. In addition,
we show that the simulation can be used to predict the likely impact of
different D&I interventions. Specifically, we show that once a company
has become imbalanced, even removing all promotion biases is not
sufficient to rectify the situation, and that it can take decades to
undo the imbalances initially created by these biases. These and other
results demonstrate that agent-based simulation is a powerful approach
for managing D&I in corporate settings, and suggest that it has the
potential to become an invaluable tool for both strategic and tactical
management of human capital.