An Agent-Based Simulation of How Promotion Biases Impact Corporate Gender Diversity

Abstract

Diversity and inclusion (D&I) is a topic of increasing relevance across virtually all sectors of our society, with the potential for a significant impact on corporations and more broadly on our economy and society. While people are typically the most valuable asset of every organization, human resources (HR) in general, and D&I in particular, are dominated by qualitative approaches. This paper introduces an agent-based simulation that can quantify the impact of certain aspects of D&I on corporate performance. The simulation provides a parsimonious and compelling explanation of the impact of hiring and promotion biases on the resulting corporate gender balance, accurately replicating real-world data about gender imbalances across multiple industry sectors. In addition, the paper shows that the simulation can be used to predict the likely impact of different D&I interventions. Specifically, once a company has become imbalanced, even removing all promotion biases is not sufficient to rectify the situation, and 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 could become an invaluable tool for the strategic and tactical management of human resources.