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Does Anyone Want to Talk About Social Class?


Socioeconomic status—and how it shapes our working lives—is an underappreciated dynamic in organizations

Chess pieces on a bright background.

Social class is all about socioeconomic status—income, education and occupation mixed with perceptions of rank based on these assets. Your social class upbringing can be a powerful predictor of how you think and act in the workplace, shaping leadership styles, collegial attitudes and much more.

Yet, despite a push for greater diversity, social class is an underappreciated and invisible force, and a source of bias and discrimination. Michelle Lee, an assistant professor at Smith School of Business, has studied social class from several angles. In this interview with Smith Business Insight’s Alan Morantz, she discusses what the evidence reveals about the social class experience in organizations, and why it is a topic of personal interest.

Alan Morantz: In conversations on the big issues of the day, the role of social class doesn’t seem to come up as often as one would expect given that the class advantage of the more affluent in North America has amplified over time. Why is that?

Michelle Lee: For a while, we thought we had gotten rid of the class system. With all the social mobility in the ’60s and ’70s, it didn’t seem relevant. It seemed like we had a more level playing field, and people had ample opportunity to move up in society.

There has been quite a bit of research on social class in the past two decades. It’s now recognized as an important topic because we see that it’s not a level playing field, unlike what we imagined a few decades ago. There’s more of a gap now between the wealthy and poor within the U.S. and Canada, and upward mobility has been declining sharply since 1980.

Class also hasn’t been prominent because it’s been tied in with other issues. In the U.S., race and class are very tightly connected. But you have to study class as well because race is not the only factor that contributed to all the issues that came up with the Black Lives Matter movement. It’s important to look at both race and social class. 

It’s well documented that as you move up the ranks in organizations, diversity among managers and executives goes down. In the case of social class, how much is this the result of organizational recruitment and retention practices versus issues that are already baked in before people enter the workforce?

Education is definitely a big factor that determines whether you’ll even get a chance to enter these organizations, and a good education is often the result of your social class background. But there’s also research that indicates there are organizational practices that advantage those of upper- and upper-middle-class backgrounds.

One might be a matter of hiring. There was a resumé audit study by Lauren Rivera and András Tilcsik that looked at the type of entry-level candidates that law or consulting firms preferred. They found that class cues on resumés made a significant difference in determining callback rates. If you came from what seemed like a higher social class background—if you played lacrosse versus basketball or track—that influenced the likelihood you’d be given an interview.

And then, even within organizations, researchers have found that those from lower social class backgrounds feel like outsiders, and it’s often because of different cultural cues. It might be differences in your sense of humour, hobbies or how you get along with people. It’s not necessarily obvious, but it’s from interactions. These sorts of cultural similarities matter for hiring and promotion decisions. So social class disadvantages people even from moving up within organizations. 

It has also been shown how social class experiences shape perceptions. If people brought up in less advantaged circumstances are asked to compare how they’re doing relative to peers at work, they tend to place themselves higher than they really are. This must have implications for how—or whether—they negotiate raises, for example. Perceptions loom large, do they not?

Interesting that you brought up pay because there’s research showing that if you come from a lower social class background, your pay tends to be lower than your upper-class peers. Part of the reason is that the authors studied these pay differences across different industries. Another reason may be your approach to negotiation, but the other part may be how you’re perceived by others. A study shows that even if your skills are the same, those with an upper-class background tend to be perceived as more competent because they seem more confident.

Because these prior studies didn’t look at pay differences within an industry or account for performance differences, I’m working on a study now that takes into account these factors. I look at whether your class background can influence the pay of executives under conditions of good and bad performance. The study looks at whether there’s a greater perception of competence associated with executives from lower social class backgrounds, because they’ve had to work harder than their upper-class counterparts to reach the top. The results show that when a company performs well, executives from lower social class backgrounds seem to be paid more than their peers from affluent backgrounds. But when the company is not doing as well, their pay is more penalized than their peers and they’re more likely to be dismissed. 

What do organizations lose out on when they have few managers or executives with different social class origins?

People with a different class background, who are not as well networked, may be more willing to engage in something considered “deviant” or innovative. There was a fascinating study that looked at the wave of corporate diversifications in the 1960s. It found that CEOs who were from a lower social class background were 38 per cent more likely than upper-class CEOs to initiate a diversifying acquisition. Interestingly, the study also found that having a Jewish CEO [many who were outside the social elite during this period] increased the probability of completing a diversifying acquisition by 79 per cent.

There’s also research that shows if you come from a lower social class background, you’re more likely to focus on others and be more pro-social. These are effects that you might see at the top. You might see firms led by CEOs from lower social class backgrounds engaging in more corporate social responsibility (CSR). A recent study showed that CSR is one key organizational decision that CEOs have more control over. 

What can organizations do to be more sensitive to the dynamics of social class?

If you’re hiring based on networks or cultural fit, it can disadvantage those of lower social class backgrounds. As an alternative, when recruiting, you could target different universities than the typical top universities, which tend to have a disproportionate number of people from wealthier backgrounds. Looking at other strong universities that don’t just have students from wealthier backgrounds, you can get a more balanced pool than if you hire based on networks or precedent in hiring. The other practice that can help is having a formal mentor system within a company, which can guide people of different backgrounds through social situations.

There’s also recent research showing that greater teamwork can bring out better team performance, especially for those of lower social class backgrounds because they engage in more active discussion than their upper-class counterparts. Nuances like this are helpful in an organizational policy. Encourage employees to collaborate more and you might get better results. For the most part, organizations seem to reward star performers rather than prioritizing teamwork.

What’s your motivation to research in this area?

I’ve always been interested in studying how peoples’ backgrounds affect them later in life. When I think back to my own background, I saw my parents, who immigrated from Korea [to the U.S.], start at the bottom in what would be considered working class jobs. Throughout life, in situations like going out to a restaurant or interacting with others, I’ve seen how people have treated them based on the way they dress or speak with heavily accented English. They run a souvenir shop now and experienced some social mobility, but they’ve definitely encountered challenges in their mobility.

My parents were barely home when I was younger, so a lot of my time was spent watching TV or reading, rather than in dinner conversations about culturally relevant topics. I didn’t have a background that gave me a social network or the skills to speak well in job interviews. It was through talking to friends and mentors at university that I figured out how to speak in interview situations.

I remember one time, we [a work team] went out on a client dinner after we finished a project. We ate at a steakhouse, which was quite common for work dinners. I didn’t grow up eating steak and didn’t realize that the cut that I thought was two cuts was actually one, which the waiter corrected me on. Later, I heard my co-workers make fun of me for not knowing this. These are the outsider type of situations that come up with class differences or not being culturally in tune.