Freakonomics Radio - 604. Did the N.F.L. Solve Diversity Hiring? (Part 2)

Episode Date: September 26, 2024

What happened when the Rooney Rule made its way from pro football to corporate America? Some progress, some backsliding, and a lot of controversy. (Second in a two-part series.) SOURCES:Tynesia Boyea-Robinson, president and C.E.O. of CapEQ.N. Jeremi Duru, professor of law at American University.Herm Edwards, former N.F.L. player and head coach.Christopher Rider, professor of entrepreneurial studies at the University of Michigan.Jim Rooney, author and co-partner of Rooney Consulting.Scott Shephard, general counsel at the National Center for Public Policy Research. RESOURCES:The Social Impact Advantage: Win Customers and Talent By Harnessing Your Business For Good, by Tynesia Boyea-Robinson (2022).A Different Way to Win: Dan Rooney’s Story from the Super Bowl to the Rooney Rule, by Jim Rooney (2019)."If There’s Only One Woman in Your Candidate Pool, There’s Statistically No Chance She’ll Be Hired," by Stefanie K. Johnson, David R. Hekman and Elsa T. Chan (Harvard Business Review, 2016)."Racial Disparity in Leadership: Performance-Reward Bias in Promotions of National Football League Coaches," by Christopher I. Rider, James Wade, Anand Swaminathan, and Andreas Schwab (SSRN, 2016).Advancing the Ball: Race, Reformation, and the Quest for Equal Coaching Opportunity in the NFL, by N. Jeremi Duru (2010). EXTRAS:"Did the N.F.L. Solve Diversity Hiring? (Part 1)," by Freakonomics Radio (2024).“When Is a Superstar Just Another Employee?” by Freakonomics Radio (2023).“How Much Does Discrimination Hurt the Economy? (Replay),” by Freakonomics Radio (2023).

In our previous episode, we talked about the ever-expanding National Football League, which is already the biggest, richest sports league in history. The NFL is a tight confederation of 32 teams that are essentially run as individual firms. Unlike the European soccer leagues, where the worst teams are pushed out each year and replaced by teams from the lower ranks, the NFL is a closed ecosystem. And it is an extraordinarily powerful one. The NFL lies at the center of not only sport, but also media and advertising, gambling, pop culture and politics, and just about anything else you can think of. It may be sacrilegious to say this, but it may also be true. The NFL, which plays most of its games on Sunday afternoon, is the closest thing we have today to a national religion. In 1960, on Meet the Press,

Martin Luther King Jr. made the following observation about churchgoing. I think it is one of the tragedies of our nation, one of the shameful tragedies, that 11 o'clock on Sunday morning is one of the most segregated hours, if not the most segregated hours in Christian America. If Sunday morning church time is, or at least was, the most segregated hour in America, would it also be sacrilegious to say that the rest of Sunday is the least segregated? There are countless constituencies attached to this game. Because of that, the NFL draws enormous attention, and it often sets the cultural or political agenda, especially when it comes to society and race.

The story we began last week looked at an NFL policy called the Rooney Rule, named after the late Pittsburgh Steelers owner Dan Rooney. The rule was adopted in 2003, and it required that whenever an NFL team hired a new head coach, which happens on average about every three years, that they interview at least one candidate who isn't white. Some people saw this move as long overdue, since the majority of NFL players were Black and the vast majority of head coaches were white. Dan Rooney's name was attached to this policy not only because he helped build consensus for it among the league's 32 team owners, but because his Steelers have been out front on diverse hiring at every level of the organization.

Players, coaches, scouts, team executives, and more. The Steelers also had the most Super Bowl wins in history, so there was some proof of concept there. The Steelers' current head coach, Mike Tomlin, is a black man and the longest tenured coach in the NFL. Tomlin hasn't won a Super Bowl since 2009, but he also hasn't had a single losing season in 17 years. In other words, the Rooney family, which still owns the team, has lived out the Rooney rule. Several other teams followed them. And in the first decade of the rule, it seemed to have the intended effect. Today on Freakonomics Radio, we'll hear where things went wrong in the second decade. Yes, I would call that a sham interview.

And we'll hear how the Rooney Rule has reverberated in the corporate world, especially after the police murder of George Floyd. Yay, I hire a lot of diverse people and the fairies come and everything happens. There's a sprinkle of dust and it's great. Along with a massive wave of DEI policy, there has been DEI pushback. We'll hear some of that, too. Partisan actors stirred up new theories that the way to fight racial discrimination is with brand new racial discrimination. As for the NFL, how can you measure the Rooney Rule's long-term effect?

So we collected data on over 1,300 coaches, and it yielded a data set of over 10,000 coach years. Try not to Google number of black coaches in the NFL today until the end of this episode, with your host, Stephen Dubner. Let's start with Tynesha Boye-Robinson. I go by Ty, and I'm the president and CEO of CappyQ, and we work with businesses and investors to embed equitable impact into their daily practices. Most people would call Boye-Robinson a diversity consultant, but she is not a fan of that label. I always say equitable impact because diversity opens a drawer in people's heads that's usually people related.

It's just, do you look like me? Are you the same gender? Are you the same race? Are you the same ethnicity? And to really build an equitable organization, it's really about, is our workforce reflective of our population? If you believe in all talent is created equal, then you would believe that your company

should be recruiting people in a way that reflects the population. And if it isn't, there's something broken in your system that's keeping certain people out and keeping certain people in. So in terms of equitable impact, how does she think about the NFL and the Rooney Rule? The Rooney Rule is really about making sure that you have a diverse slate when you're selecting and hiring people.

That's it in its nutshell. There's so much about the league itself that's diverse that it's bizarre not to have an organizational structure that reflects its employee base. How are you able to navigate the needs of the employee base? Or even if you think about the consumer base, it's incredibly diverse. The NFL is such a powerful organization for bringing so many demographics together and feeling like one, like feeling like one body. You may not agree on your politics or whatever, but if you're a Chiefs fan, you're like, Patty Mahomes, let's go. Yes, I love Kelsey and Swift. It's nice to think about the NFL in that way as a big unifying force in America. And when you hear, as we heard last week, that the 32 NFL teams adopted the Rooney rule in a unanimous vote,

you might get a nice warm feeling. But it didn't take much digging on our part to learn that a unanimous vote isn't as meaningful as it may seem. Here is Jeremy Duru. He is a legal scholar at American University and the author of a book called Advancing the Ball, Race, Reformation and the Quest for Equal Coaching Opportunity in the NFL. What I will say is that it wasn't two weeks after everybody had agreed to the rule that it was totally flouted by an owner who just agreed to it. I think a part of it was, Stephen, all right, this thing, here's another equal opportunity initiative. Let's just agree to it and keep moving. Who was the owner who flouted it? Jerry Jones. Jerry Jones, Dallas Cowboys. And who did he hire as his head coach?

Bill Parcells. And let's be clear. I mean, Bill Parcells, he's a Hall of Fame coach. He's a great coach. Nobody could argue that he's not. But this rule had just been put into place. What happened was Jerry Jones interviewed Parcells over the course of, I think, 11 hours during two trips, both of which he took his private jet to Jersey to interview Bill Parcells and come back. So two cross-country trips. And he called Dennis Green, who had previously been fired by the Vikings. Black coach. Black coach. And they spoke on the phone for 20 minutes. And Parcells was hired. Now, wait a minute. You said he flouted the rule. It sounds like he lived by the letter of the law, if not the spirit. I wouldn't say if not the spirit, Steve. I'd say definitely not the spirit. I mean,

you have 11 hours in person versus 20 minutes on the phone. So do you think of that as a total sham interview then? Yes. I would call that a sham interview. Did anyone say to Jerry Jones, hey, we, the owners, just agreed to this rule where we're going to require at least one minority interview every time you hire a head coach and you didn't. What's the story? Did anybody confront him on that? Yes. The league looked into it and they said basically what you just indicated earlier, which is, well, the rule says you're going to interview a person of color before the hire and the club did that. Now, we recognize the club did not offer a full-throated interview to Green, but

he didn't violate the rule. And then you had the Lions. The Lions situation, you had the general manager who desperately wanted a head coach for years. Steve Mariucci was the coach that Matt Millen wanted. Matt Millen being general manager. And when he became available, Millen basically said it was clear being general manager. And when he became available, Millen basically said, it was clear to everyone in the community, as well as in the press, I'm hiring Mooch. That's the nickname, Steve Marich. I'm hiring Mooch. And so I said to some black coaches, could come on for an interview. I want to be respectful of the rule, even though, you know, it's going to be Mooch. And no black coaches would go on for the interview.

Because they knew that it was useless. Because they knew it was useless. And in this case, the Rooney Rules text was violated as well. It was after the experience of the text being violated by the Lions and the spirit being violated by the Cowboys that the league altered and strengthened the rule. By the next summer, the league had altered the rule to require a meaningful interview. And meaningful is defined as similarly situated. So if you interview one person in person, the other should be interviewed in person.

If you interview one person for five hours at the facility, then the other person should be interviewed for roughly five hours at the facility. So there really did seem to be progress being made. It was expanded to the general manager ranks and the general manager ranks increased with respect to diversity. Around 2007, 2008, the rule was so well respected in the league and it's been exported to organizations across the world and in this country, totally apart from sport. So most trends, once they start in a strong direction, positive or negative, they develop some momentum. And even if they might've been

unusual 10 years ago, once they become the norm, they just stay the norm. But that was not the case here, correct? That wasn't the case. No, that wasn't the case. So what happened? A number of things happened. When you have 32 different businesses, you're going to have those 32 different perspectives. You just had some organizations that just weren't really into it. There seemed to be a reduction in commitment to equity in the league generally and to the Rooney rule specifically. And did that reduction translate into a reduction in minority coaches? Yeah, yeah.

Fell off a cliff from the mid-20-teens up until the end of the decade. In 2018, the owner of the Oakland Raiders, Mark Davis, essentially admitted that he broke the Rooney Rule. The Raiders, like the Detroit Lions in 2003, had already picked out the head coach they wanted to hire, or in this case, rehire, John Gruden, who had a successful run as the Raiders coach nearly two decades earlier. This time around, once Mark Davis got a commitment from Gruden, he had his general manager conduct two perfunctory interviews with minority coaches. Gruden then signed a contract with the Raiders worth a reported $100 million over 10 years. He barely lasted three years, during which time he won just over 40% of his games, and he resigned in disgrace after the discovery of a bunch of his old emails that were filled with racist, sexist, and homophobic remarks.

The Raiders were never disciplined by the league for violating the Rooney Rule when they hired Gruden, just as the Dallas Cowboys hadn't been disciplined earlier when they hired Bill Parcells. In fact, only one team has ever been disciplined for violating the Rooney rule, the Detroit Lions, for how they hired Steve Mariucci. That produced a $200,000 fine, which in the NFL is pocket change. For what it's worth, Mariucci also bombed out as coach of the Lions. He won only around a third of his games, and he was fired midway through his third season. These three head coach hirings, Mariucci, Gruden,

and Parcells, are, of course, a tiny sample. But if you pay even a little attention to the NFL, you will recognize a pattern. Team owners hire coaches who look the part, who feel the part, even if they are no longer right for the part. Even if there might be better candidates out there who, for one reason or another, don't quite look the part to the team's owner. By 2019, there were just three black head coaches in the league, the same number as in 2003, the year the Rooney Rule took effect. Yeah, so the situation had become bad. That was a situation among NFL head coaches, at least. But as Jeremy Duru noted earlier,

other organizations had begun to take interest in the Rooney Rule. The underlying policy is pretty simple. It requires what HR people call a diverse candidate slate. This was hardly a new idea in corporate America. Companies like Goldman Sachs and Starbucks had already adopted it without much fanfare. But there was something about the simplicity of the Rooney rule, or maybe it was the catchier name or the halo effect of the NFL that gave this policy a bit more buzz. In New York, city controller Scott Stringer sent a letter to a few dozen big American companies, including AT&T and Walt Disney, calling for them to adopt a version of the Rooney Rule and noting its connection to the NFL,

a nice halo effect. Within a year, Stringer's office announced that 14 of those companies had adopted the policy. The city of Portland, Oregon adopted the Rooney rule for hiring municipal employees. So did the city of Pittsburgh. It was also adopted by the English Football League, which includes the three main soccer divisions below the Premier League. Back in the NFL, meanwhile, Dan Rooney had died in 2017, but the league kept building on his rule. In 2020, the policy came to cover not just general managers and head coaches, but also the head coach's three lieutenants, the offensive, defensive, and special teams coordinators. The new version of the rule also required that at least two non-white candidates be interviewed for each job instead of one. Jeremy Duru again. And that was a result of a number of studies, including one from the Harvard Business Review that indicated that when you have one

person of color being interviewed in otherwise homogenous interviewee group, that person of color is automatically, albeit perhaps subconsciously, recognized as the outsider, the person who's just here to check a box. When you have more than one, let's say you have two, that doesn't attach to both, right? Both of them are considered more seriously. They call it two in the pool. and the Harvard Business Review study revealed that when you have two in the pool, the likelihood of getting a person of color or a woman in the seat is much higher. And so these parties pushed through changes to the Rooney Rule, and that time period coincided with the spring and summer of 2020. Less than a week after the NFL made these amplifications to the Rooney Rule, a black man was killed by police in Minneapolis. After the break, the consequences of George Floyd's murder.

I'm Stephen Dubner, and this is Freakonomics Radio. We'll be right back. In the spring of 2020, the police killing of George Floyd set off a wave of despair and protest that hadn't been produced by similar incidents in the recent past. Maybe it's because it happened during the early, terrible months of the COVID pandemic. Maybe it's because the incident was captured on video for everyone to see. Whatever the case, Floyd's death supercharged our national conversation on racial and social equity, including in the NFL. Roger Goodell, the league's commissioner, felt compelled to say this. We, the National Football League, condemn racism in the NFL. Roger Goodell, the league's commissioner, felt compelled to say this. We, the National Football League, condemn racism and the systematic oppression of Black people.

We, the National Football League, admit we were wrong for not listening to NFL players earlier and encourage all to speak out and peacefully protest. We, the National Football League, believe Black lives matter. I personally protest with you and want to be part of the much-needed change in this country. Without Black players, there would be no National Football League. That line about admitting we were wrong for not listening to NFL players earlier, that seems to refer to the NFL's treatment of Colin Kaepernick. Kaepernick was a San Francisco 49ers quarterback who, a few years earlier, began taking a knee rather than standing during the pregame national anthem to protest police brutality.

Not long after, Kaepernick's NFL career was essentially over. But now, in the aftermath of the George Floyd murder, the NFL pledged $250 million over 10 years to combat systemic racism, as they put it. to wear social justice messages on their helmets. Teams painted slogans in their end zones. It takes all of us and end racism. The pregame now included a performance of Lift Every Voice, a song known as the Black National Anthem. And if you've been watching NFL games this season and wonder why you're seeing so many get out the vote ads, that too is part of the program. The National Basketball Association made similar changes properties. NASCAR president Steve Phelps later said that banning the flag had a surprising upside, a big surge in younger fans who had been turned off by NASCAR's redneck reputation. Back in the NFL, meanwhile, the George Floyd aftermath produced a further strengthening of the Rooney Rule. This time, the league used a carrot instead of a stick. Here's the carrot. If your team already had a minority coach or executive, and if another team

poached that person, which happens all the time, then you would be compensated with extra picks in the college draft. You would literally get extra players for your team. In last week's episode, we spoke with Herm Edwards, a longtime NFL player and coach, now an analyst for your team. In last week's episode, we spoke with Herm Edwards, a longtime NFL player and coach, now an analyst for ESPN. He told us what it was like to be the first black head coach at every team where he landed. I also asked him what he thought of this policy of teams getting extra draft picks for losing a minority coach. Oh, so now you're telling me if you hire a black coach, you get compensation. Really? I always tell people he's just a coach.

You're hiring a coach, man. When they hire a white coach, they don't give him anything. They'll say, hire a black coach, I get something extra. I mean, stop. It shouldn't have to come to that. It really shouldn't. And I get why they did it, but it's like, really, guys? Herm Edwards may not like this new policy. He may see it as patronizing. But the George Floyd killing had provoked a widespread racial reckoning, as it was often called, and all sorts of institutions and firms decided that diversity was good for business. Corporate America was particularly enthusiastic, usually in the form of a DEI hiring program that stands for Diversity, Equity, and Inclusion. In 2020, U.S. companies spent a reported $7.5 billion on DEI programs, a lot of money for

something that many people hadn't heard of a year earlier. Many billions more were pledged to organizations and projects devoted to racial justice or racial equity. Even so, if you lined up all the CEOs in the Fortune 500 for a team photo, it would look like a team photo of all NFL head coaches a few decades ago. As of this recording, fewer than 2% of Fortune 500 CEOs are Black. Tynesha Boye-Robinson says this shouldn't be too surprising. I think people overcomplicate DEI and they're like, oh my gosh, diversity must not work because we poured millions of dollars into it. What happened? It's no different than saying, oh, you know what? I want to run a marathon. And then somebody just started running.

You're like, what the? There is a 42-week process where you train, y'all. You don't just get up and say, I'm going to run 26.2 miles. And that's what people did with their diversity efforts. They said, oh, George Floyd, that's bad. We don't want to be bad. We don't want to be racist. We're going to fix diversity. And then they like having no infrastructure, having no training, having no muscles built, just threw a whole bunch of money at it. And we're surprised it didn't work. Whereas like, if I told those same people you needed to launch a new product because your lunch is getting eaten by your competitor, they would do strategy and analysis. They might pull in some consultants. They'd start off with a pilot. They know how to fix these problems. But when it came to diversity, their brains often went off and they went straight

to action because they didn't know what else to do. And over the past few years, a lot of firms have been trimming their diversity programs. Tesla, Meta, Lyft, Home Depot and other companies have cut DEI teams by more than 50%. And you remember those sham interviews we told you about in the NFL? They seem to have happened in corporate America too. A recent class action lawsuit against Wells Fargo, the third largest bank in the U.S., accused them of defrauding shareholders by misrepresenting their commitment to diverse hiring practices. Wells Fargo had adopted a Rooney Rule-like policy, which required that half of the job candidates who interviewed for positions above a certain salary come from one of several minority categories, race, gender, disability,

or sexual orientation. The lawsuit alleges that many of those candidates got interviews only after the job was already filled. Wells Fargo denies the allegations. The suit is ongoing. Meanwhile, in some circles, there is a fierce backlash against any sort of DEI policy, including the NFL's own Rooney Rule. A conservative nonprofit called America First Legal, founded by former Trump advisor Stephen Miller, filed a federal civil rights complaint against the NFL, arguing that the Rooney Rule is itself discriminatory and therefore illegal. We couldn't get America First Legal to speak with us, but we did have a conversation with someone who takes a similar position. The Rooney rule or anything that aims at quotas, head counts, whatever they want to call them, doesn't do the hard work, the necessary work, the important work. And that's why they so fundamentally make things worse, even when they're good-heartedly trying to make things better.

That is Scott Shepard. I'm the general counsel at the National Center for Public Policy Research. I was also the director of the Free Enterprise Project, which is our center's project that for about 20 years has recognized the leftward drift of corporations and has been the shareholder proponent trying to stand athwart that hollering stop. In order to be that shareholder proponent, Shepard's organization buys stock in the companies it wants to monitor. And how much stock do they need to buy? One share if we want to try to make a comment at a shareholder meeting. But to submit a shareholder proposal, the floor is very low. It's only continuously owning $2,000 worth of a company for three years without let up.

And how does Shepard see his organization representing the interests of the shareholders? We are fighting the breaches of fiduciary duty, and particularly the breaches of fiduciary duty arising from partisanship, from directors and executives taking their eyes off the ball and getting involved in completely unnecessary, completely unrelated to core business, partisan controversies that are guaranteed to upset lots of people, to have high potential risk and not much upside. When things are good for companies, no behaviors have to be forced. If discrimination on the basis of race, sex, and orientation were good for corporations, corporations would have been figuring out a way to do it on their own.

So your argument is that if it were good for the business, the business would be doing it because they're competitive people in a competitive marketplace and so on. Let me port that argument over to the NFL. That's a very competitive environment. It's a league where there are really just 32 stakeholders and they really do run and own the league, even though the league acts as if it runs them. And they're all obviously competitive. They want to win on the field and off the field. Would you say the same is true about them, that in order to optimize their chances of

success, whether it's on-field victory or business, that they would inherently hire the best people and that they're not leaving any good overlooked talent behind? Well, I have to preface this by saying I was a tiny little boy in the 70s in the center of Pennsylvania. So I am, I think, legally disbarred from saying anything unpleasant about a Rooney. And I won't because I think that Dan was, we're not on a first name basis. I think that Dan was kind of heart and good of soul and recognizing something that was a real true problem and a problem of discrimination in the NFL. You can't possibly have the numbers that he recognized without there being some genuine systemic internal discrimination. I should think it was a careful move. It was thoughtful. And I

think that it was the right place to try something like that. It sounds like careful move. It was thoughtful. And I think that it was the right place to try something like that. It sounds like there's a but there that you haven't gotten to, but you're either unconvinced that it was the right move or you think it's gone too far or what? All discrimination on invidious grounds, race, sex orientation, is wrong and leads to bad consequences for everybody, but particularly the people on whose behalf the discrimination supposedly occurs. Because once the Rooney Rule's in place, then every black interviewee has the question mark hanging over his head. Is he or maybe someday she legitimately there?

Or are they being used as a token? And once that stain arises, everybody's tarred. Justice Thomas has talked about he having been tarred. So I think it runs everywhere. Do you think the Rooney rule is unconstitutional? Well, I think that the Rooney rule, as applied by Dan Rooney, when it was and how it was, might be. But when there's direct proof of past discrimination by a specific organization, they can take some steps consonant with the Constitution to rectify those specific deeds. I just genuinely don't know what the courts would decide about the constitutionality. But once you hop outside of the

NFL, it is absolutely and unequivocally unconstitutional. If I were to ask you what share of, let's say, the 500 biggest companies in the U.S. are engaged in what your organization would consider illegal DEI practices, what would that number be? If I could add a probably, or it's our best evaluation, I would say something above 75%. And give me some evidence of what makes you think the number is so high. Well, our first bin of evidence is the gleeful declarations of discriminatory and unconstitutional behavior that so many corporations engaged in during the lockdown, the protests and riots, the George Floyd summer of 2020. It seems that everybody being at home, there were some miscommunications. And so certain departments just announced things that an objective legal

department would have said, no, no, no, no, no, let's not admit to that out loud. Give me a for instance there. Here is a program that I'm certain that lots of companies, A, engaged in, and B, were proud to announce at one point. I think they've probably wiped all of that now. A lot of thought went into fairly sophisticated efforts to actually discriminate without triggering the constitutional bar. It worked in three parts. The first part was a diversity dashboard. Executives and directors who had the authority to hire, promote, make other human resources decisions knew the surface characteristics or

private characteristics of everybody who reported to them. And then they said, and companies were very careful about the word, although not the content, just goals, just goals, not quotas for what sort of surface or private characteristics were meant to be achieved. And then, and this is the real clincher, those actors got bonuses if they hit those goals, not quotas. And that would be illegal. Why exactly? Why specifically? It is illegal to discriminate on the basis of race, sex, orientation, even if a company has made it more difficult to discover just where in the process the actual discrimination occurred. And we think that these corporations using this system made their problems much, much worse, because you can

be harmed by illegal discrimination, even if you're not a member of the class at whom the harm is directed. For instance, if you've got a person with hiring authority, and it comes down to them to both make the discriminatory decision and to blackbox it, well, the incentive structure that's been established creates exactly the incentive for them to discriminate on the basis of race, sex, or orientation. And so it's a hostile work environment for them as well as everybody else. I understand you were part of a lawsuit against Starbucks CEO Howard Schultz and the company's officers and directors. Walk me through that, would you please, Scott? Sure. Our claim at base was one arising from fiduciary duty,

as well as the codex of civil rights laws. We said, and this is, I think, fairly clear black letter law, directors and executives may not take any action that violates law. And in other contexts, directors and executives rely on that obligation fairly heavily, but discriminating in the ways that Starbucks was discriminating, and they were using that tri-part structure. So this is the hiring component of Starbucks you're talking about, yes? Or other personnel issues or compensation? What did it include? We had six or seven different examples, and they extended beyond hiring. I don't recall right now in what directions, but it seemed like, and this is, I think,

a fairly telling word in this instance, it seemed like fairly systemic race, sex, and orientation discrimination by Starbucks. So we brought suit in district court against not the company, but the directors and executives. And the luck of our draw with a district judge. Yeah, the judge didn't like your case at all. No, but it's interesting. The way I read his decision and opinion, he didn't dismiss on the grounds of any demonstrable law.

In fact, one of the positions he cited, one of the things he indicated backed his dismissal and opportunity for Starbucks executives to try to sanction us, which was fairly unusual, was that, you know, we're shareholders. If we don't like what Starbucks is doing, we can sell and buy another company. But if that's so, then the whole edifice of fiduciary duty law collapses, right? It cannot be the position of the American courts, much less a federal court interpreting state law, that fiduciary duty just doesn't really matter anymore. You can just sell your shares. And so we thought that was a very telling way of responding to that. We think it was proof of concept and that when we get to a court more driven by obvious demonstrations of fidelity to law, we'll get different results and others will as well.

The judge in that case cited a number of reasons for dismissing the case, including that the plaintiff, that is Scott Shepard's National Center for Public Policy Research, was, quote, pursuing its personal interests rather than those of Starbucks, and that his organization has shown obvious vindictiveness towards Starbucks and lacks the support of the vast majority of Starbucks shareholders. That said, if you think the Starbucks case was the last of its kind in this DEI era, you are almost certainly wrong. Coming up after the break, back to the NFL and one researcher's attempt to perform what he calls equity analytics.

It is more interesting than it sounds, I promise. This is Freakonomics Radio. I'm Stephen Dubner. We'll be right back. This is the second episode in our mini-series about the Rooney Rule. Here's a headline we gave the series. Did the NFL solve diversity hiring? So, did it? I'm not asking if it solved the problem for Starbucks or Wells Fargo or Meta. I just mean for the NFL. The problem, remember, was that the NFL had few black head coaches, even though most players are black and many coaches are former players. So did the Rooney

Rule solve that problem? To answer that, we need to hear from one last guest. My name is Chris Ryder. I'm a self-described expert in what I call equity analytics. Ryder is a professor of entrepreneurial studies at the University of Michigan's Business School. And what does he mean by equity analytics? I document gaps among groups of people, gaps in pay, promotions, any kind of career outcome. I then try to understand what causes those gaps. And then I design interventions to close those gaps that we deem to be inequitable. Ryder used to study pay gaps among attorneys.

But a few years ago, he and some colleagues realized they could get hold of data that allowed them to study a slightly more high-profile labor force, NFL coaches. We collected three decades' worth of career labor force, NFL coaches. We collected three decades worth of career history data for NFL coaches. This is the kind of data that would be nearly impossible to collect in any other setting. We went through NFL directories, websites, and we characterized where people started their careers coaching and what position for what team, and we followed them every single year until they left the NFL. Then we went back and also collected the position that they had played, if not in the NFL, then in college or high school. Moreover, across the National Football

League, teams use the same objective measures of performance, points scored, yards allowed, turnovers. So we could compare people who are being measured according to the same objective performance measures. I couldn't imagine doing that in legal services. So we collected data on over 1,300 coaches, and it yielded a data set of over 10,000 coach years. But the data was even more robust than all that, both broader and deeper.

For example, if we're just comparing quarterbacks coaches, we would hold constant passing yards, passing touchdowns, interceptions, quarterback rating, et cetera, et cetera, of the players that they coach. For running backs, it would be rushing yards, rushing touchdowns, points scored. We can do this at a team level, winning percentage, at a unit level, offensive or defensive efficiency, and then we can standardize those

so that they are comparable across positions. That is, we can compare running backs coaches who are in the 90th percentile of performance for running backs coaches to linebacker coaches who are in the 90th percentile of linebacker coaches in terms of performance. In addition to the objective performance metrics, we can hold constant a lot of factors in the NFL that would be difficult or impossible to hold constant in another setting. If a coach's brother, father, or some other relative is coaching in the NFL, then we can hold that constant and compare coaches who have kinship ties to those who don't. If a coach coached under a very established or successful coach like Bill Belichick or Tony

Dungy, we can hold that constant. With all this data, Chris Ryder and his colleagues now try to answer one key question. Why are NFL head coaches disproportionately white men? Their massive data set covered the NFL seasons from 1985 to 2015. The Rooney Rule was implemented in 2003, roughly two-thirds of the way in. So we conduct a standard promotion analysis, which is we take all the coaches who are at risk of being promoted to a higher level, and we model the likelihood that they are promoted to a higher level at the end of the year. And we do that based on all of those factors, playing position,

coaching position, performance, kinship ties, networks, etc., etc. And what they find? We find that all else equal, white coaches are approximately 60 to 70 percent more likely to get promoted at the end of a season than coaches of color are, even when we hold constant all of those factors. And how about the impact of the Rooney Rule? I believe that the Rooney Rule is likely effective. If we search broad and wide for a candidate, we're likely to have a diverse candidate slate, and we should be more likely to hire a good candidate than if we zero in on a small segment of the candidate pool and select

only from that niche. So intuitively, the Rooney Rule makes a lot of sense. The challenge is producing evidence that makes that belief unequivocally supported. So I have a proposition for an organization. If there's a leader out there that would like to settle this debate about the Rooney Rule, in January when the coaching carousel comes to an end and the talking heads go on, where some jobs are subject to the Rooney Rule and other jobs are not. When all those positions are filled, let's compare the representation among those that were subject to the Rooney Rule and those that were not. I will design the research. I will conduct the analysis for free. I just need one organization. And I think that if we have an organization that's willing to do that, we can know within the next year whether or not the Rooney Rule is effective.

And if so, let's adopt it broadly. And if not, let's try something else. We asked Chris Ryder about an earlier research paper published in 2011, which found that the Rooney Rule was not responsible for producing more minority head coaches. We replicated that study, but we can only reproduce the result if we do one important thing, which is we limit the analysis to coordinators only. Coordinators, you will remember, are the head coaches' lieutenants. There are usually three per team overseeing the defense, offense, and special teams. And when we limit the analysis to coordinators only,

that is, we've dropped all the running backs coaches and defensive backs coaches and special teams coaches from our analysis, now we find that there is no racial disparity in getting promoted from coordinator to head coach. This suggests that if you can make it to the coordinator level, you've got the same chance of getting a head coaching job regardless of your race. coordinator to head coach. This suggests that if you can make it to the coordinator level, you've got the same chance of getting a head coaching job regardless of your race. And coordinator is the prior position for about 80% of first-time head coaches. So prior studies were incomplete. They didn't collect enough data to identify the racial

disparity, which is at a lower level than coordinator. Those jobs are the one in which white coaches have a nearly 2x advantage in getting promoted over coaches of color. So ironically, the Rooney Rule was designed to increase leadership representation at the head coach level. So even if it was purely effective, it was being applied at too high a level to have the kind of impact that proponents would like it to have. What we do document is that if you look lower down the org chart, there is a huge disparity in getting promoted to that number two job. And now that Chris Ryder has done equity analysis on football coaches and lawyers, how does he think about the equity conversations that other big institutions are having or maybe

not having? Recently, we've seen a lot of organizations backtrack on DEI and specifically on equity. Why? Because it is difficult to define equity. It causes debate. It fosters disagreement. What I think is fair is different from what you think is fair. And I think that many organizations in doing this are missing the point of equity. We should not expect to ever arrive at a uniform definition of fairness. Leaders should be trying to integrate diverse notions of fairness in a way that recognizes the diversity of an organization, in a way that is inclusive of the people who are

part of that organization. And only by doing that can we truly be equitable. I would suggest that organizations that are giving up on equity because it's hard to define are missing the point. As for the question of how the Rooney Rule has worked out for the organization that conceived of it, the NFL, we went back to Jeremy Duru. What would a team photo of this year's 32 NFL head coaches look like? So head coaches were nine head coaches of color, six of whom are black. And the general manager ranks were around nine general managers of color. Presidents of color were at six, and there were none up until five years ago. Coordinators of color, the defensive side of the ball, about a third of leagues' defensive coordinators are of color. On the offensive side of the ball, that's where the huge gap is. That's where we've got no real representation. When I hear those numbers for head coaches,

coordinators, and major front office personnel, they're the ones who are making the decisions to hire future coaches. That sounds like success, is it? I think there's success. Now, you know, we must recognize there's a spectrum of success. Have we reached a point at which we don't need to be concerned about this? No. One thing that we saw from 2017 through 2020 is how quickly there can be backsliding. We have seen some success. I think we're on an upward trajectory, but you cannot take your foot off the pedal. You cannot abandon commitment to thinking about how we ensure equity in organizations, sports or otherwise. If you do that, I think you're priming yourself for a real loss. And thus concludes our two-part series on the Rooney Rule.

Thanks to everyone who spoke with us, Jeremy Duru, Chris Ryder, Scott Shepard, Tynesha Boye-Robinson, Herm Edwards, and especially Jim Rooney. Jim Rooney wrote a book about his father, Dan, called A Different Way to Win. There is a forthcoming audio version of the book that includes interviews with several key Pittsburgh Steelers, as well as current NFL Commissioner Roger Goodell and former Commissioner Paul Tagliabue. Also, if you run any kind of big organization that hires a lot of people every year and you want to help the Michigan business professor Chris Ryder run that experiment he mentioned to see if the Rooney Rule really works, send an email to radio at Freakonomics.com. We will pass it along. Coming up next time on the show, did you know that 60% of Americans today work in jobs that didn't exist in 1940?

We're constantly thinking of new things to desire, new services to offer, new goods and products. But what happens is our labor becomes more digital and less physical. Modern efficiency has robbed most of us of that profound satisfaction that comes from baking a loaf of bread, digging a hole in the garden, going fishing. There are still people doing physical work. That's Bob. I've been up on that beam with him. That's the West Side Highway. But we talk about all those new jobs, too, jobs that sometimes require an explanation. It's kind of nerve-wracking, I will be honest. Do you ever find yourself asking, what exactly do people do all day? We did. That's next time on the show.

Until then, take care of yourself. And if you can, someone else, too. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app. Also at Freakonomics.com, where we publish transcripts and show notes. This episode was produced by Teo Jacobs. Our staff also includes Alina Kullman, Augusta Chapman, Dalvin Abouaji, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippin, Jasmine Klinger, Jeremy Johnson, John Schnarz,

Julie Kanfer, Lyric Bowditch, Morgan Levy, Neil Carruth, Rebecca Lee Douglas, Jeremy Johnson, John Schnarz, Julie Kanfer, Lierich Bauditch, Morgan Levy, Neil Carruth, Rebecca Lee Douglas, Sarah Lilly, and Zach Lipinski. Our theme song is Mr. Fortune by The Hitchhikers. Our composer is Luis Guerra. As always, thank you for listening. This is my favorite question. The Freakonomics Radio Network. The hidden side of everything. Stitcher.