My colleague tells me that everyone knows diversity is important. To his point, diversity has been a mainstay in corporate thought leadership for decades. However, what we haven’t seen is that knowledge manifesting in the marketplace in a meaningful way. In recent years, diversity has been used as an umbrella term to describe “marginalized” or “underrepresented” groups. As it stands today, diversity in this context includes gender, ethnicity, religion, sexual orientation, socio-economic status, age, and ability.
Diversity matters because diverse teams outperform non-diverse teams. Diverse teams are smarter, solve problems faster and more creatively, and make more sensible decisions. Teams with women are more innovative than teams with none. Those teams with women are also more profitable. While the case for diversity in business is clear, embracing and enacting diversity in practice is far more elusive. MIT professor Thomas Kochan has been reported as estimating that companies were spending a combined $8B annually on diversity efforts. This figure is from 2003. To put that investment in context, let’s take a look at where US companies are spending over the past few years. In 2018, US companies spent $88B on corporate training and development programs. A separate study found that US companies were on track to spend $112B on business travel for 2019. Collectively, $240B was spent on advertising in the US in 2019. In 2018, the NSF found that US companies spent $441B on research and development. These categories have been highly regarded as business critical items for future success by developing in-house talent for future demands, finding and connecting with customers for future sales, and discovering future products and services. Based on the figures, diversity has been largely overlooked as an avenue for leaders to further enhance their firms’ competitive advantage in the marketplace.
As a business leader, you have many responsibilities: your fiduciary responsibility to improve shareholder value, your responsibility to create and hold to your company’s vision and mission, and your responsibility to create and maintain a safe working environment for your employees. Your job is to protect, ensure, and fuel the future growth of the company at a time when the competitive landscape is merciless. With companies like Amazon erasing industry lines and eager, well-financed startups nipping at your heels, your focus must be on sustainable innovation. The best way to secure innovation for the future is with an inclusive and diverse workforce that operates within an equitable system.
You have the responsibility and the power to spark change at scale, so let’s talk about how you can get this right. Take a human-centric approach to understanding what diversity, equity, and inclusion can mean at your firm. Start with your own understanding, then explore what your employees and colleagues are experiencing, then take a look at how your business can exemplify DE&I values at its core.
- Do YOUR homework. Just like any new innovation that comes to market, you have to be aware of and familiar with the forces at play.
- Learn how to define and recognize racism, classism, sexism, ableism, ageism, and bigotry.
- Find out how these forms of oppression show up in the world and in your workplace.
- Come to terms with how these forms of oppression are carried out in your firm’s systems.
- Use HR data and conversations to develop a clear picture of who works for you, who’s leaving and why.
- Tactfully and with genuine interest in understanding and resolution, find out how your company supports and develops the diverse people you already employ.
- Get to know what their experiences are like at your company. Resist the urge to use these anecdotes as a way to generalize or otherwise treat groups as monoliths.
- Do the cognitive work of identifying, recognizing, and engaging the humanity of your employees as individual human beings.
- Work on defining DE&I for your own company based on your own values and unique tapestry.
- Embrace what matters to your workforce. Your company likely already makes contributions that are believed to serve your collective interest. Lean into the fact that government policy directly affects your workforce and its ability to complete work for your company effectively and efficiently.
- Reuters tracked that corporations pledged more than $1.7B to address racism and injustice just last year. Nearly a year later, many of these pledges have yet undisclosed plans for distributing and using the funds. Even fewer of these pledges have metrics or public tracking of the funds to measure impact.
- Recognize that DE&I is not just “someone else’s” issue. This is a matter of your firm’s long-term profitability -- from your ability to attract and retain talent to your ability to attract and retain customers. DE&I makes your company more competitive:
- Smarter teams – Harvard Business Review released an article detailing several studies that found diverse teams are able to solve problems faster than teams of cognitively similar people.
- Enhanced innovation – BCG found that companies that reported above-average diversity on their management teams reported 45% of their revenue comes from products and services launched within the past three years. This same 2018 study found that companies with above-average diversity on their management teams reported 19% more innovation revenue than companies with below-average leadership diversity.
- Improved profitability – McKinsey & Co. found that companies in the top quartile for gender diversity were 21% more likely to experience above-average profitability. This same 2018 study found that ethnic and cultural diversity resulted in a 33% increase in performance.
- Challenge the pipeline myth. Accept that your firm’s lack of representation throughout the ranks is not a recruitment “pipeline” issue. We’re here, qualified, ready to work, and looking to make a positive impact.
- Take steps to break out of clone syndrome when it comes to recruitment. While culture is incredibly important as we work on creating healthy employee experiences at work, hiring for a poorly defined “cultural fit” can perpetuate bias and result in homogeneous teams. Learn from the most recently published Facebook scandal.
- Update your interview process so that homogeneous hiring is discouraged. Stop using so-called cultural fitness exercises like asking “Would I like to have a beer with this person?”
- Authentically commit to the tenets of DE&I not because of a groundswell of popular opinion but because it aligns with the values you promote to your shareholders and customers.
- Starting at the top, design your DE&I program to include initiatives that include accountability throughout the organization.
- If you find that your organization can benefit from hiring a DE&I leader, equip that leader to be effective. Treat DE&I as a necessary investment by dedicating resources. Make sure she is not out on an island.
- Align all publicly announced contributions to related causes with internal practices and demonstrated values. Resist the urge to commit a few percentages of a cent on every dollar of revenue to a cause or group because it has come into vogue.
- Instill accountability for the program’s reach, progress, and results. Test different methods of incorporating DE&I values into your core business processes. Establish an evaluation approach and schedule.
- Ensure alignment of your company’s words, behaviors, choices, and actions. If you decided to jump on the bandwagon in 2020 and observe Juneteenth as a company holiday, make sure you’re also observing Martin Luther King, Jr. Day. These two days mark incredibly important movements in this country.
- Rise above the easy answer of deploying mandatory diversity training. These trainings are not only insufficient, they are counterproductive. Take it from Harvard sociology professor Frank Dobbin, PhD, “In a way, the worst thing you can do is to make [diversity] training mandatory and to make it focused on the law rather than, for example, the business case for inclusion in the workplace and the need to be welcoming to different cultures.”
- Regularly review internal data to understand the effectiveness of your initiatives.
- Overhaul your performance review tools, cadence, and process.
- Update your performance evaluation processes and metrics to measure true contribution to the business.
- Implement an effective 360 degree performance review so that managers who struggle to exemplify the company’s commitment to creating diverse, equitable, and inclusive environments can get help.
- Use exit interviews as a source of business critical insights.
- Weave DE&I into the fiber of your firm. While affinity employee resource groups are a great way to create community, those groups often result in the perception of separate resources for separate people. Segregation is problematic for everyone. A dedicated DE&I program or unit can be a useful starting point. It’s not the answer; it’s the start of a long road. DE&I needs to be at the very core of your company: how you make decisions, how you serve one another, how you speak to one another.
- Prepare yourself to give up your seat. If you’re not going to add more seats to the table, someone will have to leave the table to make room. If you’re committed to the cause and want to see your company close the gap between DE&I values and practices, you have to be ready to give up your seat to someone else. Alexis Ohanian did this last summer when he stepped down from Reddit’s board and asked that his seat go to a Black board member. Alternatively, if you remain unconvinced of the severity and ubiquity of exclusionary systems, then step aside. Any reluctance to embrace solving this issue in a real way is a danger to your employees, your customers, your business, and ultimately, your shareholders.
Turns out, no matter the topic, when it comes to employees, you’re dealing with human beings. The more compassion we show to each other, the better off we all are. We are all in this together. The COVID-19 pandemic should make this abundantly clear – we are all at risk until we are all immunized from that shared risk.
Without having done the homework, asking a leader to embrace DE&I is a lot like asking a fish to look at the water. Start with your personal understanding of why we need DE&I in 2021. Then get an understanding of what diverse employees experience on a daily basis at your company. After that, make a real investment in the health and quality of your employee experience by embedding diversity, equity, and inclusion into the core of your business: update systems, processes, and goals to reflect these values.
Despite the pandemic, we have never had a more diverse workforce. And it’s only getting more diverse with a very diverse Gen Z coming into the fold as less diverse Baby Boomers exit in droves. It will be vital to employee wellness, business profitability, and overall corporate health for the firm to act on its commitment to ensuring your workplace and your business are diverse, equitable, and inclusive. Your future depends on it.