Tackling the Diversity Deficit in Your Company

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Tackling the Diversity Deficit in Your Company | Future Business

Over the last century, the role of business within society has changed dramatically, as economic metrics have become a central element of both political decision-making and daily life. Building on this progress, discussion around company success in the 21st century has increasingly focused on the topic of representation, with diversity deficit and inclusion emerging as important factors differentiating successful institutions from their competitors. So how do you start tackling the diversity deficit in your company.

“The past 25 years have seen unparalleled speed and breadth of change in process, opportunity and expectations” Caroline Williams, Director of Open Programmes at the Saïd Business School of the University of Oxford, explains. “When we look forward to the next 25 years the changes ahead will likely eclipse even these developments in their speed and consequence. Of all the trends in motion, it is arguably diversity that will have the biggest impact on the future of business – marking out who survives, who thrives and who doesn’t.”

Research by management consulting firm McKinsey suggests that the business case for diversity and inclusion (D&I) initiatives is now stronger than ever, with a substantial performance differential between the most and least diverse and inclusive firms.

In fact, McKinsey estimates that companies with more than 30 percent women on their executive teams are significantly more likely to outperform those with between 10 and 30 percent women. Companies with less than 10 per cent fall even further behind, indicating a serious profit motivation for firms to implement D&I initiatives without delay.

“When employees think their organisation is committed to, and supportive of diversity and they feel included, employees report better business performance in terms of ability to innovate, (83% uplift) responsiveness to changing customer needs (31% uplift) and team collaboration (42% uplift),” McKinsey reports.

What is workplace diversity & inclusion?

While academic study of D&I has grown in complexity over the last five decades, the underlying concept remains very simple – empowering the people that work in a company and ensuring they are well equipped to engage with the society in which they operate.

Diversity is a focus on the make-up of your workforce. Understanding what makes each employee different and the dimensions that make up their individual identify. This could be their age, gender, ethnicity, religion, disability, sexual orientation, education, and national origin.

Trish Foster, senior director at the Gloria Cordes Larson Center for Women and Business notes that “no individual is defined by one identity” but that by taking “a broader approach to how we view others, we’re less likely to stereotype people or consider them as token representatives of a particular group. And we’re more likely to view co-workers as equal partners who deserve our respect.”

Closely linked to this concept is the idea of Inclusion, which focuses on the ways in which different groups of people can contribute to an organisation and the ways in which their differing presence and perspectives can create both opportunities and obstacles. This is primarily about ensuring that every employee feels able to participate to their full ability.

Author and leadership expert Alison Maitland comments that “without inclusion, diversity remains unfulfilled potential” and this position is affirmed by numerous examples from the busines world, where the benefits can be seen in both productivity and profitability.

Creating an inclusive workplace

Although diversity and inclusion are often two sides of the same coin, one key difference between them is that the former is largely fixed by the make-up of the workforce while the latter is based around a set of behaviours that can be altered more rapidly. While the composition of your workforce might take years to change, inclusion can be readily changed through training and coaching.

“By investing your time and money into a very important learning and development intervention you are not going to solve everything. It’s a really important part of the journey but it’s not the journey in itself,” Mark Shillabeer, director of training firm Steps, comments.

“It’s about creating a supportive environment for people to ask more questions, seek more help, talk to and challenge each other and keep the conversation going. This has to happen in the weeks and months after a learning intervention and it has to live and breathe forever in an organisation.”

Alongside training workshops and initiatives, the role of the board as an exemplar is vital both for diversity and inclusion Ana Paula Assis, general manager at IBM highlights the “very important roles” that both the board and the executive committees have in an organisation.

“Most of the time, we talk about leadership setting the tone, but I think it’s even more crucial that they set the example,” Assis explains, adding that the ability to actively engage with diverse employees and clients requires an organization “that really demonstrates that it not only sets policies, but also executes and leads policies”.

A recent survey by industry analyst firm Gartner showed that D&I is now the top talent management priority for CEOs, yet only 36 percent of D&I leaders believe their organisation has been effective at building a diverse workforce. This is despite more than 800 of the companies surveyed having signed the CEO Action Pledge for D&I and an estimated US$8 billion a year spent on diversity trainings in the US alone

“While CEOs are prioritizing and committing to the values of D&I, and want to see progress, ultimately the current measures aren’t moving the needle enough,” Lauren Romansky, Gartner Managing Vice President, comments.

Further reinforcing this shortfall, only one-third of employees think they have the ability to influence inclusion at their organization and just 27 percent feel that their organization provides information about opportunities to promote inclusion in their day-to-day work.

Tackling this deficit is one of the major challenges for companies today but Gartner’s data suggests that training can provide a clear path for improvement. Companies which enact sustainable D&I strategies are estimated to deliver a 20 percent increase in organizational inclusion and this translates into a 6.2 percent increase in on-the-job effort. This in turn can drive increase of almost 3 percent increase in individual employee performance and a five percent rise in employees’ intent to stay in their job.

Boosting bottom-line

As well as improving productivity and employee happiness, the main benefit for most firms is the boost to profitability that these workplace changes can bring. For many businesses, the burden of additional training and process change may be seen as an unnecessary cost, particularly in the difficult operating environment that many companies find themselves in post-Covid. However, research has shown time and again that D&I is not an optional extra but vital investment to safeguard the company’s bottom line.

“Workplace diversity improves innovation, decision making, revenue generation, and probably every other aspect of an organization,” Amber Corrin, director of content at Sage Communications. “This is true because, at least in part, diverse backgrounds create diverse ways of thinking, diverse approaches to problem-solving and diverse experiences that shape performance.”

Research from McKinsey in 2019, showed that that companies in the top quartile of gender diversity on executive teams were 25 percent more likely to experience above-average profitability than peers in the fourth quartile. What is more this trend appears to be strengthening with McKinsey reporting that this figures had increased from 21 percent in 2017 and just 15 percent in 2014.

“Studies have shown that when companies have diversity at board level, they perform better. This is partly because diversity is necessary for greater innovation – different voices and different ways of thinking enable new thinking, and can call out blind spots,” Evie Samuel organisational science consultant at employee experience platform Qlearsite, comments.

Sustainability

A further key reason that D&I programmes have risen to the top of the agenda for companies around the world is the link to sustainability. With climate-change now widely recognised as one of the biggest challenges for economies in the 21st century the transition to net-zero is a major focus for businesses small and large.

Williams of the Saïd Business School notes that “diversity is at the heart of sustainability in all senses, from environment to business culture, from the internet of things to the landscape of AI. And it means nothing short of a revolution in how and why we do business – and by what metrics we measure success. These are purpose-led, complex challenges that will need inclusion as a big part of any strategy to understand the ways forward.”

UN Secretary-General Antonio Guterres highlights the numerous challenges for businesses seeking to grow in a sustainable way when he calls the climate problems of this century “a code red for humanity”. Despite the many difficulties however, the good news is that those firms successful in driving change stand to win not only in terms of, new ways of working, new efficiencies and a stronger workforce but also in a long-term sustainable business model.

“At this point in time, with intense social and business change accelerated by both the digital revolution and the pandemic, when environmental crises have become regular rather than extraordinary events and social justice movements have underlined generational impatience with a narrow status quo of power and visibility, we are at a crossroads,” Williams concludes, adding that leaders must have “the courage to bring diverse conversations into the room and realise they’re not necessarily going to roll out in a way you expected, but they can offer solutions you potentially hadn’t even thought about.”

Tackling the diversity deficit in your company is a key challenge but once solved can be proven to be a significant asset towards businesses and provide financial benefits.

SEE ALSO: The Business Benefits of Diversity, Equality and Inclusion

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