One of the biggest challenges facing HR and Talent leaders today is the rapid pace at which the workforce is changing across the globe
Generational turnover, cultural evolution, widespread immigration, emerging markets, and advancing technology have all played and will continue to play a major role in creating an increasingly complex corporate and industrial ecosystem that both breaks down old and creates new barriers to recruiting, developing, and retaining talent.
In the midst of these changes, workplace diversity has gained currency in C-suites around the world as business leaders seek to develop a more cohesive, collaborative, and creative work environment as a means of driving continued growth. What often gets lost in the conversation is inclusion, the twin component of diversity that ultimately leads to business success. To help business and talent leaders better navigate the topic, we are going to explore the definitions, benefits, state of, and best practices for diversity and inclusion in today’s workplace.
The Society for Human Resource Management (SHRM) defines diversity as “the collective mixture of differences and similarities that include, for example, individual and organizational characteristics, values, beliefs, experiences, backgrounds, preferences, and behaviors.” They break down diversity even further into two categories – visible diversity traits and invisible diversity traits. In discussions revolving around diversity, visible traits are often what is emphasized and include race, gender, physical abilities, age, and body type. Invisible diversity traits include things such as sexual orientation, religion, socio-economic status, education, and parental status among other things.
Inclusion, while closely related, is a separate concept from diversity. SHRM defines inclusion as “the achievement of a work environment in which all individuals are treated fairly and respectfully, have equal access to opportunities and resources, and can contribute fully to the organization’s success.
It is important to establish a clear understanding of how the concepts of diversity and inclusion differ, as many well-intentioned companies have made the former a priority while neglecting the latter, leading to disappointing outcomes that often undermine the totality of diversity and inclusion efforts.
There are a myriad of benefits to building a diverse and inclusive workforce at every level of a company, not least of which is the need to address a looming retirement crisis by pulling in talent from historically under-tapped demographics. In a recent post we explored the concurrent departure of The Baby Boomer Generation from and Millennial Generation ascendance into the workforce and their implications for companies’ talent management strategies. Looking beyond generational changes, a recent study by McKinsey found that return on equity is 53% higher on average for companies ranking in the top quartile of executive board diversity while EBIT margins were 14% higher on average.
This of course begs the question, why do companies that prioritize diversity and inclusion perform better?
Boris Groysberg and Katherine Connolly of Harvard Business School conducted a study in 2013 of 24 companies that had earned reputations for making diversity a priority. One of their key findings was summed up perfectly by Paul Block, the CEO of Mersant who told them “People with different lifestyles and different backgrounds challenge each other more. Diversity creates dissent, and you need that. Without it, you’re not going to get any deep inquiry or breakthroughs.” The dynamic created by dissent prevents organizations from becoming too insular and out of touch with their increasingly heterogeneous customer base and as a result, working teams are able to come up with a wider range of solutions to business problems.
Further, an inclusive workplace that understands the needs of their employees, making them feel valued and respected has a significant and positive impact on employee retention. Perhaps most importantly, research suggests companies that openly articulate values of inclusion and have a diverse workforce tend to appeal to a wider customer and supplier base.
The Current State of Diversity
In the past 20 years, diversity and inclusion has grown as a corporate imperative. According to SHRM statistics, 55% of companies are big promoters of diversity while 42% of diversity programs are advocated by the CEO, top leadership, and HR heads. While approaches in various parts of the globe differ – diversity and inclusion programs in North America tend to be more centralized while programs in Asia and Europe are more relaxed – one commonality around the world has been a heavy focus on hiring and promoting women.
The focus on women is understandable as they constitute 50% of the global population and are easier by comparison to integrate into an organization due to fewer overall cultural differences with men who are heavily represented at the highest levels in the corporate workplace. As a result, a majority of business leaders are concerned about large gaps in mirroring the general population, particularly with regard to three systematically under-represented groups: workers over the age of 50, individuals with disabilities, and religious and ethnic minorities. In the coming years it will be important for companies to overcome the hurdles that prevent these groups from being incorporated into the highest levels of an organization.
Diversity and inclusion will continue to dominate the discussion in boardrooms and HR divisions across the globe as the makeup of the workforce changes significantly. In order for business and HR leaders to maintain talent continuity and broaden their appeal in various market segments, they must develop a clearer understanding of diversity and inclusion and how those concepts fit together. The benefits of building a workforce of diverse people who are empowered to positively contribute to a company’s success are numerous – from better financial performance and more innovative problem-solving to easier employee retention and greater appeal to customers. So much progress has been made in the last few decades, but in order to fully take advantage of the power diversity and inclusion brings to an organization, consider incorporating these three best practices to continue building on the foundation of diversity and inclusion you have established:
Continually build pipelines of diverse talent
It should go without saying that minority groups of all kinds are by their very nature, smaller than their majority counterparts. Size constraints of varying degrees can make recruiting the right kind of talent from a given group quite the challenge. Often the biggest barrier to building a diverse and inclusive workforce is the unfounded concern that an organization must sacrifice quality to meet a quota. The truth is that high quality, diverse talent exists but it may be harder to find.
Combatting this dynamic requires advance preparation. Companies should make a point to engage with diverse talent on an ongoing basis long before the need arises to pull new people into the organization. By proactively getting to know people of varying backgrounds, business and HR leaders will be prepared to hire diverse talent with speed and confidence.
Be flexible and lead by example
Flexible work arrangements can be very beneficial to the development of a diverse and inclusive workforce. Flexibility such as work-from-home options help to alleviate the pressures of recruiting diversity candidates who may be a good fit for a role but may not be in a position to relocate. For candidates who are able to relocate, such flexibility often helps to reduce the impact of leaving behind a support system of friends and family who might otherwise step in to assist with things like child care. Flexibility provides the added benefit of aiding in the recruitment and retention of women at the senior level who, despite working full-time, still take on the bulk of household and child care responsibilities.
The key to making flexibility work is leading by example. It is not enough to simply put a policy in place – employees must understand and believe that taking advantage of flexible work arrangements will not reflect on them negatively. Very senior leaders should find ways to demonstrate that sometimes family considerations take precedence – and that’s okay.
Emphasize mentoring and coaching
Providing access to leadership and training opportunities for women, minorities, and other historically underrepresented groups at lower levels in the organization will boost efforts to craft a more diverse and inclusive senior leadership team by ensuring that diverse candidates are eligible and qualified for promotions. Mentorship programs have the added benefit of fostering inclusivity by offering employees a feeling of belonging and a safe place to discuss sensitive issues. This also creates a “chain of command” of sorts for escalating issues to senior leaders who are then enabled to keep an eye on the challenges of promoting diversity and inclusion, and can re-calibrate programs or approaches as needed.
Diversity and inclusion is a complex and nuanced topic with many factors for business and HR leaders to be aware of. In the coming months we will further explore ways to boost diversity and inclusion efforts but these three best practices are a good start for companies that are struggling to recruit and retain people from varying backgrounds. To develop a better grasp of how strong your diversity and inclusion efforts are, download our employee engagement survey to gain an understanding of the perceptions your employees have around this topic.