According to onboarding resource firm Sapling, 64% of job seekers say that diversity and inclusion is an important factor in their decision to accept an offer. Sadly, however, only 55% of people feel that their companies promote diversity and inclusion.
As Sapling states, “If you want to be able to recruit and retain a new generation of workers — and see improved business outcomes as a result — it’s time to build a stronger focus on diversity, equity and inclusion.”
For corporations, it begs the question: If the majority of job seekers want to work for a company that has a diverse and inclusive culture, is your organization attracting or repelling talent?
Let’s be quite clear. Diversity and inclusion in the workplace is not some feel-good, politically correct goal. It not only generates an atmosphere that encourages far-sighted, broadly-based, open-minded creativity and innovation, diversity and inclusion also drives bottom-line results.
There is mounting research from companies such as McKinsey & Co., Development Dimensions International (DDI) and Korn Ferry to prove the point.
A McKinsey study of 180 global publicly-traded companies found that companies with the most diverse executive boards showed returns on equity (ROE) that were 53% higher than those that were the least diverse. Earnings before interest and taxes (EBIT) were also 14% higher.
A DDI survey of more than 2,000 human resource executives and nearly 16,000 global leaders found that organizations with above-average diversity are eight times more likely to be in the top 10% for financial performance. Specifically, having a higher proportion of women and minority leaders is the most strongly linked factor to financial performance.
A major Korn Ferry report found that companies in the top quartile of performance were 3.6 times more likely to include diversity and inclusion among their publicly professed values. The report said, “All of this requires finesse — the ability to lead differently than before. By leading with authenticity, humanity and heart, CEOs can inspire greater performance than if they lead simply with instructions and direction.”
In spite of reports such as these and the compelling financial results, most companies are lagging when it comes to diversity and inclusion in leadership. Representation of ethnic minorities on executive teams in the United States and the United Kingdom in 2019 was only 13% (albeit up from 7% in 2014). Female representation stood at 20% — an increase over five years from 15%.
There’s still a long way to go. Laurence D. Fink, CEO and Founder of BlackRock, the world’s largest investment firm handling nearly $9 trillion of investments, warns, “If we are not a mirror of who our clients are, we’re going to fail.” Fink is a man who should be listened to.
What I’ve found as a culture consultant for companies of all sizes in numerous industries is that the drive for diversity and inclusion has to start at the top.
A fine example is Microsoft’s Satya Nadella, who has led a massive culture change since he was named CEO in 2014. Nadella says his job was to create a culture where the smart, the talented and the passionate can succeed — regardless of gender or ethnicity.
In his book “Hit Refresh,” he emphasizes the importance of the CEO as instigator and manager of culture: “The CEO is the curator of an organization’s culture. Anything is possible for a company when its culture is about listening, learning and harnessing individual passions and talents to the company’s mission.”
When you’re building your organization and defining or refining your culture, it’s essential to keep pace with the needs of your employees and customers. Increasing workforce diversity must be done in a genuinely inclusive way.
As Claudia Brind-Woody, vice president and managing director of intellectual property for IBM, says, “Inclusivity means not ‘just we’re allowed to be there,’ but we are valued. I’ve always said: smart teams will do amazing things, but truly diverse teams will do impossible things.”
Belonging doesn’t just mean being accepted. It also means being fully involved and invested in the organization’s purpose and mission. Belonging fosters participation, buy-in, engagement and trust. It also means being invited to participate and being made to feel welcome and valued. While it’s always great to be invited to the dance, what really matters is being asked onto the dance floor.
When organizations strengthen employees’ connections and a sense of belonging — not only to their mission and purpose but also to each other — they create cohesion. Cohesiveness drives better performance because teams are better able to collaborate. They see how each individual and the team as a whole all contribute toward a shared purpose. Such unity reduces potential conflict around differing opinions because, when we are working well together, such disagreements become fuel for brainstorming and creative problem solving rather than a source of divisiveness.
For companies that are looking for a bright future, here’s perhaps the most significant reason of all: We are genetically wired to belong. According to Pat Wadors, a researcher at LinkedIn, “Our brains are hardwired to motivate us toward connection and belonging — it’s how we survive and thrive. In fact, recent research in neuroscience has indicated that social needs are managed by the same neural networks as primary survival needs, such as food and water. Findings show that belonging and attachment to a group of coworkers is a better motivator for some employees than money.”
In the end, having a best friend at work and being heard in meetings can be worth more than a pay raise.
How to Increase Diversity
Many companies will tell you they are actively seeking diversity while doing no more than paying lip service to the concept. A McKinsey & Company study found that a third of companies are achieving substantial gains in diversity and inclusion, but “the majority are remaining static or declining — even when their leaders have articulated noble aspirations for inclusion and diversity.”
Creating a culture of diversity, inclusion and belonging is not as difficult as you might imagine. Below are some tips for your own organization:
- Analyze Your Strengths and Gaps: Are there certain jobs, departments or business units that are well balanced and diverse? How did they get that way? What are they doing to sustain the diversity they have?
- Look at the Communities in Which You Operate: How well does your workforce reflect the world in which you operate?
- Closely Examine Your Hiring Processes: Employee referrals often deliver great candidates who are a culture and skill fit. But if your workforce is not diverse, employee referrals will perpetuate that situation. Tap into community outreach and other nonprofit programs as a source for candidates, and encourage volunteerism at these organizations. Connect with university diversity groups if you recruit directly from colleges.
- Create an Inclusive Environment: Look for ways to build your reputation as an inclusive workplace. You will attract the kind of candidates that value diversity, inclusion and belonging.
- Encourage Mentorships and Sponsorships: Encourage employees to find mentors and sponsors to help them develop their skills, and encourage your leaders to be mentors and sponsors. Get employees and leaders thinking about talent on an ongoing basis. Mentors help employees evaluate their careers and what they need to develop. Sponsors help them make it happen.
- Provide Diversity and Inclusion Training: Educate employees and managers on the bottom-line value of diversity — and how to support it with practical skills. Consider bringing in an outside diversity expert to provide this if it is not an area of expertise within your HR team.
- Focus on Retention: Do your diverse hires stay? Crunch the numbers. If not, find out why these hires no longer felt they belonged at your organization.
- Empower Employees to Form Affinity Groups: Think of affinity groups as an internal networking process. These are safe places for employees to share common interests and support each other. Sometimes called employee or resource groups, they have been mainstays of many organizations to help recruit, develop and retain diverse candidates.
- Measure Your Progress: Track changes in diversity in your leadership ranks. This is a way to measure what you are doing and provide great data for attracting more talent to your organization.
- Invest in the Future: Millennials represent the most diverse workforce employers have seen. Develop programs that focus on young professionals’ values and needs.
The bottom line is that any organization in 2021 needs to have a positive approach and embrace diversity throughout its ranks if it wants to attract and retain new talent that will help deliver serious, long-term success. Diversity may be the right thing to do morally, but it’s also the right thing to do from a smart business perspective.
Jason is an authoritative culture change strategist whose work over the past 20-plus years has helped companies build strong, sustained revenue growth by empowering their employees and developing energizing office cultures. He is the author of the groundbreaking book Culture Spark: 5 Steps to Ignite and Sustain Organizational Growth. Jason is working on a follow-up called Culture Ignited: 5 Disciplines to Inspire Adaptive Leadership.