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Why Firms Fail at Diversity Initiatives

Executives who have successfully made consistent progress on diversity and inclusion do two things differently

Diverse and Varied WorkforceIt’s hardly a corporate secret that a company can boost the productivity of all employees by employing a diverse workforce and supporting a work environment which does not exclude people based on gender, sexual orientation, race, and a host of other qualities that people can be can be discriminated against for possessing.

CEB data show that employees in this type of environment work 12% harder, are 19% more likely to stay longer with the organization, and collaborate up to 57% more effectively with peers.

And the majority of executives recognize that diversity and inclusion (D&I) is a competitive advantage, as 80% strongly support D&I initiatives, especially as they must capture market share, innovate, and operate in different, and often global, customer segments. And in virtually every investor call and annual report, they cite D&I as central to their business priorities.

Diverse Challenges

Although the senior executive team may set global D&I objectives, these will often be rendered irrelevant for large swathes of the workforce due to differing market situations, customer bases, and legislative issues. For example:

  • As a result of European Union mandates, companies in Europe are especially focused on gender and age.
  • In Australia, D&I concerns center on Aboriginal representation and gender issues.
  • Post-apartheid rulings remain the dominant influence in South Africa.

Even within countries, the focus varies. So, although nearly all organizations do have a D&I “initiative,” it rarely means that all employees are working toward the same goal.

Depending on the country, only one-quarter to one-half of workers say their organization is either diverse or inclusive. Executive teams rarely reflect their broader workforce or the demography of their customers. These problems persist despite a proliferation of policies and programs—from affinity groups and diversity councils to scorecards and unconscious bias training—to promote D&I in the workplace.

How to Make Progress

As with so much in business, the devil is in the detail. Global D&I objectives are not a bad thing and many will argue they are necessary but they’re not sufficient. Senior executives must, then, help regional managers make the link between these enterprise D&I objectives and how to make a difference in their market or region.

Executives who have successfully made consistent enterprise-level progress on D&I do two things differently:

  1. Encourage regional ownership of broad organizational D&I objectives: Leaders need guidance to adapt the organization’s overall D&I objectives to their region or market.  One CEB member in the business services industry does this by creating a consistent framework based on nine common business and HR processes.

    The firm’s leaders assess these processes within local operational contexts and compare them to the company’s stages of D&I progression. By providing both a framework and an assessment scale, the firm gives employees a common D&I vocabulary and a way to hold leaders accountable for progress.

  2. Assess and reward teams for their progress, even if they fall short of end goals: Competing strategic initiatives can make D&I goals seem less urgent or harder to achieve.

    A CEB member in the aerospace and defense industry increases business leaders’ focus on improving D&I outcomes by translating organizational D&I objectives and strategy to business unit specific D&I objectives. This enables business leader ownership of diversity objectives and holds them accountable for progress.


Download an excerpt of “CHRO Quarterly: Q2 2014” to learn what D&I challenges HR executives are tackling.


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