In the past few years, numerous studies have indicated that on top of the social good it can do, diversity and inclusion has bottom-line benefits for organizations that invest in it. Research has found that diversity helps teams think better by disrupting conformity, that companies with more women in leadership make more money, and that businesses that engage in racial discrimination are more likely to fail. Our work at CEB, now Gartner, also finds that organizations tend to perform significantly better when they have more inclusive work environments. While some scholars have questioned a few of the links between diversity and performance or argued that this isn’t the right reason to invest in D&I, there is plenty of material out there with which to make the business case for it.
Another way of thinking about the value of diversity is in terms of the costs of homogeneity and exclusivity. MIT business professor Evan Apfelbaum recently dove into the specific ways diverse teams can improve teams’ decision making in an interview at the MIT Sloan Management Review. Apfelbaum’s research found that diverse teams spent more time deliberating important decisions, while more homogenous groups were prone to falling into a groupthink trap, where mistaken opinions are more likely to spread. Indeed, that’s one reason to think twice before recruiting for “culture fit.”
Previous studies on juries and student groups found that being on a racially diverse team changed how people approached legal issues and that people prepared more thoroughly when they knew they would be discussing things with a more diverse group. In both of Apfelbaum’s studies, this led to higher quality outcomes.
It has been a rough year for Uber on the talent front, where it has faced a reckoning over an organizational culture that stands accused of enabling rampant gender discrimination and sexual harassment. The scandal led to the firing of 20 employees, including executives, as well as the ouster of founder Travis Kalanick from the CEO position in June, while former US Attorney General Eric Holder was hired to lead an independent investigation into what went wrong. It also sent Uber directors scrambling to explain to investors and the public what they were doing to detoxify the ridesharing company’s culture, such as hiring Harvard business professor Frances Frei as senior vice president of leadership and strategy.
Dara Khosrowshahi, the former CEO of Expedia who took up the helm of Uber in August, has moved quickly to assure employees and investors that he is taking the culture clean-up seriously and that the kind of behavior that was allowed to slide under Kalanick would no longer be tolerated. In a LinkedIn blog post published on Tuesday, Khosrowshahi laid out a new set of cultural norms for Uber that includes a sharper focus on inclusion and ethics:
We celebrate differences. We stand apart from the average. We ensure people of diverse backgrounds feel welcome. We encourage different opinions and approaches to be heard, and then we come together and build.
We do the right thing. Period.
In keeping with best practices for culture change management (including what we have found in our own research at CEB, now Gartner), Khosrowshahi said this new set of values was developed through a bottom-up process that engaged employees directly in making decisions about how the culture needs to change:
According to our research at CEB, now Gartner, even though 85 percent of CEOs believe it enhances business performance, only one third of employees are satisfied with diversity and inclusion at their organization, while nearly 60 percent of heads of HR believe their D&I strategy is ineffective. Many organizations are focused on making their cultures more inclusive and ensuring compliance with evolving legislation, but aren’t always seeing the results they had hoped for.
At our recent summit for HR executives in Johannesburg, more than 100 HR executives from 45 organizations had the opportunity to share ideas and hear from a panel of their peers how progressive organizations in South Africa are addressing the challenge of enhancing and evolving their D&I strategies.
1) Bring the Outside In
When defining what successful D&I looks like, our participants highlighted ideas and innovations, deliberate dialogue and co-creation, and thinking about diversity in all aspects: clients, products, and employees alike. The more integrated these are, the greater the impact. Many companies find that hiring employees from more diverse backgrounds gives them a way to engage new markets through new products, ideas or services. By bringing new perspectives into the organization, companies were better able to address the needs of both employees and customers.
2) Tackle Systems and Processes
Organizations that have made progress on D&I stressed the value of accelerated development programs that have yielded results in nurturing internal talent, including C-suite executives developed from within the organization; as well as the need to make hard decisions such as suspending the promotion process because the pool of candidates was not diverse enough.
Even though 91 percent of S&P global companies offer D&I training with 46 percent of organizations conducting their D&I training to mitigate unconscious bias, but as one participant shared, “It’s hard to catch bias in the moment.” One way to mitigate bias is by creating accountability for decision makers. For example, rather than expecting a hiring manager to make unbiased decisions independently, organizations are using a diverse panel when interviewing candidates. (To learn more, CEB Recruiting Leadership Council members can read our research on Driving Diversity Through Talent Acquisition.)
CEB's Clare Moncrieff (L) and Mazars CLO Tyra Malzy (Simon Meyer)
According to recent research from CEB (now Gartner), in order to create an inclusive climate for teams, organizations need to focus not only on climate quality (the average level of inclusion that employees feel) but also on climate strength (the variation between how different employees perceive the inclusivity of their team). In a session on building inclusive leaders at our ReimagineHR conference in London on Thursday, we heard from Tyra Malzy, Chief Learning Officer at Mazars, about her experience integrating inclusion into her company’s business practices and engaging its younger workforce in decision-making. Here are some of the strategies she shared:
Normalize Inclusion in Leadership
As Malzy explained, Mazars needed to reach out to its millennial employees and help senior leadership see the business value of including these employees in its decisions. To meet these goals, the company made several key choices.
- Start with saying “yes”: Mazars found that when leaders were concerned with the impact of change, they often responded in a risk-averse manner, usually resulting in saying “no” to ideas that deviated from the organization’s typical decision-making process. By making a habit of saying “yes” more often, this helped generate a more open environment for co-developing solutions.
- Crowdsource ideas from employees: An important component of making leadership more inclusive is empowering employees to lead from the ground up. Mazars created an app for individuals to share their ideas with others within the company, vote on those which they like the best, and then have the top five presented to senior leaders. Finally, the executive team picks which business ideas to implement. Mazars also surveyed employees to understand their thoughts on management preferences and organizational culture. They then used this information to create specific projects associated with the interests of the employees.
- Bring visibility to functions and individuals that are doing this well: By sharing examples of diverse groups that are outperforming other teams or functions, Mazars challenges teams with limited diversity to step up their diversity of thought and improve their outcomes.
Create a Culture of Inclusivity in Decision-Making
In January 2015, Intel CEO Brian Krzanich unveiled an ambitious diversity and inclusion initiative, announcing that the company was allocating $300 million toward a plan to achieve “full representation”—meaning that Intel’s US workforce should be at least as diverse as that of the United States as a whole—by 2020. On Tuesday, the tech giant released its mid-year diversity report for 2017, showing where that effort stands halfway to its deadline. Like its past few reports, this one shows Intel making progress, albeit slowly and unevenly, toward its goals. While the raw percentages appear to show little progress—Women’s representation in all roles increased 0.3 percent over last year, but representation among underrepresented minorities remained fairly static—Krzanich says the company is now on track to meet its goal of “full representation” by 2018 instead of 2020, Lydia Dishman reports at Fast Company:
It’s important to note that full representation means that Intel’s target is “market availability,” which measures how many skilled people exist in the external U.S. labor market (drawn from multiple sources, including university graduation data from the National Center for Education Statistics and the U.S. Census Bureau) as well as Intel’s own internal market. That means the company is tracking its efforts in hiring, retention, and progression for every job category–both technical and nontechnical–for women, African-Americans, Hispanics, and Native Americans.
As such, there have been some positive gains since December of 2014 when the gap to full representation was 2,300 employees. Today among about 55,000 employees in the U.S., that gap is down to 801 people, an improvement of 65%.