|Written by Liz McDermott
In a rapidly changing and complex environment, as we seem to find ourselves continually, the only way a business can come up with creative and more innovative solutions is by having a very diverse and inclusive workforce. Unfortunately, when times are bad, Diversity, Equity, and Inclusion (DEI) programs tend to fall down the list as “nice-to-have” for most companies.
According to McKinsey, companies that excel at implementing diversity and inclusion strategies see measurable performance benefits, such as higher profits, customer loyalty, and employee retention. Most importantly, their research shows that companies with historically high levels of diversity on executive teams outperformed in profitability by almost 62 percent. On the other hand, business performance for lagging organizations was at 40 percent of the national industry median.
Why don't more businesses embrace diversity?
Culture plays a big role in every business case for diversity. Integrating gender diversity, ethnic diversity, and generational diversity is nearly impossible in some companies and easier in others. Some companies may only be open to a truly diverse workforce when it’s too late and business is tanking.
Polarized Views Impact Diversity Efforts
Gender diversity in 2022, as reported by The World Economic Forum, highlights that the gender gap has increased by a generation from 100 years to 136 years. The racial equity movement also lost momentum and progress on LGBTQI+ rights. Rigid beliefs around sexual orientation, gender identity, and expression continue to challenge the social acceptance of LGBT diversity efforts.
Furthermore, The World Health Organization estimates that 1.3 billion people – 17% of the world population – are disabled. These individuals are at an increased risk of social and economic marginalization across the world.
These new insights point to a growing polarization across the global economy, preventing real progress in increasing diversity efforts at companies.
Nearly 60 years after The Civil Rights Act and affirmative action were introduced in the U.S., equal access to career opportunities for women, ethnic minorities, and homogenous groups is still a struggle in companies today. On social media search results, it is easy to find negative sentiment around workplace diversity in the tone that learning about unconscious biases tends to increase bias. Some feel a moral obligation to prevent progress for the black lives movement. Diversity is a touchy subject, to say the least.
Lack of Awareness of Workforce Projections
Historically underrepresented groups, combined, are projected to account for the majority of the U.S. population by 2044. That means that in the near future, underrepresented demographic populations will surpass the majority white population, and there will eventually no longer be a single ethnic or racial majority in the United States.
Multiple studies by governments, consulting firms, and non-profits provide unlimited access to workforce population data, yet most executive teams are running a "blind" status quo, and that flawed approach keeps such companies from building a business case for diversity.
Missing the Economics of Diverse Teams and an Inclusive Work Environment
Today’s workforce is increasingly diverse, with a greater number of minority millennials entering the job market and remaining there for longer. This new dynamic creates new challenges for businesses — as well as tremendous opportunities.
A diverse team has the potential to bring greater innovation, creativity, and quality to any organization. By working together, diverse teams can create more opportunities for everyone involved to learn and grow. But to truly reap the rewards of a diverse team, all organizational levels must make sure that everyone feels included.
Inclusive workplaces are essential for creating a culture of inclusion. They offer employees the freedom to be themselves — without fear of discrimination or harassment — while allowing people with diverse backgrounds and experiences to come together and contribute their unique perspectives.
By building an inclusive workplace, you can not only increase productivity, efficiency, and profitability but also encourage a more diverse talent pool that will benefit your organization for years to come.
How to Create an Inclusive Culture
A culture that's inclusive fosters better communication, collaboration, deeper understanding, and empathy among all members, including diverse groups. However, in more diverse teams, an inclusive work environment can be a costly endeavor if not executed tactfully. There are a few things that HR leaders should keep in mind before implementing workforce programs in a more diverse workforce for a more inclusive environment.
Talk to Recruits, Employees, and Executives about Diversity and Inclusion
First, make sure to get buy-in from all levels of the organization. Not everyone will be comfortable with the changes that need to be made and expect to run into moral arguments. Don’t let this stop you from collecting data to learn about your workforce and back up your plans for creating a more inclusive culture.
Get buy-in from candidates before they start their rounds of hiring interviews to ensure workplace fit from the get-go. Remember that openness leads to change and that HR’s job is to create that openness in your team.
Be Realistic about Diversity and Inclusion in Your Organization's Culture
Second, set realistic expectations for how much your culture can shift and how long it will take to implement diversity and inclusion programs, among other priorities—measure program success by aligning DEI training efforts to business metrics. The financial benefits need to be clearly understood by leadership roles for diversity to have a chance at any company. If you are part of a fully remote workforce, consider the barriers to inclusion and the technology needed to provide an inclusive digital experience. Think creatively.
It may not be possible to transform your culture overnight completely. Instead, focus on incremental wins tied to reducing costs, driving profitability, and mission-driven behavior.
Consider Diversity and Inclusion Training as a Competitive Advantage
Lastly, educate sooner and often. The biggest challenge diversity and inclusion face is a lack of deep understanding of the case for diversity—the why. Providing online training is the cheapest way to communicate complex concepts that not only bring alignment on ideas and behavior but also help identify employee sentiment and foster innovation. Unconscious bias training, systemic racism, microaggressions, and responding to racial injustice are training topics that help staff understand what diversity and inclusion are in work environments.
Custom online courses allow you to set diversity standards in place with videos from executive teams and modules covering mission-driven expectations and goals. A benefit of investing in custom elearning is that it's a great channel for capturing data specific to your business through surveys and quizzes embedded in the training.
Don't leave employee onboarding entirely to the department or function doing the hiring. HR's leadership in employee resource groups is essential. For example, if there are more women in your workplace than men, make sure male employees have a safe channel for reporting incidents.
Go beyond new employee training and annual compliance training. Providing diversity and inclusion training to high-potential hires before they commit allows you to measure workplace fit at different stages of the employee lifecycle.
Training is a powerful workplace lever for increased diversity and inclusion in companies.
The Business Case for Diversity: 5 Starting Points
Diverse workforces lead to better products, services, and processes. They also improve company culture, increase employee retention rates, and reduce turnover costs. A workplace interested in creating or sharpening a business case for diversity and inclusion should take the following steps.
1. Articulate your organization’s business objectives from the "workplace diversity" perspective
Business objectives are the goals or outcomes that a company wants to achieve — and that are closely linked to its core business model. They are usually stated in terms of profitability, market share, and/or growth. Business objectives are often stated as key performance indicators (KPIs). KPIs are metrics that can be used to measure the performance of a company or other organizational unit by comparing the actual outcomes against predicted results or expected levels of achievement.
2. Agree on diversity drivers for the desired business results
Drivers are the reasons why achieving a particular business objective is important to your organization. They are the mechanisms by which the business objectives drive positive outcomes for the company. Diversity drivers might include:
- Improved consistency in new product and service development
- Increased retention rates among key talent
- Reduction in turnover costs
- Higher customer satisfaction rates
- Reduced time to market for new products and services
- Greater employee engagement
- More positive brand perception among stakeholders and consumers
3. Brainstorm the potential links between workplace diversity and business results
Diversity and inclusion strategies aren’t ends in and of themselves but are actually ways of achieving business objectives. So, it’s important to think about how these business strategies can benefit your organization. Ideally, you should brainstorm in a group setting and with representatives from all major organizational units, including HR, marketing, and customer service. This helps you to consider a wide range of potential benefits to focus your business case on, as well as mitigate any potential drawbacks.
Some common business benefits that organizations see from diversity efforts include:
- A richer talent pool
- Stronger employee engagement
- Improved flexibility and adaptability
- More creative problem-solving
- More customer-centric products and services
4. Synthesize and prioritize the business case for workplace diversity
As part of the prioritization process, you should outline the costs and potential barriers to your business diversity strategy. This includes time, resources required, potential pitfalls, and potential benefits. Similarly, you’ll also want to think about the best time to implement each strategy. Some DEI strategies have a shorter time frame for implementation, whereas others, like diversification of the executive team, take longer.
5. Test your diversity hypotheses through internal data analysis and external benchmarking
Some of the potential links between the business case for diversity and organizational performance may be difficult to quantify. You may not have a "diversity" budget for resources ahead of building your business case. You may be the only one that believes in driving organizational change for diversity strategies. In these cases, the best course of action is to test hypotheses through internal data analysis and external benchmarking.
Internal data analysis might include looking at your own employee satisfaction survey data, turnover rates, or customer satisfaction ratings. Employee data collection should include demographic data to help you associate feedback with gender diversity and ethnic minorities.
Make sure that your data collection surveys are explicit for diversity. Otherwise, you are likely to miss out on insights. You may find that male counterparts have a totally different experience than more women. Below are some example questions to help you get started:
- Based on who I am, I feel heard, and my opinions count at work.
- The people I work with treat each other with respect, and based on who I am, I feel respected and understood.
- Based on who I am, I feel valued because if I contribute to the company's success, I know I will be recognized.
You might also want to benchmark your performance against companies in your industry. Doing so gives you a baseline of where you stand against other competing organizations and allows you to identify areas where you can improve. An easy way to do this is by looking at reviews on Glassdoor for companies in your comp set. Consider other websites that measure diversity, such as Inside Voices, an online platform for diverse workers to submit anonymous reviews of their employers.
Conclusion: Companies Embracing Diversity Progress
Companies in the top quartile of gender and cultural diversity are experiencing above-average profitability. These companies have taken a systematic approach to demonstrate the business case for diversity and inclusion.
These companies ensure the representation of diverse talent by enabling equal access to career development through transparency and strengthening the accountability of executive teams for diversity and inclusion. Most importantly, these companies promote openness and tackle microaggressions to foster workplace fit and belonging.
The main takeaway is that the most diverse companies are now outperforming less diverse companies on profitability. If you are responsible for driving diversity progress for your company, consider Vubiz's DEI training to help you standardize your knowledge of complex topics such as unconscious bias and systemic racism.
For more information, please contact us to inquire about our DEI training program.