Diversity and Inclusion Are Very Much Works in Progress

August 14, 2018 John Rossheim

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Reading the headlines about employers’ diversity and inclusion successes, you might think that American industry’s D&I goals are nearly a done deal. It’s common to hear that companies are bringing diverse employees into marketing efforts to help the enterprise reach the broadest range of customers and prospects. And many enterprises’ management teams have transcended their all-white, all-male past.

But the latest research tells a different story.

Consider these facts on workforce race and ethnicity from consulting firm McKinsey’s January 2018 survey report, Delivering Through Diversity:

  • Black Americans comprise 10% of U.S. graduates but hold only 4% of senior executive positions
  • Hispanics are 8% of graduates but only 4% of executives
  • Asian Americans are 7% of graduates versus 5% of executives

Those numbers say something about the state of diversity in U.S. organizations, but what’s the trend? Isn’t diversity progressing rapidly as companies work hard to improve it?

Think again.

American companies are becoming more diverse … very slowly

“The numbers are not improving, or not improving fast enough, especially in technology. Sometimes they’re even backsliding,” says Jennifer Brown, CEO of Jennifer Brown Consulting.

Indeed, the McKinsey report finds very slow progress along the lines of both gender and ethnicity. Compared to a study three years earlier of mostly American and British companies,

  • Female representation on executive teams has increased only 2 percentage points, to 14%
  • Ethnic and cultural diversity has risen just 1 percentage point, to 13%

Says Brown: “There are plenty of companies, probably most, that don’t have any diversity and inclusion strategy at all.”

Diversity and the bottom line

In the meantime, as reality continues to lag many organizations’ stated goals for diversity and inclusion, the evidence builds that this shortfall goes to the bottom line. “The penalty for bottom-quartile performance on diversity persists,” says the McKinsey report. “Overall, companies in the bottom quartile for both gender and ethnic/cultural diversity were 29% less likely to achieve above-average profitability than were all other companies in our data set.”

That’s another strong reason to create an inclusive organization and workplace. And increasingly, research shows that – whatever the demographics of employees – cultivating diversity of thinking is key to the health and profitability of the enterprise.

“The goal is to create workplaces that leverage diversity of thinking,” says a 2018 report by accounting firm Deloitte, The Diversity and Inclusion Revolution: Eight Powerful Truths. “Why? Because research shows that diversity of thinking is a wellspring of creativity, enhancing innovation by about 20%. It also enables groups to spot risks, reducing these by up to 30%.”

Culture and workplace inclusion

Yes, we know that inclusion – maybe it’s just another word for diversity in action – translates to success in business. Deloitte, for example, reports that "an increase in individuals’ feelings of inclusion translates into an increase in perceived team performance (+17%) and decision-making quality (+20%).”

But inclusion of the cultural kind – whether it means welcoming the identities of all employees, or incorporating a true cross-section of the workforce into decision-making processes – can get complicated.

“With any culture, you might exclude people, and that’s a challenge at the organizational level,” says Willemien Kets, an associate professor of economics at the University of Oxford in England.

This means it’s incumbent on organizations to recognize – even highlight – differences, to make the point that when it comes to who people are, it’s all good. Or as the official jersey of France’s 2018 World Cup-winning, very diverse team put it: “Nos Differences Nous Unissent” – our differences unite us.

“How people are celebrated, how cultural differences are celebrated – a lot goes into whether an organization feels inclusive,” says Brown.

Recognizing contributions, celebrating successes

To further diversity and inclusion, it’s critical for employers to regularly shed light on the progress of diversity programs and people. “Not only does the company promote acquired diversity – e.g., by employing people of different national origins and cultural exposure and by encouraging international rotations – it also shares its progress against all of its diversity goals, holds its managers accountable for delivery, and celebrates their successes,” says the McKinsey report.

Employees’ acts of recognizing the accomplishments of their peers can also help to break down barriers and bridge differences. “There is evidence that people feel more positive toward people who recognize their achievements,” says Kets.

There’s even data showing that employee retention improves dramatically when people feel that they need not cover any aspect of their identities at work. “Employees who are able to bring their whole selves to work are 42% less likely to say they intend to leave their job within a year,” write Laura Sherbin and Ripa Rashid in their Harvard Business Review story “Diversity Doesn’t Stick Without Inclusion.”

“Diversity without inclusion is a story of missed opportunities, of employees so used to being overlooked that they no longer share ideas and insights,” Sherbin and Rashid write. “But diversity with inclusion provides a potent mix of talent retention and engagement.”

About the Author

John Rossheim

John Rossheim writes about healthcare, diversity, recruiting and human resources.

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