Research

Do the RIGHT THING

Diversity, equity and inclusion can create a better workplace culture for all employees. They also make

business sense – by Michelle Sturman

George Bernard Shaw supposedly once noted: “Progress is impossible without change, and those who cannot change their minds cannot change anything.” This observation may easily apply to the world of work which has undergone a gradual transformation over centuries as we have become further enlightened.

At least this was the case until 2020 when, in a matter of weeks if not days, the global pandemic altered our working life. Against this backdrop has arisen a more vigorous assessment of what people want and how they wish to be treated as individuals through the lens of their employer. It has, in part, contributed to the Great Resignation.

With companies fighting to hire the best talent, Glassdoor’s Diversity Hiring Survey found that over three-quarters (76%) of job seekers and employees in the US are looking for an inclusive workplace when thinking about a career move. Meanwhile, almost a third (32%) would not apply for a position where there is a lack of diversity.

For many, the pandemic has clearly brought to the fore issues of work inequality, a battle people have been fighting for years, with varying degrees of success.

Inequality is far-reaching, encompassing everything from bullying and harassment to the glass ceiling and social exclusion. It stretches across all forms of diversity including (but not limited to) sexual orientation, sex, gender identity, age, race and ethnicity, religion and beliefs, disability, neurodiversity and social class.

In this world of rapidly changing minds about what employees want from their employers, one acronym is taking centre stage, encapsulating the movement toward equality in the workforce: DEI (diversity, equity and inclusion) – sometimes also referred to as D&I (see ‘What does it all mean’ on page 46 for definitions).

INCREASING AWARENESS

The International Labour Organization (ILO), in its Transforming Enterprises Through Diversity and Inclusion study released earlier this year, draws on a global survey with over 12,000 employees in 75 countries. One eye-catching statistic is that two-thirds of respondents say the coronavirus crisis brought about a heightened awareness of societal inequalities and has contributed to extra focus and action on D&I where they work.

D&I, health and well-being as well as flexibility have become top employee concerns. Comments related to D&I, for example, increased by 19% compared with 2019. Significantly, two-thirds of participants agree or strongly agree the pandemic experience increased expectations of their employer to promote diversity and inclusion.

While most business leaders recognise the urgency and importance of DEI, it is complex, can be notoriously difficult to implement successfully, and there’s no one-size-fits-all strategy. This is evidenced in the Future of Diversity, Equity and Inclusion 2022 survey from the HR Research

Percentage of job seekers and employees who would not apply for a position where there is a lack of diversity

Percentage of respondents who say their company offers DEI learning and development to all employees

Source: HR Research Institute

Institute which reveals that most organisations still lack “mature and effective DEI programmes”.

The results are pretty stark. Only a paltry 22% indicate their firm’s DEI initiatives have reached expert or advanced stages, and a scant 9% rate them highly effective. On a more positive note, over 44% of those surveyed say they play a role in strategic planning.

Among those companies deploying metrics to measure the current state of DEI, the majority use basic compliance-orientated workforce data (56%), while fewer than half (42%) evaluate diversity within leadership ranks, recruiting outcomes (38%), diversity goals related to succession planning (23%) and equal job titles (20%).

TRAINING GROUND

As regards coaching and guidance, the HR Research Institute found just 40% of respondents saying their company offers DEI learning and development to all employees, with 69% citing unconscious bias training (UBT) as the most common programme. Nearly a quarter (24%) don’t offer any DEI-related training.

According to the Chartered Institute of Personnel and Development (CIPD), in its Diversity Management That Works report, the basic premise behind UBT is to educate people about prejudice and bias, and the techniques that can be deployed to reduce them.

However, CIPD warns that concerns suggest such workshops may “backfire”, inasmuch as those undertaking this training could subsequently feel “virtuous” and stop making an effort to rein in any prejudice and bias.

Indeed, inadequate training was one of the three most commonly cited barriers to DEI effectiveness by respondents (41%) in the HR Research Institute survey. The others were a failure to prioritise at top leadership levels (43%) and a lack of metrics to identify insufficient diversity (41%).

THE FULL PACKAGE

A central component of any DEI strategy is inclusion. In CIPD’s Building Inclusive Workplaces report, its importance as a fundamental building block in any DEI initiative is summed up nicely: “Focusing on diversity alone could even be counterproductive as it doesn’t address the systemic challenges to workplace equality and inclusion, such as workplace culture.

“It instead puts underrepresented, or less ‘powerful’ groups in harm’s way, potentially doing more harm than good. Inclusion, then, might be a better starting point for organisations wanting to increase diversity.”

In other words, “an employee’s perception of inclusion relates to having a voice, being treated fairly and a sense of belonging [...] True inclusion arises where individuals feel they will be valued for their own unique views and skills, not when ‘different’ people are accepted into an organisation as long as they comply”.

As the Deloitte Review Diversity and Inclusion Revolution notes, the behaviour of leaders is vital in promoting inclusion, especially middle managers.

• Diversity: the real or perceived differences attributed to people and the representation of these differences within an organisation.

Diversity references are protected by law in certain countries: age, disability, marriage and civil partnership, race and religion, gender and gender reassignment, sex and sexual orientation. • Equity: refers to fairness in terms of opportunity and outcome, and treating people according to their own needs. It recognises that treating everyone equally has shortcomings if it’s not a level playing field. • Inclusion: the extent to which a culture is fostered and where everyone can thrive, feel valued, accepted and supported in the workplace, regardless of background, identity or circumstance. • Equality: means equal rights and opportunities for all.

Sources: CIPD – Building Inclusive Workplaces; Journal of Consumer Research, Volume 48, Issue 5, February 2022 – Diversity, Equity and Inclusion

Focusing on diversity alone could even be counterproductive

It further reveals that an individual’s feelings of inclusion result in an increase in perceived team performance (+17%), decision-making quality (+20%) and collaboration (+29%).

However, ILO’s study also notes a disconnect as regards the feeling of inclusion within the work environment, with senior executives much more likely to report positive experiences compared to staff and managers. For example, 92% of executive-level respondents report feeling included at work compared with 76% of other staff.

There’s also a significant difference between enjoying respect and belonging at work – 86% of senior executives report positively compared with only 62% of other employees.

The results from PwC’s Global Diversity & Inclusion survey from 2021 tell the same story. While just 15% of leaders believe they are not communicating to their organisation frequently about D&I, only 25% of HR professionals and 30% of employees consider this to be true. In addition, 74% of leaders compared to 54% of staff think their company regularly makes information available on the diversity of personnel and leadership teams.

CREATING VALUE

According to the ILO report, there are several advantages of full inclusion: increased workforce commitment, productivity, collaboration and innovation, as well as improved levels of employee well-being.

It tallies with Deloitte’s research, which arrived at this conclusion: Diversity + inclusion = better business outcomes. The Review further reveals that firms with inclusive cultures are twice as likely to meet or exceed financial targets; three times as likely to be high performing; six times more likely to be innovative and agile; and eight times more likely to achieve better business outcomes.

McKinsey also underscores the commercial value of DEI. Diversity Wins is the third in a series of reports that investigate the subject and offers a few eye-catching statistics.

The management consultancy firm found companies with over 30% women on the senior management team were significantly more likely to outperform those with between 10-30%. These were, in turn, more likely to outperform organisations with fewer or no female executives. The final result, says McKinsey, is a substantial performance differential of 48% between the most and least gender-diverse businesses.

The research, involving over 1,000 companies in 15 countries, suggests that “at the current rate of progress, it will take 29 years and 25 years, respectively, for the average US and UK organisation to reach gender parity on its executive team, and 18 and 13 years on boards”.

Turning to ethnic and cultural diversity, McKinsey notes there is an even higher likelihood of outperformance difference with ethnicity than with gender. By way of example, companies in the top quartile outperformed those in the fourth by 36% in terms of profitability.

According to the Future of Diversity, Equity and Inclusion 2022 survey from the HR Research Institute, organisations that perform better in DEI practices are more likely than others to:

• Have support from the top to close pay gaps and an associated budget for it; • Include a wide range of characteristics in their definition of DEI; • Integrate DEI frameworks into their business strategies; • Make DEI quite visible to the workforce; • Emphasise DEI in succession planning and talent acquisition processes; • Deploy more advanced metrics, set additional goals related to DEI, and use added incentives to encourage it; • Provide training for pay equity, communication practices, anti-racism, inclusion awareness and inclusive recruitment policies; • Have programmes to improve diversity in the leadership ranks; • Offer more inclusive and family-friendly benefits.

Diversity + inclusion = better business outcomes