Every day in the news we hear about another case of gender bias, discrimination due to sexual orientation, or unfair assumptions based on ethnicity. At the same time, a growing number of businesses are becoming less tolerant of such behavior and are actively working to improve their culture through a variety of awareness and education initiatives around diversity and inclusion.
The intent is there and progress underway, but it is important to take a step back and question what “diversity and inclusion” really means. What is the goal? Is it a checked box to show that the company is recruiting diverse candidates? Is it a key indicator necessary for continued financial growth and prosperity? Is it a way of working that is so ingrained in a company’s fiber that it impacts every interaction and decision made?
One could argue that it encompasses all those things – and more.
Understanding the Difference
To begin, let’s differentiate “diversity” from “inclusion.” According to Merriam-Webster, “diversity” is “the inclusion of different types of people in a group or organization.” On the flip side, the literal definition of “inclusion” is “a relation between two classes that exists when all members of the first are also members of the second.”
In other words, diversity is about ensuring we have different and varied individual parts. Inclusion is about creating the right environment so that the sum is greater than the individual and differentiated parts. An inclusive culture is one that truly embraces what it means to be diverse while ensuring that those differences are celebrated and heard. To be effective, one cannot exist without the other.
Inclusion Healthy for a Bottom Line
According to research presented at Deloitte’s IMPACT 2017 conference, a truly inclusive culture has a high upside for companies beyond human resources. Inclusion impacts both innovation and the bottom line. It is a becoming a prerequisite for long-term growth and success.
A survey of 245 global organizations and more than 70 client interviews revealed that organizations with inclusive cultures are six times more likely to be innovative, six times more likely to anticipate change and respond effectively, and twice as likely to meet or exceed financial targets. However, Deloitte also reported that as few as 12 percent of organizations have been able to achieve full diversity and inclusion “maturity” based on their criteria.
McKinsey and Company has produced similar research indicating that companies with gender and ethnic diversity are 15 and 35 percent more likely, respectively, to outperform those without it. Indicators of this superior performance include greater sales revenue, more customers and increased profits.
More telling is McKinsey’s finding that companies ranked in the top quartile of executive-board diversity had equity returns 53 percent higher than those in the bottom quartile. What’s more, organizations with a higher percentage of female executives were more profitable than those with less equal gender representation, according to a 2016 analysis of more than 20,000 firms from 91 countries.
Needless to say, inclusive cultures serve up a competitive advantage beyond the “soft skills.”
Companies Living D&I
In light of this data, it’s no surprise that leaders of large organizations like AT&T and Johnson & Johnson value diversity and inclusion as a business requirement.
AT&T has focused on hiring employees who match its diverse customer base. Forty-two percent of the organization’s employees are minority ethnicities. In addition, the company places a lot of emphasis on diversity within its suppliers and vendors. The focus has been on deliberately casting a wider net, with the view that not casting a wide net effectively limits the talent pool.
For Johnson & Johnson, innovation is at the heart of what the company does. As a result, its human resources department focuses on hiring and promoting diverse employees. The goal is to create a global workforce that emulates the diversity of the customers and patients they serve, bringing new perspectives and unique insights for continued innovation.
Covering as a Consequence
Diversity is step one, providing a straightforward metric to track and assess. Inclusion, on the other hand, is harder to achieve and more difficult to measure. Inclusive cultures allow people to be themselves, share problems, make mistakes, innovate, take confident risks and drive change. So what takes place within an organization that has made in-roads in diversity while lacking in inclusion?
Sociologist Erving Goffman created the term “covering” in 1963 to describe an individual’s deliberate and conscious efforts to keep more stigmatized elements of his or her identity from being the focus of an interaction or situation.
For example, perhaps a woman shows less passion in a meeting for fear of being perceived as “emotional.” In another case, a person from one political party affiliation feels uncomfortable sharing opinions or weighing in on a politically charged issue when the majority has a different affiliation. In both cases, these individuals downplay—“cover”—who they are.
Research by Deloitte in the report “Uncovering talent: A new model of inclusion” found that the vast majority of minority populations in the workplace are “covering” who they are regularly, with LGBQT employees at 83%, African Americans at 79%, women at 66%, and even heterosexual white men at 45%.
Beyond the internal conflict of the individual, what does this mean from a business standpoint? If individuals cannot be themselves, then they cannot maximize their differences, and confident risk-taking is most assuredly stifled. As a result, meeting the expectations of a company culture that encourages or enables covering will take priority over innovation and idea generation. If individuals cannot be themselves, they will avoid sharing ideas that might benefit those similar to them.
The Call to Action
To stay relevant and competitive, both diversity AND inclusion must be core management skills.
Leaders at all levels of an organization need to drive this culture. Research shows that this is no longer an HR-only mandate to make employees “feel good.” An effective and authentic D&I culture results in proven business impact for the long-term.
Beyond diversity, leaders must value inclusion as a critical key performance indicator for their organization and emulate the principles of inclusion to develop authenticity and trust. The goal is to integrate both demographic diversity and diversity of thought. This allows individuals to develop and share beyond their perceived “stigmas.”
More importantly, the organization needs to provide the appropriate resources to empower individuals to take action and create a culture of self-efficacy. In other words, an organization must promote and encourage leadership to take place not only with a traditional people manager, but also with individual contributors and innovators throughout all levels of the organization.
Finally, the leaders of an organization must continually analyze and assess their progress. Accountability must be assigned and recognized. To do so effectively, those metrics must be shared and openly discussed throughout the entire company.
It Starts at the Top
The concept of organizational diversity far exceeds the traditional classifications of race, gender, and sexual orientation. It includes personality type, thinking style and other factors that influence how individuals perceive the world. Finding the right, broad mix of individuals to come together as a team to embody that diversity is the key. Creating an environment in which they can flourish is mastering inclusion. Leaders play an active role and must appreciate the importance of these initiatives. The combined result is a critical success factor that ripples throughout the business for a positive impact on performance, employee retention and satisfaction, and the bottom line.