Creating a diverse and inclusive workforce is not just about virtue signaling. Myriad studies have shown that a diverse workforce leads to greater levels of innovation and profitability. Diversity is a question of growth and profit, and there are numerous ways that it should play out in companies hoping to reap the full benefit of their efforts.
Here, we explore how diversity and inclusivity initiatives can be integrated across a business, and discover some of the companies taking the lead.
What is Diversity and Inclusion in the Workplace?
Each company should have their own definition of what diversity and inclusion means for them, defined in a vision statement. This statement should outline why diversity and inclusion is important to the overall mission of the company. Importantly, the vision is only the beginning: it should inform a comprehensive strategy that incorporates communications, processes and performance metrics, and is understood by employees across the business.
Diversity and inclusion strategies should encompass all measures of difference, including sex, gender, age, nationality, race and religion. In the context of a private company, diversity and inclusion at its fullest sense means seeking to diversify the workforce from entry level positions to leadership roles and to support diversity throughout the recruitment process, as well as ensuring diversity in the supply chain and investments. Companies engaging in diversity and inclusion seek to create an inclusive workplace culture, a diverse workforce and to capitalize on this in the marketplace, with diverse ideas and perspectives from employees attracting a diverse range of clients.
Why Is It Important in Business?
Numerous studies have proven the benefits of increasing diversity and ensuring inclusion in the workplace.
A study by Boston Consulting Group’s strategy think tank found “a strong and statistically significant correlation between the diversity of management teams and overall innovation.” And a report from McKinsey found that companies with the most ethnically diverse executive teams are 33% more likely to outperform their peers on profitability.
This data is further underpinned by a Deloitte study focused on Millennials and Generation Z, which found that both generations will support businesses whose values align with their own, and penalize those who don’t. They also found that job loyalty among members of these generations rises as businesses address key issues, including diversity and inclusion.
Furthermore, Glassdoor discovered that two thirds of job seekers place importance in a diverse workforce when evaluating companies and job offers. They’ve recently added diversity and inclusion metrics into their employer ratings, which are submitted anonymously by employees and enable jobseekers to assess employers. Glassdoor CEO Christian Sutherland-Wong said: “Job seekers and employees today really care about equity, and for too long they’ve lacked access to the information needed to make informed decisions about the companies that are, or are not, truly inclusive.”
Finally, Debra Walton, chief product & content officer, financial & risk at Thomson Reuters, said: “Our research shows that companies that make investments and focus on ESG [environmental, social, and governance] matters can have a stronger stock performance and better long-term profitability. For investors, looking beyond financial data is becoming more important.” Underpinning company values with active efforts to improve on diversity and inclusion performance, alongside other ESG matters, will reap financial returns in the long run.
All these studies go to show that it is essential for companies aiming to attract and retain a loyal workforce, expand their product lines and grow their customer base, to address diversity and inclusion.
Achieving a Diverse and Inclusive Workplace
There are many approaches businesses can take to improve their record on diversity and inclusion. There’s no one-size-fits all approach here; companies need to design a strategy that aligns with their vision, produce their own goals and determine how to integrate these measures across their business. Diversity and inclusion initiatives should be spearheaded by someone at the top of the hierarchy, preferably the CEO or a board member. This helps to ensure accountability and that challenges are raised during top-level discussions.
Diversity and inclusion cannot be achieved by publishing a statement on the website and sending out a press release. It requires real and sustained effort and a data driven approach, to ensure that initiatives are measured and enhanced for maximum effect. This should be seen and managed as a project with concrete outcomes, a timeline and a budget, if businesses want to have success in this area.
An effective diversity and inclusion strategy may include commitments to:
- Post job openings across a spectrum of job sites with diverse audiences, to reach diverse jobseekers.
- Form partnerships with local institutions like universities and colleges with a diverse student body.
- Offer internships, apprenticeships and training programs to make sure there are diverse candidates with the knowledge needed to fill entry level roles.
- Eliminate bias in recruitment: implement blind CV screening so unconscious bias does not eliminate diverse candidates.
- Consider quotas as a useful way to ensure you hit self-imposed diversity and inclusion targets.
- Publish a diversity and inclusion report to allow customers and employees to hold you to account. This has an added benefit: transparency about your efforts and mistakes in diversity and inclusion will chime well with Millennial and Generation Z customers, who are values driven and appreciate corporate honesty.
- Participate in public rankings such as the Diversity Inc Top 50 list, which builds momentum behind change initiatives and allows customers and jobseekers to make informed decisions about the companies they engage with.
- Establish internal networks and mentoring initiatives that create space for difficult conversations, facilitate honest feedback and provide career development support.
- Assess procurement practices and integrate diversity requirements into your processes.
- Look at supplier diversity and ensure that you are sourcing products, materials and services from businesses that also prioritize diversity.
- Analyze company investments and seek to diversify your portfolio. Investing in minority owned businesses, for example, can lead to real and measurable impact on your community, which will have the bonus effect of positive press and brand perception.
What Works: Success in Diversity and Inclusion
Case Study: PricewaterhouseCoopers (PwC)
PwC have set a great example for how to approach diversity and inclusion with their multifaceted, data-driven approach.
Firstly, they publish their diversity and inclusion data. And this is accompanied by detailed data analysis, which draws attention to areas they’ve identified as needing improvement. For example, while they noted a positive increase in the number of diverse employees at various levels in the company, they also found that this was not reflected in promotions. Diverse colleagues – women, people of color or those from ethnic minorities, for example – were not being given opportunities to work with the company’s most important clients. In response, they’ve committed to redesigning their ‘talent pipelines’ to make sure that diverse employees have access to the best projects and are able to advance their careers at PwC.
Secondly, they’ve launched a CEO-driven commitment to advance diversity and inclusion across businesses globally. More than 1,200 CEOs from world-leading companies, representing over 85 industries, have signed the pledge and are creating change in their businesses. US Chairman and Senior Partner at PwC Tim Ryan said: “We’re serious about developing the best and most inclusive leaders in the world and this is another way we’re taking action to make that commitment a reality.”
PwC is not the only company making change happen. Further examples from across the corporate world highlight things to consider when promoting diversity and inclusion:
- Diversity and inclusion strategies need to be tailor made: Recognizing that publishing is an overwhelmingly white sector (80% of employees across the industry are white), Penguin Random House U.S.A. have appointed a campus recruiter to build relationships with schools that have diverse enrollment, in order to diversify their talent pool.
- Diversity and inclusion initiatives need a dedicated resource: Since widespread black lives matter protests over the summer following the death of George Floyd, a number of multinational companies, including Condé Nast, have announced the appointment of high-level employees to spearhead rejuvenated diversity and inclusion efforts. Glassdoor found that postings for roles in diversity and inclusion fell by nearly 60% between early March and early June when the pandemic hit (compared to a 28% drop in overall job postings), but increased by 50% after the protests. And executive level roles such as chief diversity officer or vice president of diversity and inclusion more than doubled. While demonstrating that people and companies are sitting up and taking notice of the need for change, this data also intimates, worryingly, that diversity and inclusion is often seen as an added extra and is the first to go in a crisis, when arguably it is most needed.
- Language matters: In all communication and conversation, pharmaceuticals giant Novartis has replaced the word ‘disability’ with ‘diverseability,’ to reflect their belief that people living with disabilities have diverse skills, rather than a lack of ability. And, catalyzed by Black Lives Matter protests and worldwide focus on structural racism, Unilever and L’Oreal changed the language they use in relation to their skin lightening products, which many argue are popular due to a damaging historic association of paleness with beauty. Yet this has been criticized as a PR move, as both companies continue to profit from these products.
- Rapid action is impactful: Starbucks, following an incident at one of their stores, shut down all their outlets across America on the same day to conduct racial-bias training with all their employees. And they’ve been praised for doing so.
It seems extraordinary that it has taken so long for this issue to be given the attention that it requires, but a tide of change is finally sweeping the business world. These examples are just some of the many inspiring initiatives being taken across industry globally.
The Future of Diversity and Inclusion
Not only do current business leaders need to address the lack of diversity and inclusion across their companies, but we need to educate the next generation about the importance of keeping diversity and inclusion high on the agenda. Profitability and growth depend on it.
At EU Business School, our faculty are entrepreneurs, consultants and leaders who draw on their own professional experiences to teach the next generation of leaders. Diversity and inclusion is an important aspect of the syllabus of each of our programs across a wide range of specialisms.