8 tried-and-tested practices of Diversity, Equity and Inclusion – What works today
In the wake of significant demographic, social, political and health-related changes in the last decade, Diversity, Equity and Inclusion have begun to take center stage.
A multitude of research and surveys demonstrate the clear benefits of applying Diversity, Equity and Inclusion (DEI) in the workplace: six times increase in likeliness of company-led innovation, 36% increase in the likelihood of financial outperforming, 59.1% increase in creativity, innovation and openness, a 59.7% increase in the ability to attract and retain talent, and a 57.8% gain in company’s reputations, to name a few (for a full review of “Diversity, Equity and Inclusion business-case benefits” see here).
With such compelling evidence, one would expect most companies and CEOs to be rigorously championing DEI initiatives. Yet, a recent survey demonstrates that only 12% of companies are fully immersed in DEI, while the majority of companies still consider DEI as a compliance issue that should be handled by HR and legal.
One of the reasons for the relatively limited progress is that DEI efforts are not easy, and experts worldwide agree that there is no single silver bullet. The hard truth is that every company needs to find its way to achieve greater levels of DEI through reshaping and evolving its set of cultural values. The good news, however, is that some strategies have been proven to be more effective than others.
In the following article, we share eight tried and tested evidence-based strategies to help you move the DEI needle in your organization:
- Collecting data from key areas
- Asking the right questions
- Analyzing, measuring and planning
- Using Accountability and KPI
- Starting at the top
- Continuing at the bottom
- Picking the low hanging fruits, and finally
- Becoming DEI industry leaders
1. “If you can’t measure it, you can’t improve it.” – Peter Drucker
Research [1,2] shows that achieving a more diverse, equitable and inclusive business is no different from achieving any other business goal. Yet while companies today make considerable effort to collect and analyze business-critical information such as P&L, sales, marketing or accounting to improve and grow, much less effort is directed towards gathering and especially analyzing critical DEI data. As Lorraine Hariton, President & CEO, Catalyst shares, “measurement is a critical component of creating an environment of diversity, equity, and inclusion in workplaces that allow all employees to thrive. You cannot improve what you cannot measure.”[3]
For any DEI initiative to succeed, we must first understand where the organization is currently at, and while there is an abundance of data sources, DEI data collection should start by focusing on the five Golden Life Stages: recruitment, promotion, representation, pay, and retention.
The Golden Life Stages often hold the initial low-hanging fruits where it is relatively easy to track company-wide inequalities and biases both conscious and unconscious.
These low-hanging fruits are critical for the initial stages of any DEI initiative. They give a clear sign to the company’s shareholders – external and internal—that the company is progressing on the path of DEI.
2. Don’t assume – Ask
To collect valuable data, organizations need to ask effective questions. Employees have an abundance of important and relative information that they can share when given a chance. Tapping into that information is the first and most crucial step of the DEI process.
These data collection processes – often run by external companies – focus on unearthing the answers to the question: What does inclusion, diversity and equity mean for us? At this stage, companies collect information on themes such as employee sense of openness and safety, acceptance and respect, belonging, leadership support, and equity.
Data collection is typically done through surveys, yet it is often recommended to add focus groups and open conversations to extract that crucial information that is difficult to gather through written feedback. Additionally, our experience is that the prevalent 360 surveys tend to be less effective for DEI interventions. Employees often rate their colleagues and employers by converging to a comfortable average, thus effectively watering down important information that does not propagate to higher management.
While data collection is not a one-time event but a continuous effort, the first batch of answers can help us set the organizational DEI baseline.
3. Analyze, measure, plan
Andrew Lang, the Scottish poet and novelist, wrote, “I shall try not to use statistics as a drunken man uses lamp-posts, for support rather than for illumination.”, succinctly describing the phenomenon of “confirmation bias,” e.g., collecting, interpreting and preferring data that confirms and supports our existing beliefs and values. As stated above, employees have a wealth of information, yet we need to remain open to be able to really hear them.
Like most business-critical operations, many companies today prefer to use DEI lagging measures to account for outcomes rather than effort. While these efforts are perfect for more evolved enterprises (usually during and after stage 3 of our Diversity, Equity and Inclusion Growth Model), less DEI-evolved companies should also consider using leading, aspirational goals, that create the initial motivational efforts to progress on the DEI path.
DEI Dashboards tracking the company’s most important stats are also an effective tool. In the name of transparency and openness, some companies also opt to share the dashboard with the management team or even across the whole organization.
Once companies understand their baseline and the first data analyzing and measurement phase is done, organizations can define clear DEI goals as well as the processes and timelines needed to achieve them. This, typically, 2-3 year plan tackles behavioral standards and procedures, defines and implements clear DEI metrics, and ensures management accountability, especially around the five Golden Life Stages. Research emphasizes that transparent goals, as part of a fair-process leadership cycle, allow for easier accountability and follow-through [4,4b].
4. Accountability and KPI
A landmark research of 708 private sector companies compared three different approaches for promoting diversity [1]: diversity training, networking and mentoring, or managerial accountability and responsibility for diversity.
Of the three, diversity training had no effect, and networking and mentoring had only a modest effect on organizational diversity. In contrast, managerial accountability and responsibility for DEI had the broadest effect on the company’s diversity.
Moreover, organizations that initially asserted management accountability and responsibility also later exhibited better results for both diversity training and networking.
While it is clear that managerial accountability is a strong force for moving the needle towards greater DEI, it is often not clear what measurements these managers should be accountable for.
The need for management accountability —on results, not just efforts—led to new initiatives like the Gender and Diversity KPI Alliance (GDKA) [5]. GDKA’s steering committee, now enjoying a wide range of corporate supporters, defined a universal standard (universal KPIs) for measuring organizational diversity. It focuses on three high-level measurements:
- Percentage of representation on an organization’s board.
- Percentage of representation by employee category.
- Pay equality: the ratio of compensation by employee category (i.e., equal pay for equal work).
These KPIs measure underrepresented groups in the organization (for example, race and ethnicity in the US) and offer a clear baseline to track and highlight areas of concern in the employee’s life cycle.
5. Start at the top
It is clear that CEO and top management involvement is crucial in moving the DEI needle forward [6], and a recent McKinsey report stated that “The most important starting point of a transformation, and the best predictor of success, is a CEO who recognizes that only a new approach will dramatically improve the company’s performance.” [7] Yet many HR managers currently feel that they are leading the DEI effort alone.
A BCG survey of 1700 companies across eight countries and a variety of industries and company sizes shows that only 35% of CEOs chose to lead the DEI initiative [8].
Companies that have been successfully implementing DEI for years advocate viewing DEI as a core business-led project and not an HR one. This perspective leads to the full engagement of the CEO and top management from the get-go. Full engagement pertains to communicating a clear vision and setting clear DEI accountability goals and timelines to top management. Yet, more importantly, full engagement refers to walking the talk, as DEI actions speak louder than mere words.
6. Continue at the bottom
While CEO and top-management involvement is key to the success of every DEI initiative, management engagement alone is simply not enough. Kim Drumgo, Anthem’s Chief Diversity Officer states that: “Placing the responsibility on one person, and not cascading accountability and responsibility to the entire organization, could throw a wrench in any company’s diversity and inclusion plan[…]We believe that all associates play a role in creating an inclusive environment and opting out is no longer an option.” [9]
To advance on the DEI path, many companies today build and foster a multitude of grassroot Employee Resource Groups (ERG). These ERG, when set up correctly, quickly become the company’s driving force for DEI innovation and action as they help promote diversity and inclusion throughout the organization.
For example, AT&T, selected as the number one DiversityInc company for 2019 [10], currently supports 37 such ERGs with more than 145,250 participants (roughly 64% of their employee base), affirming that: “Employee groups members are the cultural lifeblood of our organization and when it comes to advancing diversity, equity and inclusion, they are the vanguard, helping to shape our path forward.” [11]
7. Take advantage of the low hanging fruits
Having a set of quick wins on any initiative is a sure-fire way to gain more trust and buy-ins from both top management and employees. While each company’s low-hanging fruits may be different and can only be fully assessed after collecting and analyzing measurements as explained above, out of the five Golden Life Stages, the two most susceptible for quick wins are commonly recruitment and promotion.
Often, taking a hard look at the recruitment process reveals possible conscious and unconscious biases. For example, a common issue occurs when executives search for a younger or similar version of themselves as candidates. This social phenomenon is commonly referred to as the “mini-me” syndrome. In many companies, a mixture of unconscious bias training, using automated tools to remove potential bias from CVs, and producing a clear set of DEI-based recruitment goals and metrics can create a quick yet significant shift in the recruitment process.
Promotions and bonuses are two other areas where quick wins are often possible. Creating an employee scoreboard based on clear and transparent DEI metrics, and using it to assess the candidate’s merit for promotion and/or remuneration, sends a clear message across the organization.
8. Become a DEI Industry leader
In today’s world there is nothing better to boost the company’s morale (and company revenue) as to showcase how your company makes this world a better place. This means continually showcasing examples of teams who have been successful or innovative in their DEI efforts, and ensuring to cascade that information appropriately internally and externally.
It is common sense that practicing DEI in the organization increases talent acquisition and retainment [12,13] as well as employee engagement [14]. However, the benefits of becoming a DEI industry leader extend way beyond the limits of the company. A recent survey done by the UN International Labour Organization (ILO) showed that companies that practice DEI are 60.2% more likely to have improved profits and productivity, and they are 57.8% more likely to experience enhanced gains in their company reputation [13].
In order to achieve this goal, some companies hold themselves accountable to compete in external award programs [15], while others, such as GM CEO Mary Barra set the audacious goal to become the most inclusive company in the world [16]
Taking the next step
As in any cardinal culture change creating a process and fine-tuning it as time goes by is critical, and these tried and tested practices above could help you take the first step in the right direction. You are also free to use our Diversity, Equality and Inclusion Growth Model to assess your current organizational maturity level and start moving the DEI needle in your organization.
If you have any thoughts or questions, feel free to write or comment below
This article was originally published on the Lead.Thrive.Inspire blog
Bibliography:
[1] Alexandra Kalev, Frank Dobbin, and Erin Kelly, “Best Practices or Best Guesses? Assessing the Efficacy of Corporate Affirmative Action and Diversity Policies,” American Sociological Review 71, no. 4 (2006): 589–617.
[2] Pedulla, D. (2020). Diversity and inclusion efforts that really work. Harvard Business Review, 12.
[3] Catalyst, taken from https://www.catalyst.org/media-release/corporations-measure-diversity/
[4] Emilio J. Castilla, “Accounting for the Gap: A Firm Study Manipulating Organizational Accountability and Transparency in Pay Decisions,” Organization Science 26, no. 2 (2015): 311–333.
[4b] Kim, W. C., & Mauborgne, R. (2003). Fair process: Managing in the knowledge economy. Harvard business review, 81(1), 127-136.
[5] The GDKA VISION – KPIs That Provide a Universal Measurement for Gender & Diversity – https://www.gdka.org/
[6] Aiken, C. B., & Keller, S. P. (2007). The CEO’s role in leading transformation (McKinsey Quarterly).
[7] Bucy, M., Hall, S., & Yakola, D. (2016). Transformation with a capital T.
[8] Lorenzo, R., Voigt, N., Tsusaka, M., Krentz, M., & Abouzahr, K. (2018). How diverse leadership teams boost innovation. Boston Consulting Group, January, 23.
[9] Addressing diversity and inclusion report (Oracle)
[10] DiversityInc, taken from: https://www.diversityinc.com/the-2020-top-50-diversityinc/
[11] AT&T, taken from: https://about.att.com/pages/diversity/employee_groups
[12] King, B. J. (2017). p. 4 and 21 Unleashing the Power of Inclusion. Attracting and Engaging the Evolving Workforce. Deloitte Development LLC.
[13] The business case for change, ILO, 2019: “companies that practice DEI profit from a 57.8% gain in their company reputation and a 59.7% increase in the ability to attract and retain talent.”
[14]Downey, S. N., van der Werff, L., Thomas, K. M., & Plaut, V. C. (2015). The role of diversity practices and inclusion in promoting trust and employee engagement. Journal of Applied Social Psychology, 45(1), 35-44.
[15] Bersin, J. (2105), Why diversity and inclusion will be a top priority for 2016
[16] Addressing diversity and inclusion report (Oracle), GM, p. 47
