Most D&I tools fail, but yours can succeed. 3 common pitfalls to avoid & 5 Steps you build d
Diversity and Inclusion!
D&I programs often use generic best practices but fail.
Success requires clarity on why diversity fits to the business strategy then scientific tools with impact.
"Does he really believe in what he says?“
Those were more or less my thoughts at a recent global diversity conference. No, the speakers himself, I call him Larry, was not to blame. As a senior executive at one of the most admired Professional Service Companies, Larry knew how to present. Neither was it the topic: make sure Diversity in companies works and makes money. In fact, we all came for the conference as we shared the core belief that a diverse workforce is important to any long term success. No - It was the content. Basically, Larry summarized the old (or better boring) way the leadership committed to “increase our share of diversity." It more or less sounded like:
“Each employee should bring their full self to work because talent is our greatest asset. To us, Diversity matters in this complex world as we need different views to solve the hardest problems in the ever-changing workplace. Therefore, we implemented this best-practice (IT) solution, from the famous company YY.”
It sounded like the HR section in an annual report of a Fortune 500 company. But this was not an investor presentation. It was a conference where we as HR experts specifically tried to find HR tools that lead to a more heterogeneous workforce. Finally work out how diversity improves the bottom-line or ignites innovation. Especially as ever increasing efforts, remain at best, marginally successful. For instance, among Fortune 500 companies the share of female CEO stands at 6% and for every three open board seats only one is filled by a woman. Moreover, the share of non-white board members remained virtually unchanged during the last decade as still around 80% of new board members are white. Even the most admired tech companies struggle to increase their share of diverse employees, as less than 20% of tech-related jobs are filled with woman0. Despite millions spent in diversity programs with advanced data analytics high attrition of women persists and the share of female employees will likely decrease more (Apple, Google and Intel together pledged to spend more than half a billion! USD). Nearly half (41%) of women leave tech companies after 10 years of experience, in contrast to less than one-fifth (17%) of men. At the same time, corporate lawsuits, regulatory requirements and investor activism pressure organizations to show tangible results of their Diversity and Inclusion initiatives. With this increased interest and need to improve diversity the question remains:
Why corporate Diversity and Inclusion initiatives do not improve equality & How Organizations can build effective tools to increase their share of minorities and impact business?
My colleagues and I wanted to answer this simple question, specifically “How and why do tools for diversity work and help business performance?”
While most of us believe that diversity is a good thing and positively impacts business performance, the truth is actually not that straight forward.
After analyzing, reviewing and putting together 100s of scientific studies on Corporate Diversity conducted in the last two decades, our study1 clearly confirmed that:
“Diversity itself has NO consistent effect on performance."
Simply put, for every study that shows a positive effect, there is another one that shows the opposite effect. To our surprise though, whether diversity benefits or harms business performance depends on the type of workforce diversity (see Table I).
For example, diversity in education and job background often improved revenues because companies had broader access to knowledge. However, a high share of demographic differences (e.g. gender, age or race) on average decreased business performance. Those studies showed that because employees eventually formed groups with people similar to them, employees did not share knowledge with other groups. Thus departments and ultimately companies were unable leverage on diverse perspectives. Even worse, several researchers showed that if unmanaged, conflicts between groups and group thinking substantial harmed business performance (e.g. profit).
Importantly, there is clear evidence that early success or failure on managing D&I sets the direction for long-term business outcomes.
At the same time, our study uncovered that the right interventions could change the negative effects of diversity. This can lead to upward spirals in which employees increasingly use their diverse thoughts for higher and higher team performance. In summary, across several industries and functional units, we found that inclusion tools that specifically fit to a diversity type allowed benefits of diversity to dominate. For example, managers that demand a cooperative team culture in which employees honestly discuss their difference but limit personal conflict challenge, do not only increase effective teamwork but also creativity. As conflict remains on the task (separate from the person) group-thinking diminishes while teams discuss more ideas and ultimately become more creative. However, our study also showed that leaders can neutralize failures in diversity management. Again, key is an open discussion of why diversity programs failed and to empower employees on which specific processes should change.
In conclusion, companies could limit the downside of diversity and benefit from a heterogeneous workforce, if they: 1) identified the relevant types of diversity and 2) understood how Human Capital tools fit to the forms of diversity.
Nevertheless, many companies still employ tools without scientific backing and hence more often fail than meet their Human Capital goals. At another diversity conference in Zurich, I had the opportunity to discuss with Dr. Alexandra Kalev from Princeton University Why diversity programs fail and what to do. She analyzed diversity programs of more than 800 companies and checked which in fact, work. Her study2 was published in Harvard Business Review (HBR) and for its insights received the 2017 McKinsey award. It shows that managers continue to use D&I programs that actually DECREASE workforce diversity. Especially the common and standardized HR tools such as mandatory diversity programs or hiring tests decreased minority share of up to 10% in just 5 years. Most likely, because those programs put employees and managers into a mindset that 1) something is already wrong and 2) if you do not act correctly you will be punished.
So what can you do? How can you manage something messy like a diverse workforce and know which tools work?
Two guidelines can help you on your journey.
I developed them based on my Doctoral research, close interaction with leading scholars and from my discussion on HR trends with several Senior HR executives. The aim is to provide you with a comprehensive guide 1) to avoid the common traps why diversity fails; and 2) to build D&I programs that impact your business.
3 common traps in diversity management to avoid - Overcome early failure on your D&I journey
1. Leaders are unclear WHY focus on Diversity in the first place: Different types of diversity influence business result distinctly and need to align to the company culture.
2. We don't know WHERE we stand: Companies have various data points on employees - but are overwhelmed where to start and what the data means.
3. We don't know HOW to achieve our diversity goals and WHAT tools to use: Most tools (e.g. trainings) are generic. What tools fit to our company and are not based on averages?
of tools companies use actually hinder Diversity (especially mandatory diversity trainings)
5 steps for successful Diversity and Inclusion
1. Start with Why: Crystal clear Why diversity matters for business and What type of diversity can impact business performance. Especially senior leader must understand Human Capital goals and commit to them.
2. Maximum of 3 measurable goals: Resources committed to a few measurable goals for fast impact.
3. Use the right measure: Specific and simple criteria to measure diversity of employees and real inclusion at work (policy, culture and empowerment). Existing employee data normally is enough and HR managers do not need to wait for a perfect analytics tool.
4. Unique action plan that fits to your culture: Plan fits to culture and is not generic best practice. Executives own action plan and not outside consultants.
5. Start now, adapt and keep moving: Expectations are set that human capital is complex, but company starts somewhere even if not perfect.
We look forward to hear from you!
About the author Nicolas:
Fire of Creativity?!
How do we spark it? Why are some of us more able to keep it burning? What can leaders do for their teams to become inspired and more effective? My doctoral research investigates what underlies the creative process and employee motivation.
The research is academic, but the goal is to provide value for business executives. Here I build on several years work experience in strategy consulting and in corporate as a former HR VP. My aim is to build a bridge into your business world as I translate findings into practical tools for you as a manager. The clients I advice are executives and senior executives at global multinationals. Together we make sense of complex Human Capital topics so YOU make an educated decision
A global boutique consultancy specializing in inclusion and diversity strategies, programmes and dynamics in business. We are truly diverse with over 50 assoicates working in 22 countries worldwide.
Pluribus is deeply committed to inspire, engage and support organisations, teams and individuals. We help our clients value and leverage their workforce diversity, by creating an inclusive and high-performing culture. Pluribus consists of a team of experienced, passionate and talented I&D consultants, facilitators and leadership practitioners, all with a real passion for inclusion and diversity. Our associates bring a wealth of international private sector experience. Across all levels of seniority and front line business our team builds on operational, commercial and HR roles, all aspects of I&D (age, gender, cross-cultural, disability, ethnic origins, LGBT, personalities, etc.). We are not "teachers." We aspire to be role models in inclusion and diversity. It is a life journey, where we continuously learn and challenge ourselves. Key clients are from various sectors and industries, with projects across several continents: including Sodexo, L’Oréal, Hilti, Solvay, PMI, Carrefour, Nestlé, Total, Unilever, Crédit Mutuel Arkea and Bureau Veritas.