The years 2020 and 2021 will be remembered as the years when diversity became a leading character on the stage of organisational transformation. From Minneapolis to Melbourne to Istanbul, people took to the streets to protest the killing of George Floyd, to call a halt to sexual intimidation and to demand that organisations walk-the-talk in advancing diversity, equity and inclusion.
The rapidity with which these grassroots social justice movements such as #MeToo and #BlackLivesMatter have gathered pace has caught many leaders off-guard and questioning why they are on their backfoot. They question why their diversity investments are not delivering benefits of advancing an inclusive environment with the richness of diversity and equity that is being increasingly demanded by the new generation of talent (Generation Z and the younger Millennials).
Turning the tide on diversity requires a strategic response from leaders—not lip service, but a clear narrative for how their organisation is responding and what their role will be on the diversity stage. When organisations get diversity right, tangible value is created to the organisation and to larger society.
And it is worth getting right, for research has confirmed a direct correlation between more diversity and improved growth and profitability, more engaged employees, more satisfied customers, better creativity and innovation, better decision-making and greater access to talent.
Creating a diversity narrative
So what is required to get diversity “right”? Firstly the organisation needs to create a compelling diversity narrative that is directly connected to their mandate and their strategic goals. Through the strategic diversity narrative, the organisation is able to identify to which stage of diversity performance they aspire to and to identify their current diversity performance stage. And finally the organisation needs to close the six capability gaps for their desired stage of diversity performance.
Here is a case study. A CEO is appointed to a technology company that has to date delivered out-of-the-box enterprise resource planning (ERP) software. The CEO hears from clients and employees that diversity is important and the CEO wishes to place emphasis on this topic. However the CEO doesn’t know exactly where to start. Should emphasis be placed on gender first, or are there other diversity dimensions to consider? What investments should be made and what is the priority of interventions? The short answer is that diversity is not a fishing expedition. Diversity needs to be led with discipline, strategic intent and with consistent leadership and focus.
Let’s examine what the strategic process would involve.
Step 1: Identify the mandate of the organisation, transformation journey and stakeholder requirements
The CEO of the software company was intent on transforming it from an out-of-the box ERP software company to an iCloud provider for start-up companies and young entrepreneurs, where expanding into Asia was top of mind. The CEO evaluated what diversity dimensions were critical to realising this strategic goal.
Step 2: Identify the diversity dimensions
Diversity dimensions can be inherited, such as gender or age, and acquired, such as specialisation and cultural know-how. Identify the diversity dimensions that are critical to support the strategic imperative, and identify the impact of not having them in place. In the case of this software company it was possible to identify that gender, age, specialisation and cultural know-how were the key diversity dimensions to be pursued, in addition to race.
Their client base would be entrepreneurs, with an average age of 28 years, while their people had an average age of 48, and were seen to be out of touch with their new client base. A review of their skill set also showed a gap in specialisation. They were missing iCloud skills and this would be critical for delivering on their vision of Cloud solutions. They also missed a knowledge of Asia and an understanding of business there, and so there was a cultural gap.
Last but not least, they observed their leadership team was 80% men and all white, and yet 50% of their client base were women and people of colour. So they were missing a leadership connection and approach that required a representation of women and people of colour, not only in their board but in all layers of their organisation.
Step 3: Identify the implication of not acquiring and retaining the diversity
The CEO identified that the implication of not acquiring the required dimensions of diversity would lead to its demise. Without this diversity the organisation would not be able to transform and innovate, nor to anticipate the requirement of their customers, nor be able to enter successfully into Asia. A lack of gender and racial diversity would lead to a disconnect with their people and clients.
Through an examination of step 1-3, the CEO was able to identify the required evolutionary stage for diversity in the software organisation and concluded that they needed to be at the fourth stage of diversity. These are organisations who do not only need to pursue diversity for legal compliance (Stage 1), or to meet stakeholder requirements (Stage 2), or for improved organisational performance (Stage 3) but for their ability to transform (Stage 4). Stage 4 organisations pursue diversity because they need to be agile and have a 360-degree perspective of a fast-changing environment, and for the bottom line benefits that it brings.
Closing diversity performance gaps
When the strategic narrative has been put in place it is possible to move forward to look at gaps in diversity performance.
Step 4: Identify and close the six diversity performance gaps
There are six capabilities that are required to be delivered together to support diversity, and they have been defined for each stage of diversity performance. The CEO integrated the Diversity Capability Framework to identify the diversity capability Gap and the prioritise the closing of the capability gaps. The review revealed that each of the six diversity capabilities were lacking in the organisation. These six diversity capabilities are:
- Mitigate bias: No bias training was in place and with a need to attract a pool of diverse talent (racially diverse, more women, younger, more iCloud specialisation, more cultural know-how of Asia) that it needed develop a capability to identify bias, mitigate bias and build skills on having courageous discussions around bias.
- Build case: The CEO realised that no strategic goals were in place for diversity, nor investments to build capability.
- Embed behaviour: Leaders were not regarded as walking-the-talk of inclusive practices and were not evaluated as inclusive leaders. Overall the factors leading to psychological safety and an inclusive environment were not in place.
- Harness diversity policies: There was a lack of diversity policies in place, including not even a basic zero-tolerance for discrimination policy and no policies supporting ERG (employee resource group) communities and setting out their role.
- Measure and monitor: No practices were in place to measure the diversity dimension target, and the progress against the targets. Also there was no inclusiveness index that measured inclusive leadership, nor the feeling of being included.
- Celebrate and sustain: While the company had some diversity events in its calendar, it did not have a practice of celebrating the advancements in diversity in their organisation, nor celebrating leaders and champions who greatly advanced the achievement of diversity goals.
Before the CEO commenced these steps, they felt anxious about the diversity journey and felt privately that diversity was more about checking off the boxes and doing some window-dressing. However when diversity is progressed in a strategic manner and the diversity journey is directly connected to the mandate of an organisation and its strategic goals, then diversity has a place in the boardroom, in the room of the CEO and within the roles of all leaders and contributors to the organisation.
Research shows that when diversity is elevated to the boardroom and when leaders are able to tie diversity to their strategic goals and mandate that the conversation around diversity changes—for the better. These companies are able to steer forward with confidence, knowing that they are delivering on the imperative of diversity by attaching diversity capabilities and goals to the very mandate of the organisation.
Kay Formanek is a global speaker on diversity and inclusion, founder of consultancy Diversity & Performance, and author of Beyond D&I: Leading Diversity with Purpose and Inclusiveness (Palgrave Macmillan, hardcover £27.99).