How would you like to increase profit and innovation revenue in your organization? If you raised your hand, diverse leadership is the key.
Research findings from McKinsey’s Diversity Matters report indicated that gender and ethnic diversity in executive leadership were directly correlated with profitability, by as much as 33%. Adding ethnic diversity to the Board of Directors increases the likelihood of financial performance above the national industry median by as much as 43%.
So why don’t businesses have diversity in executive leadership?
You might point out issues with the pipeline. In years past fewer college graduates were female or persons of color. Today, however, women outnumber men for degrees received and the number of Black and Latino graduates increases annually. For those college graduates, though, the numbers still don’t add up. For example, 10% of graduates are Black Americans, but comprise only 4% of senior-executive positions. This disparity is true for women, Latinos, and Asian Americans.
Where are we going wrong?
Diversity isn’t enough
The Civil Rights act of 1964 prohibits discrimination based on race, color, religion, sex, and national origin. In 1968 the National Advisory Commission on Civil Disorders recommended sweeping changes in response to the race riots of 1967. Two human generations later, not much has changed. Diversity programs are in place in companies across the country, but overall executive leadership in America remains overwhelmingly white and male.
Diversity in the workplace is only half of the answer. The other half is opportunity. Diversity speaks to the demographics of the workforce. An inclusive organization, providing targeted opportunity, creates an environment where all employees are respected, valued, and are encouraged to reach their full potential.
“Inclusion allows you to leverage the diverse people and mindsets in your organization. Without inclusion, you will never be able to tap into the full value of your people.”
~ Patricia Hatley
Assess your culture
Executive leaders must be intentional to increase representation within the organization at all levels. This begins with a very honest discussion about the current status of diversity in the company and setting goals for desired outcome. This is a conversation that extends far beyond tallying token numbers and requires insight into gender, age, lifestyle, race, and more.
To lessen the opportunity gap, the diversity and inclusion agenda must be a part of the strategic plan and be implemented at all levels of the company. The successful program will provide resources, funding, and training and will also hold their leadership accountable for outcomes in this area.
“Individual behaviors can shape the success of individuals. But policies determine the success of groups.”
~ Ibram X. Kendi
Check your hiring and promotion practices
Organizations do not intentionally set out to become homogenous. Unconscious and unrecognized bias can derail the most well-intentioned manager. Similar-to-me bias leads to favoring candidates who have similarities to the hiring manager. Ethnicity, sex, alma mater, hometown, hobbies – all of these elements can create a bond that would cause a manager to lean more favorably toward one applicant and away from another qualified candidate.
In their latest Workplace Diversity Report 2018, Namely reviewed data from over 1,000 companies and found that teams tended to report to a manager that was similar to them in not only ethnicity but also in gender.
The problem with this is that diverse teams outperform homogenous teams. Diversity of experience, thought, education, and perspective results in higher-performing teams.
The first step to confronting hiring bias is being aware that it exists. The second step is to brainstorm and incorporate ways to mitigate and avoid bias and bring in diverse advocates.
For example, the blind hiring method removes demographic information like name from the process so that candidates are evaluated solely on qualifications. A field study conducted by MIT and the University of Chicago distributed identical fictitious resumes with the only variable being randomized ‘white’ and ‘black’ names. White names received 50% more callbacks for interviews.
The structured interview process, where all candidates receive the same interview questions, has been shown to reduce bias over free-form interviews.
Your job postings may also disable diversity. What message is the style or language sending potential applicants? Would your wording alienate a particular audience? Is your language biased to attract only a particular audience? Your hiring platform may also limit your response. Recruiting via different channels could attract more diverse candidates.
Finally, ask the experts; recruitment tools and services are available that focus on diversity hiring.
Benefits of diverse companies
Diversity in executive leadership and in the workforce challenges and strengthens perspectives in thought. A broader mindset makes companies more nimble and able to adapt to change. A wide employee and management base provide perspective and insight aligned with a wider customer base. For all of these reasons, companies with diverse leadership outperform those without.
Finally, diverse companies are better able to attract and retain talent. Our climate has changed, and diversity and inclusion are important to our employees.
Our youngest generations (Millennials and Digital Natives – also called Plurals) are the most ethnically diverse generation ever. Via the internet they regularly engage with people from all nations. They want to work in diverse and inclusive environments and are quick to take action where that is not the case.
The time is now
A Chinese proverb says “The best time to plant a tree is 20 years ago. The second-best time is now.” Now is the time to review your corporate culture, strategic goals, and hiring practices to develop your company diversity and inclusion plan. For now, and for the future.
The best time to plant a tree is 20 years ago.
The second best time is now.
~ Chinese proverb