Inclusiveness

Diversity, Equity, and Inclusion (DEI) is increasingly being recognised as a CEO-level priority and a primary strategic driver for companies. And this is not just from a social standpoint, but also from the perspective of profitability, innovation, and resilience.

It is becoming clear that DEI brings real measurable outcomes that can benefit the whole company and represent a significant competitive advantage. Inclusion could even represent the key factor that determines whether companies can successfully navigate out of times of crisis such as the ones that we are living today.

However, although the vast majority of CEOs seem to rate diversity, equity, and inclusion as an important issue, in 2020 McKinsey found that even relatively diverse companies seem to face significant challenges in creating work environments characterised by inclusive leadership. Accountability among managers, equality, fairness of opportunity, openness and freedom from bias and discrimination also still remain a challenge.

WHAT DOES INCLUSION MEAN AND WHY DOES IT MATTER?

In today’s globalised, diverse and interconnected world, diversity, equity, and inclusion are essential competitive factors. As people increasingly demand to see changes at all levels of society, DEI can considerably affect brand reputation, customer appreciation, as well as talent acquisition and retention. Employees today are acutely sensitive to diversity, equity and inclusion. Millennials, for example, consider inclusion to be a mandatory pre-requisite of corporate culture.

However, the impact of DEI goes beyond that. It has been demonstrated that more diverse and inclusive companies gain benefits in terms of financial performance, innovation, creativity, and resilience. McKinsey’s latest report, Diversity wins: How inclusion matters, also shows that the strong correlation between financial performance and diverse and inclusive companies is growing. They found that companies in the top quartile for gender diversity on executive teams were 25 per cent more likely to have above-average profitability compared to companies in the bottom quartile. This increased to 36 per cent when taking into account ethnic and cultural diversity instead. Companies lacking diversity and inclusion, on the other hand, seem to be increasingly lagging behind.

If the benefits of inclusion are so clear, why is the concept of inclusion so difficult to put into practice?

DIVERSITY WITHOUT INCLUSION

Most organisations seem to still only focus on the demographic layer of diversity – such as gender, religion, ethnicity and nationality – forgetting about inclusion. And while it is true that diversity has the potential for greater performance, this potential, if not leveraged, is not a guarantee of success. Employing diversity does not necessarily mean that diverse talent is actually given equal opportunities or that it is made to feel engaged and valued. Members of a team or organisation might feel ignored, misunderstood, scared, or disengaged.

Thus, lack of inclusion – even in the presence of diversity – has a potentially high social cost in terms of mental well-being of the employees and impact on their communities, and will negatively impact performance and profitability too. Csaba Toth, founder of ICQ Global and author ofUncommon Sense in Unusual Times, considers inclusion to be ‘the difference between lots of people working independently and unsure of what they should be doing next, and a successful mix of people who work in harmony, creating synergy and superior performance.’

A study by 3Circle Partners cited in the book Close the Interaction Gap shows that, on average, 79 per cent of potential performance is lost when working within a team due to clashing values combined with poor leadership. This is the true cost of lack of inclusion: 79 per cent of unrealised performance. This is why, to fully tap into the potential of a diverse workforce, organisations need to ensure team members are working in highly inclusive environments.

Inclusion aims at creating a psychologically safe and empowering environment where people with a wide range of perspectives and backgrounds feel that they belong, that they are being treated equitably and with respect, and that their presence and their contribution are being valued. Only then can people express their potential and grow, driving innovation and participating to better decisions. Inclusion is critical for what we call ‘cognitive diversity’, which is the diversity that has real proven benefits on team performance, studies have shown.

CULTURAL INTELLIGENCE IN TIMES OF CRISIS

According to Toth, cultural intelligence is the key to understanding the blueprint of why people think and behave in a certain manner. This enables culturally intelligent organisations to build cohesion and belonging and to create an inclusive environment where cultural and individual differences are allowed to express their full potential. Culturally intelligent leaders can then turn this potential into synergy, ultimately leading to better decisions and innovation.

Companies have all the reasons to quickly act and turn equality, fairness, and social justice into a strategic priority that brings about real actionable change. Not only this is the right thing to do ethically, but it will also help them to successfully address other unprecedented challenges, such as COVID-19 or climate change.

In times of crisis, leaders and organisations need enhanced problem-solving skills and vision to re-imagine their business models. Inclusiveness can give them this competitive edge. Innovation, resilience, and social cohesion are essential conditions to successfully recover from the crisis. These are all qualities of inclusive organisations. More inclusive and diverse teams are more likely to be able to anticipate shifts in the market and consumer needs. The research available suggests that, when companies invest in diversity and inclusion, they are also better equipped to create more adaptive, effective solutions.

WHAT CAN BUSINESSES DO?

While progress has been slow, a few pioneering companies have led the way for other companies to see how they can adapt and innovate their approach to inclusion and diversity. Winning strategies, McKinsey says, have to adopt systematic, business-led approaches to DEI and combine them with concerted actions to create a long-lasting, inclusive culture and promote inclusive behaviour. If companies do so, they are most likely to reap the rewards.

Drawing from recommendations by another of the big Four, Deloitte, here are some suggestions for businesses:

  • Recognise that progress will take a culture reset. Organisations often underestimate the depth of the change required and only set to comply to prescriptive diversity and inclusion requirements. Creating an inclusive environment, however, is not as simple as ticking a box. A culture reset might even require a greater effort than other business objectives. It is a mindset change. Organisations should invest much more time and resources into achieving DEI.

  • Foster diversity of thinking. The most innovative companies take a broader idea of diversity that looks beyond demographic diversity. This does not mean that demographic characteristics, such as gender and ethnicity, are not important. Advancing diverse talent into executive, management, technical, and board roles is still imperative. But in order to fully leverage diversity, companies need to aim to promote inclusion.

  • Promote inclusion. Inclusion is the pre-requisite necessary to fully leverage diversity. Hiring diverse talent is not enough. It is the workplace experience that shapes whether people feel included and thrive.

  • Engage middle managers. While change needs to be driven from the top, middle managers are vital to the success of an organisation’s DEI strategy. Engaging in open conversations or exposing middle managers to influential role models and other powerful experiences – such as offering them mentoring opportunities – should help managers become inclusive and culturally intelligent leaders who make sure that inclusive values are upheld. Training and coaching should never be treated as an afterthought; they are an essential part of developing maximum leadership potential.

  • Rewire the system. Biases can be embedded into the organisational system and its various processes. A systematic approach will create more comprehensive and sustainable solutions. Leaders should pursue significant changes in all processes and systems and consider DEI as a business responsibility that involves the whole organisational structure, not just HR.Diversity training programs can raise awareness around DEI and unconscious biases while providing a shared language to discuss diversity and inclusion, but they are just the first step towards systemic inclusion.

  • Strengthen accountability, recognition, and rewards. Clear tangible goals turn ambitions into real change and enable accountability and reinforcement. Tangible goals should measure both inclusion and diversity. Systematic changes have to be data-driven and their impact must be tracked and assessed periodically to evaluate effectiveness. Assessment should involve all areas, such as recruitment, promotion, pay and other talent practices. For example, DEI can be used as criteria for compensation and rewards. By taking accountability, leaders signal the importance of diversity and inclusion as a business priority and help focus people’s attention.

  • Match the inside and the outside. Make your company mirror the diversity and the desire for inclusion, equity, fairness, and social justice that characterises society at large. Apply the same scrutiny and culturally intelligent awareness when dealing with your customers, avoiding stereotyping and vacuous marketing. DEI communication must be authentic and come from a real commitment.

The author would like to thank Lucrezia Baldo, GMD intern, for her support in the research and writing of this article.

Related

6 practical steps on how to promote psychological safety in your team

6 practical steps on how to promote psychological safety in your team

24 May 2022
by Dragan Donkov

These practical steps on promoting and improving psychological safety in your team will help you take better care of your ...

10 common traps to avoid when using a coaching leadership style

22 May 2022
by Karl Grech

Coaching is a craft. However, simply having the tools doesn’t make you a craftsperson - any new skill is developed ...

Ask yourself: Do I really need to come to your meeting?

21 May 2022
by Joseph Micallef

Have we not all experienced the amount of effort, time and costs saved, not to mention the critical reduction on ...

The importance of creating cultures of recognition and appreciation at work

14 May 2022
by Dr Angelica Attard

An invitation to organisations and employees to give appreciation and recognition more abundantly at work and to practice receiving it ...

Close Bitnami banner
Bitnami