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What’s the Business Case for Diversity?

We’re making a big push to focus on multiculturalism, but want to avoid it becoming “just another thing.”

December 3, 2013

Dear Melting Pot:

    Organizations implement diversity and inclusion initiatives to create an environment in which individuals from different backgrounds are treated fairly and given equal access to opportunities and resources. Embracing diversity and inclusion can bring a broader range of mindsets and backgrounds into the organization, leading to more effective decision-making or drawing in a wider customer base.

    Companies are investing in this area: 77 percent of executives strongly support diversity initiatives, and organizations expect to focus and invest even more on diversity and inclusion in the coming years. However, success at improving the perceptions of diversity and inclusiveness in the organization are not as strong as most organizations would like or need; only 40 percent of employees actually believe their organization is actually diverse and inclusive.

    The gap between investment and results is problematic as organizations are missing out on some very real benefits of building a more diverse and inclusive workforce. When employees feel that they have a more diverse and inclusive workforce, turnover is almost 20 percent lower and employee effort is nearly 12 percent higher.

    This gap is generated by the fact that most executives underestimate the importance of investing in building diversity and inclusiveness. They equate it with simply hiring more people from more diverse backgrounds, and fail to truly appreciate the investment that is required to build a more diverse and inclusive working environment.

    After analyzing the behaviors of hundreds of thousands of employees and conducting interviews with hundreds of heads of human resources and heads of diversity, we have identified four lessons to implementing a diversity and inclusion initiative:

Build diversity and inclusion strategies that link diversity with outcomes that matter to business leaders.

    While building a diverse and inclusive organization as a goal unto itself is certainly worthy, success at improving diversity and inclusion is rarely achieved when organizations simply set ambitious goals. Rather by tying diversity and inclusion objectives into the broader business strategy buy-in for and delivery of diversity and inclusion strategies is much more likely to be successful.
 

Define relevant diversity and inclusion objectives.

    Allow business leaders to create locally relevant diversity and inclusion objectives, and assess incremental progress against those objectives, not just final results. Frustration is generated without creating a way to show incremental progress on the goals. This disconnect prevents progress.

Build a diverse and inclusive workforce.

    Diverse candidates are often bombarded with information. Rather than trying to exclusively influence diverse candidates through direct organizational recruiting outreach, leading organizations are influencing the career influencers of diverse candidates to shape perceptions and to expand the diverse talent pool rather than fighting fierce battles over a limited talent supply.

Create a path to leadership positions for diverse talent.

    Most organizations highlight the career experiences of some of their diverse senior leader talent. However, these strategies have limited success since many diverse employees fail to see the connection between their current situation and the final destination of other employees. Instead, leading organizations are helping diverse employees see the link between their skills and leadership position requirements, and build processes that minimize the impact of biases in talent management decisions to show how diverse talent can move into leadership positions.

SOURCE: Brian Kropp, The Corporate Executive Board Co., Washington, D.C., Oct. 22, 2013