Painting at protest against the passing of Proposition 8, West Hollywood, 2008 (Source: Wikimedia Commons)
Ideas for Leaders #625

Diversity and Inclusion: Key Success Factors for Today’s Companies

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Key Concept

Recognizing the competitive advantage of a diverse workforce in an increasingly diverse marketplace, companies are making an effort to include diversity and inclusion elements in their leadership development programs. 

Idea Summary

In today’s workplace, driven by demographic changes and the evolution in our social attitudes, diversity competencies in managers and leaders are required. Such competencies are based on the following abilities:

  • attitudinal (for example, adapting to other cultural norms, withholding judgment)
  • skills (practicing appropriate etiquette, seeking local expertise).
  • managerial (using culturally appropriate motivational tools)
  • knowledge (following rules and norms, understanding world geography)
  • business (using negotiation tactics and styles across different cultures)

A survey of nearly 800 leaders in U.S. and international organizations show that companies are more aware than ever of the importance of developing diversity competencies in their leaders and of creating a culture of inclusion. The survey was conducted by the  University of North Carolina Kenan-Flagler Business School and the Human Capital Media Research and Advisory Group, the research arm of Chief Learning Officer magazine.

According to the survey results, the use of diversity competencies for leadership development is widespread. Nearly three-quarters of all organizations in the survey included diversity competencies in their leadership development to some extent. These organizations recognized the importance of diversity in achieving their business objectives, from attracting top talent (73.2% of respondents believed this objective was directly impacted by a culture of inclusion) to retaining employees (68.3%) and improving the customer experience (59.0%).

Organizations, according to the survey, are also committed to creating cultures of inclusion, with more than 95% agreeing that “diversity is important to improving our bottom line profits,” and just shy of 95% agreeing that “a culture of inclusion is critical to the future success of my organization.” Creating this culture of inclusion requires setting performance targets (in 60% of the organizations, leaders have diversity recruiting targets) and holding leaders accountable for diversity and inclusion performance goals. For example, 61.6% of organizations reported that leaders are held accountable for creating and fostering an inclusive workplace.

The survey also explored the “maturity level” of the diversity and inclusion function. For example, in undeveloped organizations, diversity and inclusion (D&I) initiatives are not a priority. Beginning organizations pay some attention to existing employees but D&I is not a strategy priority. Intermediate organizations have a few D&I best practices in place, such as diversity hiring. Advanced organizations, which have formal D&I related development plans in place, and vanguard organizations, where leaders are accountable for diversity metrics, training and goals, had mature D&I functions. Less than a quarter of respondents identified their organizations as mature (5.9% vanguard, 16.9% advanced).

The differences between mature and underdeveloped or beginning organizations is stark. For example, 77.2% of respondents from advanced or vanguard organizations believed that appreciation of differences was an important skill in a leader; just 40% of respondents from underdeveloped or beginning organizations saw the value of appreciating differences. Gender intelligence (70.9% to 29.3%), openness (67.7% to 40.8%) and awareness of biases (64.6% to 29.8%) showed similar disparities in attitudes between mature and underdeveloped or beginning organizations.

Business Application

Diversity is a critical competitive success factor in today’s business world. Organizations with culturally sensitive leaders will be better positioned to attract the best candidates to their organizations.

A number of roadblocks — such as no time set aside for development, lack of structured training and programs, and lack of support from top management or middle management — prevent organizations from attaining the required D&I maturity.

Suggestions for overcoming these roadblocks, thus increasing leadership diversity competencies in your organization include:

  • including leadership diversity competencies in all leadership development programs and initiatives
  • increasing awareness through individual and group training and mentoring
  • linking D&I goals to the company’s business framework

Suggestions for overcoming the roadblocks to the creation of a culture of inclusion include:

  • creating a diversity council
  • proving the ROI of diversity initiatives
  • encouraging and enabling multiculturalism training

The top-ranked organizations in Human Capital Media’s Diversity Value Index offer additional guidelines to emulate, including the following:

  • Align D&I practices to organizational goals
  • Have a workforce that reflects the diversity of your customer base
  • Provide unconscious bias training
  • Sponsor diversity events in the community, thus creating interest in your organization among diverse members of the population
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