A Closer Look at the Flaws in Diversity Programs and Opportunities for Success to Affect Change

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The July/August issue of Harvard Business Review’s cover story examines diversity in the workplace closely. In the piece, “Why Diversity Programs Fail” by Frank Dobbin and Alexandra Kalev, the authors make the compelling argument that although businesses have begun caring a lot more about diversity since they were rocked by lawsuits in the late 90s and early 2000s, unfortunately equality hasn’t improved much.

The article states: “Although the proportion of managers at U.S. commercial banks who were Hispanic rose from 4.7% in 2003 to 5.7% in 2014, white women’s representation dropped from 39% to 35%, and black men’s from 2.5% to 2.3%... Among all U.S. companies with 100 or more employees, the proportion of black men in management increased just slightly—from 3% to 3.3%—from 1985 to 2014. White women saw bigger gains from 1985 to 2000—rising from 22% to 29% of managers—but their numbers haven’t budged since then. Even in Silicon Valley, where many leaders tout the need to increase diversity for both business and social justice reasons, bread-and-butter tech jobs remain dominated by white men.”

There is no single reason why diversity programs are not successful. The HBR article explores a number of methods organizations have implemented over the years including diversity training, hiring tests, the role performance ratings play, and how grievance procedures work, that haven’t lived up to their vision.

Some of the avenues not explored, but those we feel are critical to talent management, include a lack of communication of the value of diversity programs.  Every organization, be it public or private, is focused on success and financial results. Indeed there is a moral high ground, but these businesses need to articulate a business imperative that is believable and achievable.

In that context, diversity is the demographic of success. Recent U.S. Census Bureau data shows that by 2050, Asian, Black and Hispanic individuals will represent 50 percent of the population. Today, 50% of babies born are non-white.

There is value in building diverse workforces. McKinsey released a study showing that gender diverse companies had financial performance that was 15 percent higher than the national industry median, and ethnically diverse companies had performance that was 35 percent higher than the national industry median. Additionally, Bersin by Deloitte’s 2016 Predictions included Diversity in their Top 10. The company found business returns of a diverse organization were as follows:

  • 2.3 times higher cash flow per employee
  • 1.8 times more likely to be cash ready
  • 1.7 times more likely to be innovation leaders
  • 3.8 times more likely to coach improved performance
  • 3.6 times more able to deal with performance problems
  • 2.9 times more likely to identify and build leaders

There is a powerful correlation between diverse businesses and success. It is widely accepted that better decision-making comes from informed and diverse views that enable objections, alternatives, and efficient solutions that are more readily adopted.

As a leader in diversity and inclusion for talent management for many years, there are also some bad habits we’ve seen that prevent organizations from hiring more diverse groups.

Companies are often too focused on the diversity count instead of on making diversity count. The mindset has to shift from diversity to inclusion. They need to ask themselves: Who are the leaders? How are collaboration teams formulated to build differing points of view and perspectives? How is the company building a culture of inclusion by breaking down unconscious bias?

STEM programs in particular also need to do their part to include more students from various backgrounds. This will, in turn, result in a more diverse talent pool, specifically for technology and financial industries.

It’s important to remember that the industry’s leading consumer tech and finance brands have their pick of the best talent and the greatest diversity opportunity on the market. These are companies that candidates of all backgrounds want to work for. A couple of reasons why things may not seem to be adding up:

  1. These companies have not acted quickly enough to address the diversity issue in pragmatic and direct ways inside the business.

     

  2. There has been no broad and impactful leadership team change or expansion to show visible commitment to not just diversity, but inclusion. This has been a self-fulfilling prophecy.

If a company is not willing or capable of the change needed for an inclusive workforce, then your best diversity candidates will pick a company in which they will be recognized and rewarded despite the brand.

 So, the real question is, what should organizations do instead?

The HBR article outlines how a number of companies have gotten consistently positive results with tactics that don’t focus on control. They apply three basic principles: engage managers in solving the problem, expose them to people from different groups, and encourage social accountability for change.

We agree completely, but also believe there is a business need to operationalize for the outcomes you want to see. Additional steps to consider in executing a successful diversity and inclusion program:

  1. Measure where you are today. (Note: This is about all many organizations have done)

     

  2. Set a new goal and target aspiration. Determine what you want your diversity DNA to be and recruit and onboard for it.

     

  3. Compensate people appropriately and equally across gender and race and make those statistics public.

     

  4. Set up performance evaluations and goals for the behaviors you want to see. For example companies should reward managers for low attrition rates of strong diversity contributors.

     

  5. Build learning programs across the organization that educate around subconscious bias.

     

  6. Build succession paths with a conscious approach to developing a diverse leadership team.

Diversity and inclusion should be a significant priority for HR and Executive Management. As a follow-up to our successful 10 Key Trend Affecting HR in 2016 report,  we further examined the top 3 HR trends gaining steam in 2016, with diversity and inclusion and its importance to innovation a large contributor in our whitepaper The HR Department of the Future

Companies should get ahead on diversity by making it a business imperative, and communicating the benefits of that imperative so that becomes true and believable to everyone. Organizations that make diversity and inclusion a part of their DNA, and organize their talent management efforts for diversity and inclusion accordingly, will succeed.

By building a palpably inclusive culture that delivers the promise of a diverse workforce with business success, any organization can attract the next wave of highly qualified diversity candidates into the business.

 Learn how PeopleFluent’s diversity and inclusion focused product capabilities help companies build and implement their diversity strategies at every stage of the employee lifecycle. Download our Diversity and Inclusion-focused brochure now.

 

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