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WHY YOU SHOULD STOP CALLING IT DIVERSITY & INCLUSIONID:

WILBURY WHITE PAPERS AUGUST 2016

Imagine a giant bubblegum machine and a bus-load of 20p coins. You drop the first coin in the slot and crank the silver lever, listening eagerly as the first surprise rattles out: a blue one. Next coin, same thing. And the next, and the next. Get the picture? Despite the fact your potential choices were as diverse as the spectrum itself, it didn’t guarantee you different results. In the first instance, you have diversity. But what you wanted was inclusion: the mutual contrast of flavours that makes the experience that much sweeter.

“Given certain conditions”, Page says, “a randomly selected collection of problem solvers outperforms a collection of the best individual problem solvers.” At the core of Page’s findings is an understanding that people of higher ability often come from similar institutions, and tend to be closed off to new perspectives. Consequently, Page argues, their problem-solving suffers when compared to less homogenous groups.

ID: WHY YOU SHOULD STOP CALLING IT DIVERSITY & INCLUSION

Of course, diversity on its own isn’t a bad thing, and its business-enabling potential should be well-known by now. But just in case, here’s a few tasters: companies with more female or LGBT senior employees outperform those with fewer (Credit Suisse1; Peterson Institute2); ethnically diverse companies are 35 percent more likely to financially outperform homogenous companies (McKinsey3); individuals are better problem-solvers when they anticipate a diverse environment (Columbia4; Scientific American5); and both innovation and conflict resolution is seen to improve in diverse environments (Stanford University6).

Still not satisfied? Well, in a landmark study by Caltech Professor Scott Page, diversity alone even managed to beat ability.7 By modelling the results of a problem-solving test between two distinct groups: the ‘mensa’ group (i.e. high-achieving, top-institution participants) and the ‘brown sock’ group (i.e. a random selection of people), Page found that the brown-socks trumped the mensas.

Every. Single. Time.


“ ...a randomly selected collection of problem solvers outperforms a collection of the best individual problem solvers...”

PROF. SCOTT PAGE, CALTECH

pockets full of changeIn the wake of such evidence, companies have already made considerable headway in promoting the diversity agenda.

In fact, this is what’s wrong with calling it ‘Diversity & Inclusion’ in the first place. Inclusion should come first. Plus, neither concept should be considered as distinct from its counterpart.

We’re surprised by the number of senior sources we speak to for whom diversity is still simply a numbers game, with inclusion viewed as a kind of addendum. So from here on we’re not going to call it D&I. We’re going to call it ID – short for Inclusive Diversity. Only through the catalytic power of an inclusive environment can the true potential of diversity be released; they’re flavours that work better together. What’s more, in the context of a global workforce set to be 75 percent millennial by 2025, ID represents an approach bound more closely in the ideals of the time.11

ID stands for both a higher proportion of diverse employees and, crucially, a better quality of working environment. It celebrates the identity, unique ideas, and highest ideals of a company that wants to be greater than just the sum of its parts. Cultivating an environment that celebrates individuality – regardless of race, gender identity or sexual orientation – is vital to attracting and retaining a diverse and talented range of people.

Oh – and by the way, it’s also much better business.

ID: WHY YOU SHOULD STOP CALLING IT DIVERSITY & INCLUSION ID: WHY YOU SHOULD STOP CALLING IT DIVERSITY & INCLUSION

According to the Human Rights Campaign’s Corporate Equality Index for 2016, gender identity is now part of non-discrimination policy at 75 percent of Fortune 500 companies, an increase of 73 percent since 2002, when the CEI was first published.8

Additionally, more than a third of F500 companies also offer trans-inclusive healthcare, up from the zero percent who did back in 2002. Other initiatives, like the Top 100 Black and Minority Ethnic (BAME) Leaders in Business, have also helped to propel a groundswell of positive action in the corporate world, countering the erroneous belief held by some recruiting teams in the UK that there isn’t enough BAME talent available.9 Similarly, Lord Davies’ Report on Women on Boards – published five years ago – has had a similar impact on improving diversity.

With companies like Diageo, Unilever and Next leading the charge, there are now more women on FTSE 350 boards than ever before, with representation rates doubling since 2011, to 26.1 percent in the FTSE 100 and 19.6 percent in the FTSE 250.10

But diversity doesn’t actually work. Or rather, it only works in the right context. Your outlook has to be crystal clear when it comes to maximising the inclusivity of your environment. Otherwise, diverse staff will leave, you’ll waste money, and you’ll have a harder time attracting new candidates in the future. Most of the time it’s not about diverse talent at all, in fact, but the environments that failed to empower them. Generally, we find that the case against diversity only manifests in situations where inclusion isn’t already in place.


Inclusion lays the ground for diverse staff and makes them feel welcome by virtue of their environment. In a ground-breaking report published by Deloitte in 2013, the company was able to demonstrate a concrete improvement in business performance when diversity was coupled with inclusivity. From a sample of 1557 people across three diverse sectors (manufacturing, retail and healthcare), Deloitte showed an increase of 80 percent when employees felt highly included and saw their company as truly committed to diversity.13 In any number of metrics—from customer service and innovation to employee motivation—the report found that, regardless of the measure, a greater focus on diversity or inclusion would never yield as sweet an impact on overall performance as when the two were combined. The difference rests on three factors:

Forbes have outlined that difference alone can sometimes be linked to lower revenue, performance, morale, and wellbeing (coin in, blue out, coin in, blue out...) But when coupled with an inclusive culture, diversity gives you a rainbow of business uplift: higher performance, less absenteeism, more customer satisfaction and greater innovation.12

1 DIVERSITY IS NOT A NUMBERS GAME—BUT NUMBERS DO MATTER

Research conducted by Prof. Margaret A. Neale at Stanford University has pointed to worse performance levels for a small amount of diversity, ie when a member is seen ‘as a token representative of any given group’.14 “Two-on-one scenarios,” says Neale, “with, say, two Caucasians and an African-American, resulted in poorer performance than when the team comprised a Caucasian person, an African-American person, and an Asian-American person.” (Notice how this is still underpinned by the notion of workplace culture, however. Diversity flourishes when the culture itself is enriched through a cross-pollination of backgrounds and ideas.)


2 OUR PERCEPTION OF INCLUSION HAS EVOLVED

The sweet shop is under new management. In a separate study on the influence of the millennial demographic on ID, Deloitte found stark contrasts between the views of millenials and those of their forerunners. Millenials, Deloitte found, tend to focus on respecting identities, unique experiences, ideas, opinions and thoughts, compared to nonmillenials, who are more likely to focus on representation, religion & demographics, and equality.

Millenials were more likely to focus on business impact, teamwork, and a culture of connection. Nonmillenials, on the other hand, were more likely to focus on opportunity, equity, integration, acceptance and tolerance. The latter perspective is markedly defined by a sense of ‘equal but different groups working together or alongside each other’, whereas the millennial view of inclusion suggests ‘one group with individual experiences and identities.’ Ultimately, millenials feel more engaged and empowered when they believe their organisation fosters a culture of inclusivity. The difference in perspectives is depicted in the following diagram:

INCLUSION

EXCLUSION SEGREGATION INTEGRATION

Context is everything. Vernã Myers, a widely recognised expert and advocate for inclusive diversity within the US law sector, provides a case in point: “As a consortium of large law firms in Boston,” Myers recalls, “we initially aimed all our efforts at outreach and recruitment of attorneys of colour, and we saw the numbers increase tremendously.15 Then we noticed them stagnate and even decline; all the people we invited in the front door were leaving out the back.”


3 DIVERSITY ONLY WORKS IF YOU CREATE THE RIGHT ENVIRONMENT

“ We used to think that diversity was a goal in itself.”

VERNÃ MYERS

If you aren’t creating an inclusive environment, is it any wonder that employees don’t feel engaged or welcome? “We used to think that diversity was a goal in itself,” Myers tells us, “until we discovered that unless the environment...and the workplace are inviting, fair, and respectful, diversity is not going to thrive.” Cultivating an ID culture requires a specific set of values and practices. Through an increased understanding into the business case for ID, companies worldwide have come to realise that it must be hard-wired into everything they do. From our research and consistent engagement with thought leaders in the field, we’ve listed some common factors in environments that are highly-conducive to ID environments. They are as follows:


CULTURE• Hire a dedicated Head of ID to push the

diversity agenda. A large number of senior sources have suggested that too often the task is sidelined as an additional HR responsibility.

• Women, BAME and LGBT staff need “real models, not role models” – as one source cogently put it. Diversity depends a great deal on the strength of the leaders pushing the agenda internally, and the behaviour of senior leaders has a huge influence on the perception of a company from within. If leaders embody an authentic commitment to ID in the workplace, the culture is more likely to flourish. Changeboard.com suggests asking managers how well they know the diverse members of their team, as well as what they know about the interests, concerns, beliefs, and ambitions of their diverse staff members.16 Often a lack of personal understanding belies the true cause of our unconscious bias.

• There must be a coherent and well-defined strategy for inclusion within the workplace. Many companies choose to supplement their efforts in overseeing inclusivity by setting up networks for BAME leaders, for example.

• Work-life balance: Deloitte highlight the fact that employees’ perception of their organisation’s commitment to diversity, and their feelings of inclusion, closely correlate to the level of work/life balance they’re afforded.

• Encourage a collaborative and active ethos among staff. Google, one of the most renowned ID cultures in the world, are well-known for

their team rotations and innovative recruitment techniques, a theme that Neale’s study corroborates.17 However, she asserts, ‘newcomers to the team should be different in some critical way, be it in an area of expertise, level of education, manner of thinking, or some similar dimension.’ The Stanford study found that when newcomers were socially similar to the team, the original members had a positively skewed idea of their team’s ability, performing objectively worse on the same problem-solving tasks. When newcomers were socially different in some way, however, original members had a negatively skewed idea of their team’s ability, while performing objectively better in the same tasks. Our hesitancy to embrace the new often leads us to misjudge how effective the current status quo actually is.


• Ethnically and gender diverse interview panels. Multiple sources have stressed the importance of demonstrating the diverse culture of a company from the very outset of a candidate’s journey. It also helps to remove unconscious bias in the hiring process. For in-house recruiters and search firms alike, assessing the views of new hires around diversity is an important process of ensuring that the ID culture permeates every level of an organisation. This is more likely to occur where those in charge of hiring have a sense of what a collection of unique viewpoints really means.

• Collaborative working between ID and talent acquisition teams. This has become a huge area of concern, as standards can differ between the two parties. Search firms, in particular, need to seriously consider the diversity of their candidates if they want to provide the best service offering to their clients, with many HRD’s pushing for 50:50 male/female representation on short and long lists.

• Where possible, recruit from within. Recruiting externally to fill leadership roles with diverse talent creates a different message to developing and recruiting the same talent from within. Sources who were advanced with ID saw recruiting internally as a pivotal factor, ensuring that positions are well advertised and that underrepresented groups are engaged with through centrally-run initiatives.

• Cast a wider net: role-specific criteria should go further than work experience and extend to valuable soft-skills as well. Recruitment teams and search firms are sometimes unwilling to be imaginative with their resourcing efforts, like looking outside of immediate industry sectors for other potentially relevant hires, for example.

REFERENCES

1 “Credit Suisse ESG Research.” Credit Suisse. 15 Apr. 2016. Web. 8 Aug. 2016. <https://doc.research-and-analytics.csfb.com/docView?document_id=x695480&serialid=u0qj22TwXJAwyF%2FreBXW%2FeSFdVyYwRIZQGZP1IAumTo%3D>.

2 “Is Gender Diversity Profitable? Evidence from a Global Survey.” Peterson Institute, Feb. 2016. Web. 8 Aug. 2016. <https://piie.com/publications/wp/wp16-3.pdf>.

3 “Why Diversity Matters.” McKinsey & Company. Jan. 2015. Web. 08 Aug. 2016. <http://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters>.

4 “Do Diverse Teams Work Harder — and Better?” Columbia Business School, 20 Dec. 2013. Web. 8 Aug. 2016. <https%3A%2F%2Fwww8.gsb.columbia.edu%2Fideas-at-work%2Fpublication%2F1617>.

5 “How Diversity Makes Us Smarter.” Scientific American. 1 Oct. 2014. Web. 08 Aug. 2016. <http://www.scientificamerican.com/article/how-diversity-makes-us-smarter/>.

6 “Diverse Backgrounds and Personalities Can Strengthen Groups.” Stanford Graduate School of Business. Aug. 2006. Web. 08 Aug. 2016. <https://www.gsb.stanford.edu/insights/diverse-backgrounds-personalities-can-strengthen-groups>.

7 “The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies.” Google Books. Princeton UP, Web. 08 Aug. 2016. <https://books.google.co.uk/books?id=hJRu4O8q1xwC&pg=PA380&dq=scott%2Be%2Bpage%2Bthe%2Bdifference&hl=en&sa=X&ved=0ahUKEwiErLTbm7LOAhXB6RQKHb-bA6IQ6AEIHDAA#v=onepage&q=scott%20e%20page%20the%20difference&f=false>.

8 “HRC’s 2016 Corporate Equality Index | Human Rights Campaign.” Human Rights Campaign. Web. 08 Aug. 2016. <http://www.hrc.org/campaigns/corporate-equality-index>.

9 “The Top 100 BAME Leaders in Business.” British Race and Cultural Equality Awards. Web. 09 Aug. 2016. <http://www.britishraceawards.co.uk/top-100-bame-leaders.html>.

10 “Women on Boards Davies Review.” Gov.co.uk, Oct. 2015. Web. 9 Aug. 2016. <https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/482059/BIS-15-585-women-on-boards-davies-review-5-year-summary-october-2015.pdf>.

11 “The Radical Transformation of Diversity and Inclusion: The Millennial Influence.” Deloitte. Web. 9 Aug. 2016. <https://www2.deloitte.com/content/dam/Deloitte/us/Documents/about-deloitte/us-inclus-millennial-influence-120215.pdf>.

12 “Why Diversity Can Be Bad for Business (And Inclusion Is The Answer).” Forbes. Forbes Magazine, 20 May 2014. Web. 09 Aug. 2016. <http://www.forbes.com/sites/sebastianbailey/2014/05/20/why-we-should-prioritize-the-i-in-d-and-i/#4b09218677ee>.

13 “Waiter, Is That Inclusion in My Soup? A New Recipe to Improve Business Performance.” Deloitte. May 2013. Web. 9 Aug. 2016. <http://www2.deloitte.com/content/dam/Deloitte/au/Documents/human-capital/deloitte-au-hc-diversity-inclusion-soup-0513.pdf>.

14 “Diverse Backgrounds and Personalities Can Strengthen Groups.” Stanford Graduate School of Business. Aug. 2006. Web. 08 Aug. 2016. <https://www.gsb.stanford.edu/insights/diverse-backgrounds-personalities-can-strengthen-groups>.

15 “Diversity Is Being Invited to the Party; Inclusion Is Being Asked to Dance.” Diversity Is Being Invited to the Party; Inclusion Is Being Asked to Dance. Web. 09 Aug. 2016. <http://www.americanbar.org/publications/gpsolo_ereport/2012/june_2012/diversity_invited_party_inclusion_asked_dance.html>.

16 “Diversity versus Inclusion – Can You Spot the Difference?” Changeboard.com. 16 Dec. 2015. Web. 09 Aug. 2016. <http://www.changeboard.com/content/5302/diversity-v-inclusion-can-you-spot-the-difference/>.

17 “Here’s Google’s Secret to Hiring the Best People.” Wired.com. Conde Nast Digital, 8 Jan. 2015. Web. 09 Aug. 2016. <http://www.wired.com/2015/04/hire-like-google/>.


• Empower diverse staff and outline development. At levels once or twice removed from the management positions, ensure that interventions are being made to empower people to apply for the roles on offer, and clearly outline internal progression from the beginning of an employee’s journey. Having a pipeline of diverse staff is absolutely key to ensuring both the self-perception and efficiency of diverse employees remains high.

• Educate existing staff members – particularly those with hiring responsibilities – to tackle unconscious bias in recruitment by facilitating discussion through workshops and ID seminars.

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