Diversity initiatives to increase business performance

In response to the grassroots movements of #BLM, #MeToo and by the exposure of pronounced and increasing equity gaps during the COVID-19 pandemic, organizations are allocating ever-increasing budgets to diversity-related initiatives.

Already in 2002, MIT Sloan School of Management found that $8 billion is spent each year on diversity training alone in corporate America. In Europe, diversity investments have jumped significantly in response to diversity legislation, quota requirements and the global response to the killing of George Floyd.

Postings for diversity and inclusion professionals jumped 35 per cent between 2016 and 2018. Furthermore, a 2019 study revealed that 63 per cent of diversity professionals in S&P 500 companies had been appointed or promoted to their roles during the past three years. According to 2021 research by GIA the expected compounded annual growth on diversity investments globally will be 12,6% (doubling the diversity investments) every 5 years.

This article will review why the sizeable investments in diversity are not delivering diversity benefits. As well as to present a solution that supports organizations and their leaders benefiting from their investments in diversity.

Why 75% of all diversity investments are going to waste?

Despite this considerable investment in diversity, these investments are not converting to moving the diversity needle, nor delivering on the diversity business case. Indeed, research suggests that 75% of all diversity investments are going to waste and some activities even reduce diversity performance. The COVID-19 crises have added to the loss of previous diversity investments as women and other underrepresented groups exit the workforce.

In a nutshell, investments are not translating to diversity benefits because diversity investments are often ad hoc, not proven in benefits (called “disputable initiative efficacy”) and not integrated into a diversity journey. This in part leads to a lack of rigour in how organizations select, evaluate and integrate their diversity initiatives. Let us examine three re-occurring problems:

1. Ad hoc, duplicate initiatives—An inventory of initiatives carried out in over 50 medium to large organizations reveals that organizations typically have 70 discrete diversity initiatives (such as unconscious bias training, mixed recruitment panels, sponsorship networks, inclusiveness index)—and at times as many as 400 or more. Ad hoc adoption of best practices by different organisational units and geographical locations means limited transferability, cross-organizational learnings, and other synergies.
2. Ineffective Initiatives—Organizations assume diversity initiatives effectively produce the desired or intended result (“efficacy”). Often organisations select diversity interventions without piloting, testing and measuring the benefit of the intervention in their unique context. For example, some unconscious bias workshops actually reinforce biases (such as mini-me bias, affiliation bias, in-group bias, race and gender bias) instead of diminishing them. This occurs when facilitators offer stereotypes as examples in the training and create a name-and-shame environment.
3. Non-integrated Initiatives—Frequently, diversity initiatives are launched in an isolated manner rather than connecting them up and ensuring that they reinforce one another. Without an integrated approach, synergies between initiatives are missed and people may become weary as well as confused, wondering when the “next diversity flavor of the month” will be launched. There is real diversity fatigue when participants are not able to understand the steps of the diversity journey and why certain initiatives are selected as well as what the desired diversity benefit will be.

For example, organizations that initiate leadership training to promote inclusive leadership practices, would benefit from introducing an inclusiveness index, taking a baseline, setting a clear 3-years goal for increasing an inclusive environment year-on-year, and holding inclusion workshops to support awareness also skills building around being inclusive. This would make the intervention more sustainable, promote feedback to leaders and validate whether the intervention has delivered the expected inclusiveness benefit.

Benefits of building organization diversity capabilities

Organizations would be well served to have a reference diversity capability architecture for their ambition level for diversity and a proven package of initiatives that are shown to deliver the required diversity benefits for their selected stage.

For example, organizations that pursue diversity for legal compliance (Stage 1) need to support a smaller set of required diversity initiatives than an organization that pursues diversity to avoid stakeholder penalties (Stage 2). Or an organization that seeks bottom-line performance (Stage 3), wishes diversity to support its transformational capability (Stage 4) or desires to support societal sustainability through its diversity initiatives (Stage 5).  

The good news is that this Diversity Capability Architecture has been recently developed, published and is based on extensive scholarly research. Applied learnings from multiple organizations around the world.

There are six diversity capabilities leaders need to cultivate within their organizations in order to close diversity performance gaps. These capabilities are interdependent and work together:

1. Mitigate Bias—Mitigating personal and systemic bias so that stakeholders feel included, and equity is advanced. This requires an organization to identify its talent blind spots, to raise awareness on bias and why it occurs. As well as to equip leaders with the skills to mitigate bias in practice.
2. Build the Case—Translating the diversity purpose into a clear case for diversity, identify the appropriate performance level and allocate budget to the diversity journey while measuring the results of the investments.
3. Embed Behaviour—Embed inclusive behaviours across the organization, supported by appropriate values, rituals and daily practices. A simple check-in before the start of a meeting or supporting all participants in a meeting being able to contribute, are some behaviours that can foster a sense of engagement and belonging.
4. Harness Policies—Identifying the right policies to guide, reward and promote daily diversity practices. Reviewing policies with the beneficiaries of these policies is critical to ensure that the policies are being valued by its beneficiaries.
5. Measure and Monitor—Measuring and monitoring progress in closing the Diversity Performance gap. People wish to understand what constitutes success and whether progress is being made against the diversity goals. So often this is not done.
6. Celebrate and Sustain—Energizing collective commitment to the diversity journey, stay aligned with stakeholder expectations and support the organization’s transformation journey. Diversity is a journey and like all journeys it can be difficult and experience setbacks. Thus it is important to celebrate the diversity achievements and recognize those that are supporting the journey through their daily actions.

For each of the 6 diversity capabilities, there is a corresponding package of validated initiatives that organizations need to implement. A ‘package’ of initiatives is an integrated suite of efforts, comprising multiple projects or actions, that work together to enhance the diversity capability of the organization for the desired stage of performance.

Translating to a diversity roadmap with milestones

Having a proven Diversity Capability Architecture allows an organization to be deliberate about their diversity investments. To have confidence that they are implementing proven diversity initiatives to satisfy their aspired diversity ambition (stage). This allows leadership to create a compelling and understandable roadmap of diversity initiatives.

If you want to learn more about leading diversity, you can check out Beyond D&I by Kay Formanek.