Managing diversity and inclusion (D&I) is an increasingly critical aspect of creating a successful organisation. Debbie Ramsay, who works across GoodCorporation’s business ethics portfolio and leads on measuring ethical culture, examines why these areas are so important and how best to get them right.

Making the business case
D&I has risen rapidly up the corporate agenda in recent years. While a greater sense of social justice, a desire to demonstrate corporate responsibility and the need for legal compliance have placed this firmly on the radar, it is clear that a significant impetus for change has come from initiatives such as the #MeToo and Black Lives Matter movements. The Covid-19 pandemic has also exposed the social, racial and gender inequalities entrenched in society, and widely reflected in the workplace, adding to the drive to address these issues meaningfully.

While many organisations acknowledge a social need to embrace D&I, how many fully understand the business case for a building a diverse and inclusive workplace? Too many organisations respond with tokenism, such as recruiting female non-executive directors to the board to meet gender targets that can then be used as evidence of progress.

While this may tick a box, companies that take this approach are missing out on the chance to improve both competitiveness and performance. In an increasingly globalised economy, organisations that can draw on a wide range of perspectives and approaches can carve out a sustainable competitive advantage. Furthermore, all the evidence to date shows that this leads to higher retention levels, better workforce engagement, the ability to attract top talent, more innovation, and better decision-making.

This, in turn, improves performance. The recent study by McKinsey, Delivering through diversity, has found a strong correlation between diversity and profitability. Companies in the top-quartile for gender diversity on their executive teams were 21% more likely to have above average profitability than those in the bottom quartile. Organisations in the top quartile for ethnic and cultural diversity were 33% more likely to outperform on profitability.

Building an inclusive organisation
An inclusive organisation is one that recognises and fully embraces the importance of a diverse workforce to its success. It has a culture where everyone can feel valued, engaged and respected for what they do, and given the opportunity to progress.

This means taking proactive steps to ensure that the rhetoric becomes a reality. The best place to start is the careful identification of clear and achievable goals. Begin by ensuring that diversity and inclusion are properly understood. In its broadest sense, diversity refers to anything that sets one individual apart from another, including the full spectrum of human demographic differences as well as the different ideas, backgrounds, and opinions people bring to an organisation.

Inclusion implies a cultural and environmental feeling of belonging; the extent to which employees feel valued, respected, encouraged to participate and able to be their authentic selves.

Assess how diverse and inclusive the organisation actually is currently. This should be done by consulting staff and other stakeholders to guarantee an accurate perspective. Once the reality is properly understood, identify what you plan to achieve with a clear, timed road map for improvement.

Recruitment is often the first place to start when looking to build a diverse and inclusive organisation. Are there any barriers to recruitment, participation or progression? Again, this will involve consultation; you may not perceive the barriers that others see or even experience. Listen to what is said, understand the concerns and work hard to address them. Ensure that any consultation is conducted sensitively and carefully to protect anonymity and ensure wide participation.

Ensure that the pathways for progression are open to all and that a wide range of groups are represented across the organisation, in particular in leadership roles. This may need to be supported with mentoring, training and coaching to enable those groups less accustomed to career progression to thrive.

Building in equity
Equity is about creating a level playing field, not just for those already in the organisation, but those who may wish to join. How can you ensure staff are recruited from a wide, diverse pool? Where should jobs be advertised to select from a representative selection of the community? Unconsciously or otherwise, organisations often recruit “people like us”. While this may feel comfortable, it inevitably leads to ‘group-think’. Not only can this lead to less innovation and dynamism, when this extends to the board, as Margaret Hefferman argues in her book Willful Blindness, it can also lead to poor decision-making, often with disastrous consequences as many of the recent corporate scandals have shown.

Within the organisation, building equity means making sure that everyone can achieve their potential, whether by enabling working parents to manage childcare needs alongside their work demands or recognising the additional needs of people with disabilities, or, in the current environment, ensuring that people feel they have been treated fairly whether furloughed, working from home or on the front line.

Advocating for diversity and inclusion
Always start at the top. If the importance isn’t understood and prioritised at board level, you may find yourself pushing water uphill as it won’t be properly recognised or promoted through the organisation. Start by looking at the structure and make-up of the board and senior management team. It is vital to ensure that the right role models exist within the organisation. If staff can’t see what they could aspire to, not only are they less likely to apply for certain roles, they are more likely to vote with their feet, perpetuating the problem.

Engaging D&I advocates can be highly successful. While there need to be champions at executive level, they should not be exclusively selected from the senior ranks. For the millennial generation, this just makes sense, so engage them as advocates, together with others representative of the organisation as a whole.

Managing challenges
Such changes do not come without their challenges. Men in particular, who are accustomed to seeing male, often white, leaders predominate and succeed, may feel threatened if they perceive that their own opportunities are diminishing. Care is therefore needed to manage expectations appropriately.

Reaping the rewards
Building a diverse and inclusive workplace is beneficial for all stakeholders, not just those directly advanced as a result of improved opportunities and rewards. According to McKinsey, an increasing number of companies now perceive diversity and inclusion as enablers of growth and value creation. Not only is this of importance to stakeholders and shareholders alike, D&I indicators are increasingly being considered by the growing number of investors looking to allocate ESG capital, making this an important aspect of any organisation’s ESG profile.

As the global economy adjusts in response to the pandemic, building a diverse and inclusive work environment will be critical to future success.

Debbie Ramsay joined GoodCorporation in 2011. She leads business ethics assessments and heads up our measuring ethical culture work. She runs our ethics training and is also responsible for a four-year ethics training programme that GoodCorporation is running for one of the EU’s largest financial institutions. At the start of 2020, she was asked to join the Lloyd’s of London culture advisory group. Debbie has a Modern Languages degree from the University of Bristol and a postgraduate qualification from the University of Surrey. She speaks French and German.

This article was first published on 25 June at https://www.ethicalreading.org.uk/embracing-diversity-and-inclusion-the-key-to-success/