By Andrew Fayad, CEO of ELM Learning, a creative agency focused on designing custom multimedia and digital learning experiences.
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Diversity and inclusion is an important part of creating a welcoming environment at work. It’s also a way to improve employee satisfaction, retention and productivity. And, as a direct result of implementing effective D&I strategies, organizations benefit financially, too!
Employees who feel valued by their employers are more likely to stay with their employers and perform better than employees who do not feel valued. While employee retention shouldn’t be the sole reason to make D&I a leadership priority, there’s no denying the indirect payoff that it (D&I) brings.
According to the Society for Human Resource Management, the cost of replacing an employee with an annual salary of $60,000 can run anywhere between $30,000 and $45,000. That’s 50% to 75% of the departing employee’s annual pay. That turnover premium can go as high as 213% of the annual salary for highly trained employees. Retaining D&I-seeking employees through appropriate D&I policies can reduce replacement costs resulting from such departures—cost savings that can potentially go toward funding D&I programs.
And there’s more: According to a study by the Harvard Business Review, more diverse organizations ranked higher in innovation (19% higher) and financial performance (9%). Clearly, what’s important to the workforce also translates to the bottom line!
Understanding The Impact Of Culture On D&I
A diverse workforce helps organizations achieve success because it reflects the communities in which they operate. Having the benefit of those (different) cultural perspectives is important for business leaders, as they craft customer-focused programs and initiatives. However, there are challenges when trying to recruit and retain people from underrepresented groups. This includes women, people of color, LGBTQ+ individuals and others.
Corporate leaders must understand the opportunities they forego by not integrating D&I into their core strategies. For example, culturally diverse talent pools deliver better opportunities to hire the best and the brightest individuals. A deep understanding of cultural norms (e.g., social traditions, religious celebrations, historical perspectives) gives business leaders an opportunity to produce more targeted product/service positioning, branding and marketing messages.
But not being diverse and inclusive hurts, too. One research study showed that companies ranked in the bottom quartile for gender and ethnic/cultural diversity were less likely (by 27%) to achieve above-par profitability than their higher-ranked peers.
Building An Effective D&I Strategy
D&I will not take root without senior-level sponsorship and commitment. Even with top leadership buy-in, D&I doesn’t “just happen.” It takes planning, organizing and backing from organizational resources to establish a culture of D&I across the organization. Unfortunately, despite the huge benefits that D&I promises, a McKinsey & Company study showed that 9 out of 10 executives struggled in building effective D&I strategies.
The numbers bear witness to this lack of effectiveness, where just one out of every six employees from under-represented groups—such as women, LGBTQ+ employees, people of color and working parents—felt more supported in the wake of the Covid-19 crisis and its aftermath.
To build an effective D&I strategy, start by understanding the current state of your workplace. What does diversity mean to you? How do you define diversity? Do you have any policies or programs in place to support diversity? If not, what steps should you take to develop one?
Having a D&I policy statement, or even fleshing out a detailed strategy, doesn’t necessarily equate to having an effective D&I strategy. To make the strategy effective, leadership at every level must proactively endorse and show their support for D&I. Such effectiveness manifests itself in all other policies and strategies within the company, including recruitment, training and development, the establishment of D&I employee resource groups, employee recognition and rewards, and corporate branding, as well as external partnerships.
Implementing D&I At Scale
Organizations must adapt quickly to ensure their employees feel safe and supported during this unprecedented time. However, when leading a geographically dispersed workforce, where virtual teams, mobile workers and remote work are the norm, scaling D&I to purpose is a leadership challenge. This is especially difficult when leaders must account for local cultural norms. Those challenges aren’t insurmountable, though.
In the HBR essay cited previously, the authors proposed a six-step recipe for cultivating broad-based diversity:
• ensuring that everyone in the organization has a voice
• creating an environment where all team members feel safe when offering novel ideas
• empowering teams with authority to make decisions
• acknowledging everyone’s contribution to organizational success
• providing a constructive, practicable critique (as opposed to a constant stream of negative feedback)
• actioning practical feedback and ideas from the rank and file
Scaling diversity globally also requires cultivating grassroots employee representative networks that can help leaders navigate organization-wide D&I challenges. A good start to implementing D&I at scale is setting goals for recruiting diverse leadership teams and funding and implementing “cradle-to-career” leadership development programs.
Creating A Diverse Workforce
A diverse workforce is critical to an organization’s success. It helps companies attract top talent, build stronger teams and improve organizational effectiveness. With the right D&I vision, corporate leaders can help make their organizations a more welcoming place for people across a broader spectrum of race, ethnicity, sexual orientation, gender and socio-economic backgrounds.
Leaders must consider a two-dimensional approach to D&I when building diverse workplaces, including inherent (race, gender, age, sexual orientation, socioeconomic background, religious background, disability and nationality) and acquired D&I (global mindsets, language skills, cross-functional knowledge, cultural fluency).
Leaders who embrace this 2-D approach to D&I can see tangible results for their organizations. An HBR study indicates that 2-D diverse organizations are likely to see more growth (45%) in market share and an even greater (70%) likelihood of breaking into new markets. Not only do employees reward diverse and inclusive employers through loyalty, integrity and dedication, but statistical and empirical evidence shows that business stakeholders do the same!