Diversity, Equity, and Inclusion at work – 3 steps to a successful DEI strategyBlog / March 29, 2023 / with Lisa Debatin
Diversity, equity, and inclusion are topics that every HR professional must integrate into their daily work. Unfortunately, these subjects are often only publicly discussed during certain periods, like Black History Month or Pride. However, diversity and inclusion should be a top priority in every company year-round. In this article, we’ll examine why it is so important for companies and what makes a successful DEI strategy.
THE HISTORY OF DIVERSITY & EQUITY
In the US, most efforts at DEI strategy have their origin in the Civil Rights Movement of the 1960s. At this early stage, the movement focused on repealing Jim Crow laws that largely impacted Black and African Americans. Integration and tolerance were the key messages. The movement mostly worked to ensure equal rights to institutions and jobs and to end active discrimination.
The Civil Rights movement was the driving force behind the Civil Rights Act of 1964, which banned discrimination on the basis of race, color, religion, sex, or national origin. The Act has been amended several times since, including via the Equal Employment Act of 1972, the Pregnancy Discrimination Act, and the Civil Rights Act of 1991. The Supreme Court also ruled in 2020 that the 1964 Act protects LGBT rights within its provision. Meanwhile, the Americans with Disabilities Act of 1990 created protections for people with disabilities.
In the decades since the Civil Rights movement, the term diversity has become more nuanced. It includes gender, a broader range of races and ethnicities, sexuality, religion, disability, and neurodiversity.
What does DEI legislation mean for companies?
The legislation surrounding diversity and equity means that employers need to ensure that their hiring practices and day-to-day operations don’t discriminate against anybody.
That includes employees, potential employees, managers, and customers. Therefore, all members of an organization must have a good understanding of diversity, equity, and inclusion and the common ways that businesses and individuals can discriminate – knowingly and unknowingly – against others.
Beyond this basic level of ensuring that an organization doesn’t fall foul of legislation, the DEI community has pivoted to promoting the benefits of a diverse workforce. Rather than being forced to implement DEI programs, more businesses are actively investing in this area to improve the satisfaction of their employees and support retention and recruitment efforts.
UNDERSTANDING WORKFORCE DIVERSITY
DEI initiatives aim to bring the diversity of employees into the corporate structure and make the best possible use of their skills.
In this context, aspects such as character traits, professional competencies, or cultural experiences are harnessed for the company’s success. Diversity schemes should assist leaders in recognizing these elements in their employees and developing them further.
But how can people be trained to understand diversity, without making assumptions or generalizations about others? We need to understand that diversity is intersectional, with individuals having multiple characteristics that build towards their unique set of experiences, skills, and needs.
One good way to understand this complexity is to use the “Four Layers of Diversity” model by Lee Gardenswartz and Anita Rowe. This model identifies four levels:
- Core: This level refers to a person’s personality – are they introverted or extroverted? Are they reflective or reactive? How do they like to learn or work?
- Internal dimensions: The individual cannot choose or change these aspects. They include gender, sexual orientation, age, ethnicity, skin color, and physical ability.
- External dimensions: These aspects are the results of choices, upbringing, or life experiences. They include religious affiliation, marital status, education, geographic location, parental status, etc.
- Organizational dimensions: This outermost level refers to the social environment around the individual. Examples are company affiliation or their place in the hierarchy of an organization.
These different strata of diversity can help people understand why someone may respond completely differently to a situation, even if they are from very similar demographics.
WHY DIVERSITY IS IMPORTANT
On Juneteenth 2020, Logitech CEO Bracken Darrell publicly announced that he was recommitting to his company’s diversity and inclusion statement. He hoped that people would hold Logitech accountable if they failed to uphold their promises.
In August 2020, German pharmaceutical company Bayer was rated the best company in the pharmaceutical industry for DEI initiatives, spending hundreds of thousands of dollars globally on scholarships, workshops, training sessions, and other DEI initiatives. Their strategy benefits their employees, suppliers, students, and even those participating in drug trials led by the company, making this a huge endeavor that touches almost every area of their business.
But even small companies are increasingly focusing on diversity management – not last because DEI initiatives can help to mitigate the shortage of skilled labor in many countries.
WHAT ARE THE BENEFITS OF DIVERSITY FOR COMPANIES?
The basic premise of DEI work is that everyone should be given fair and equitable opportunities at work, regardless of their background, gender, skin color, or other diversity attributes. But this belief alone is often not enough to convince senior management to invest in diversity initiatives – they are often mistakenly seen as an outgoing that offers no return on investment.
However, many studies have now shown that diverse employees with different backgrounds and experiences add significant value to companies. Here is a short insight into four of the many benefits:
In 2019, a study conducted by the Boston Consulting Group and the Technical University of Munich revealed that diverse companies are more innovative. Among other things, the study examined the characteristics of gender, nationality, age, and industry in 1600 companies from eight different countries. People from different backgrounds can identify potential problems that need to be mitigated and have different perspectives on how to resolve a problem.
Tip: In her TedTalk on diversity, Rocio Lorenzo elaborates on the study’s interesting findings.
According to McKinsey, diverse companies are more profitable. The research found that companies in the top quartile of gender diversity in their leadership team were 21% more likely to have above-average profitability.
The link between ethnic and cultural diversity and better profitability was also significant at the board level. The study identified that companies with the most ethnically/culturally diverse boards worldwide were 43% more likely to have higher profits.
The McKinsey study also showed that successful companies also have more women in leadership roles than in employee roles. Companies that were in the top quartile of gender diversity on their leadership teams were 21% more likely to have higher EBIT margins.
Employee retention and satisfaction
According to Michael Page, diversity is essential for employee retention: For 68% of employees, diversity is critical to their retention. In addition, diversity increases productivity as well as employees’ sense of belonging.
The diversity factor is increasingly important in the workplace, especially for young professionals. In order to retain young talent in the future, DEI should therefore be an integral part of every HR strategy.
DIVERSITY, EQUITY, AND INCLUSION – WHAT’S THE DIFFERENCE?
We’ve already taken a look at the definition of diversity, so let’s tackle the two other elements of the acronym.
Equity in the workplace
If diversity is simply having employees with differences in your workforce, then equity is the first step in ensuring their experience is positive.
Equity means that all employees are empowered to succeed within the company. Part of implementing equity is understanding that some individuals may need different kinds of support – while the outcome should be as equal as possible, the support offered may differ from person to person.
For example, an employee who uses a wheelchair needs to be able to easily access the physical spaces where you expect them to work, with accessible desk space, break rooms, bathrooms, and meeting rooms. The result of providing this additional support should be equality – able-bodied employees and employees with disabilities should find it just as easy to navigate the office space and do their jobs without additional stress.
Another example of equity programs in the workplace could center on education. Many demographics receive limited access to further education but, with appropriate support, could be very valuable team members. An organization that wishes to increase diversity could commit to hiring people who don’t currently have all the qualifications they usually require for a role and providing on-the-job training or paying for relevant courses.
The goal of inclusion is to make all employees feel they belong to their organization as they are. The goal for the organization should be that every employee can identify with the company values and does not feel excluded because of their identity. They should not feel that they have to change or hide parts of themselves in order to fit in.
Inclusion is a crucial part of diversity management. After all, hiring diverse individuals is not the end of the story. If you want to reap the many benefits of diverse teams, you have to make sure that every person you hire feels at home in your organization.
INCLUSION VERSUS INTEGRATION
Traditionally, many organizations expected diverse hires to integrate with their existing company culture. During integration, a person is added to an existing system and must fit in accordingly.
That might require conformity to a rigid dress code or the attendance of events outside of office hours. In sales departments, for example, many companies have had traditions of wining and dining potential customers. This sometimes created difficulties for employees who couldn’t eat certain foods or consume alcohol, forcing them to either make a choice of standing out or compromising their beliefs or medical advice to fit in.
Efforts to integrate employees often came from a well-meaning place. However, when female employees speak out about informal “boys’ clubs” events where upcoming opportunities were discussed, or Muslim employees say that they were skipped over for promotion after not attending work events in bars, it’s clear that integration does not allow people to succeed by being themselves.
Inclusion aims to improve on integration. Instead of asking individuals to adapt to the system, it adapts the system so that everyone feels comfortable in it.
Moving from a model of integration to one of inclusion is not always easy. Many people who succeeded in the old system may be resistant to change. However, inclusion efforts can benefit everyone, making it easier to be your own person within an organization, regardless of your identity.
SUCCESSFUL INCLUSION WITHIN COMPANIES
According to Tedx Speaker and Inclusion and Diversity Lead Thais Compoint, there are two very simple steps anyone can take to promote inclusion and diversity:
- Look beyond first impressions: We often form an opinion about a new person within a few milliseconds of meeting them based only on their appearance. While this might have been helpful in human evolutionary history for spotting enemies, we should actively try to break this habit. Not relying on our first impressions means giving ourselves time to get to know the other person in depth.
- Network with people who are different from you: We tend to surround ourselves with like-minded people. At first, this seems like a no-brainer. It gives us a sense of security and belonging, but it can also trap us in an information bubble where our ideas and assumptions are never challenged. To interact with people who are different from you means to live inclusion. This, in turn, fosters a sense of belonging and enables innovation in companies.
BUILDING A DIVERSITY AND INCLUSION STRATEGY
Building an authentic strategy for inclusion is a major challenge for some companies. How can you integrate DEI into your existing corporate strategy? And how can you best implement it in a hybrid work environment?
According to McKinsey, DEI efforts can be successfully integrated into corporate strategy via the following four steps:
Define DEI priorities based on what drives the growth strategy
- Internally research which aspects of DEI can drive performance for specific KPIs such as productivity, customer retention, risk management, or time to market. These emerge from understanding how DEI is linked to specific value drivers such as customer insight, product design, innovation, or decision-making.
- Combine this detailed, data- and analytics-driven understanding with the organization’s goals and predicted pipeline. Where are the gaps? What could the organization benefit from?
- Now use the data to determine the combination of diversity attributes that should be the focus of the DEI strategy.
Create DEI initiatives
- The identified key diversity characteristics can now be used by the human resources department to design relevant DEI initiatives.
- Next, these can be prioritized and planned using the previous analysis of how DEI aspects can add value to the growth strategy.
- Adapt talent management policies and processes. Eliminate bias in hiring and promotion processes, promote pay equity, and introduce comprehensive sponsorship programs for high-potential talent. Thus, management builds capabilities to support the retention and promotion of specific, diverse talents.
- Although the overall alignment of the DEI strategy is essential, large companies should make geographic adjustments to remain relevant.
- Different regulatory frameworks, local demographics, and specific regional history mean that it is important to adjust your strategy from region to region. However, the previously defined overall DEI strategy and company values must not be discarded here.
INCLUSION IN A REMOTE WORK ENVIRONMENT
The inclusion of new employees in a remote work environment is a challenge for many companies. Especially during onboarding, new colleagues need to get to know the team, the company’s values, and absorb the company culture. That’s really difficult to do consistently in a remote or hybrid environment.
Digital tools and regular team activities are essential, and they don’t have to be focused on work. In fact, taking time away from project work and showing interest in colleagues as people first is important for building an engaging and inclusive culture. How do they spend their free time? What are their hobbies and passions? You can’t find that out from a big, virtual team meeting.
Here is a list of the Mystery Minds team’s favorite activities, perfect for remote-first or hybrid workplaces:
- To get to know each other better in a small group: Ice breaker questions
- To get to know the company and different business units: A Virtual coffee break can help to introduce you to new people
- For informal fun moments in social check-in meetings: Skibbl or gartic phone
- Guessing games to strengthen team cohesion: Online Escape Rooms
- Get to know your colleagues’ tasks virtually: Virtual jobshadowing
- Spend some social time with colleagues after work – we recommend online games like Haxball or an afterwork drink (alcoholic or non-alcoholic!)
DIVERSITY AND INCLUSION – AN ONGOING CHALLENGE
There is far more to an open and diverse company culture than defining a strategy and delivering training sessions.
According to Rocio Lorenzo, the number of women with university degrees has increased rapidly over the past 20 years. But this has not been mirrored in the number of women in leadership positions. To make a difference, therefore, companies need to set specific goals. SAP, for example, set a target of filling 30% of all management positions with women by 2022. They have already achieved their target of 25% by 2017.
There are many other demographics that could benefit from this kind of quantifiable institutional support.
So, what DEI goals would you like to set for your organization, and how can you start to achieve them?
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