By Donald Fan
As diversity, equity, and inclusion (DEI) executives and practitioners, we ask ourselves how we can position our companies as employers of choice to attract and retain top talent, and how we can reap the benefits of DEI to enhance innovation and new business opportunities in the digital era. Those two questions reflect the top concerns reported by business leaders worldwide, according to the Conference Board’s C-Suite Challenge™ 2018: failure to attract and retain top talent and the need to create new business models in response to disruptive technology.
Although we are clear about the why and what of our work, thanks in large part to a wave of empirical and heuristic research on the business of DEI, we are collectively struggling with the HOW. After so many years of committed efforts, corporate America is still facing discrimination, stagnation, fatigue, apathy, and disparity in the workplace.
According to “Hiring Discrimination Against Black Americans Hasn’t Declined in 25 Years,” published by the Harvard Business Review (October 2017), the level of discrimination encountered by black Americans during the hiring process has remained unchanged over the past quarter-century.
Recent research, conducted by economists from University of Chicago and Stanford University, indicates that less than one fifth of C-suite executives at large publicly traded U.S. companies are women, only twenty-four of the CEOs at Fortune 500 companies are women, and only three are black. The study concludes that 50 years of economic history proves that inclusive workplaces make us all richer. The researchers estimate that if access to education was fully equal across groups and discrimination was to disappear, U.S. GDP per capita would grow by another 15 to 20 percent, making everyone better off. That is where DEI efforts can contribute to the big picture.
We cannot help asking this question: What have we been doing wrong, and what are the major barriers that prevent us from achieving sustainable DEI progress in corporate America? Albert Einstein said: “We cannot solve our problems with the same thinking we used when we created them.” By adopting the Theory of Algorithms, a conceptual framework for solving a range of problems, this article attempts to identify those blocks and contemplate how we can solve the problems we have identified.
1. Failure of Vision: A Numbers Game vs. a Culture Change
Philosophically, we must affirmatively answer this fundamental question: Is DEI a compliance-based numbers game or a culture change that engages and includes everyone in order to attain equality and justice? The reality is that many companies have been pivoting on compliance-based diversity driven by historical context and government regulation.
Historically, diversity originated with government initiatives. The Civil Rights Acts of 1964 made it illegal for businesses to practice discriminatory hiring or firing. This focus on the moral obligation to address the impact of traditional discrimination led to affirmative action programs, which were introduced in the 1970s. Now companies in the United States with more than 50 employees are required to report their diversity data to the Equal Employment Opportunity Commission on an annual basis. If diversity is imposed through regulation and compliance, corporations tend to chase numbers.
We also notice that short CEO tenure impacts DEI in some companies. According to a recent Equilar study, the median tenure of CEOs at large-cap (S&P 500) companies was only five years. The frequent senior executive shifts negatively disrupt the continuum of corporate DEI efforts. An inclusive culture would end a company’s dependence on the presence of a particular CEO for sustainable DEI success; an established inclusive culture would tell us what to do when the CEO is not in the room.
Diversity without equity and inclusion will not attract and retain diverse talent, get that talent fully engaged, foster innovation, or lead to business growth. That is why we witness the “leaky bucket” problem with regard to retaining talented women and people of color (POC). To solve this problem, we must focus on nurturing both an inclusive culture and inclusive leadership.
Compared to tracking and reporting diversity data, fostering an inclusive culture is much harder to accomplish. It calls for an unwavering commitment, strategic planning, intentional actions, and unyielding grit. It takes a whole village working collaboratively to achieve changes to mindset and behavior.
Strategy for achieving course correction:
- Obtain a strong commitment from the CEO and C-suite executives. The tone and message from the very top are determining factors for DEI success.
- Craft a narrative that helps leaders explain why DEI is a culture journey with shared interests. This requires everyone’s participation, rather than a silo call from the chief diversity officer and Office of Diversity.
- Include qualitative measures in a DEI scorecard that track employee perception and experience of inclusion, such as an inclusion index (measuring the sense of belonging, uniqueness, and fairness) and a culture index (measuring the alignment between employee experience and the corporate values practiced in the workplace).
- Transition DEI ownership to business areas, and support business leaders with consultancy, expertise, resources, and tools. Hold business leaders accountable for advancing DEI and achieving the expected outcome.
- Nurture an open environment that welcomes and seeks out different voices, opinions, and perspectives, while creating a compelling group identity that leads to greater cooperation and collective intelligence. The social neuroscientist Jay Van Bavel indicates in his research that diverse teams benefit most from having a group identity. They can use their different insights to solve problems together, without the conflicts that would normally arise.
2. Failure of Strategy: Margin Choice vs. Growth Choice
A margin choice focuses on short-term needs and aims for incremental change. When the diversity numbers go down, the company strengthens its recruiting efforts to “buy” diversity. Whereas, growth choice focuses on “growing” diversity by investing in the incumbent workforce through purposeful talent development and providing an ecosystem that supports and advances diverse talent.
In the volatile and complex digital age, DEI becomes a strategic imperative and competitive differentiator. While advanced technology and new opportunities can accelerate business growth, there is no substitute for people. The innovation, knowledge acquisition, soft skills, and agile nature that are wired into our human DNA will help us successfully navigate a rapidly changing marketplace. This long-term growth mentality will unleash the full potential of diverse talent and energize companies around agility, innovative thinking, and continuous improvement.
To activate the growth choice, we must be crystal clear about our vision and create a blueprint for what to achieve, where to bet, and how to win.
Strategy to win the game:
- Form a DEI Executive Council to lead the journey, set objectives, connect all the touch points, and provide direction. Leverage their clout to invite and engage more leaders and employees to champion DEI efforts.
- Conduct prescriptive, descriptive, and predictive analysis with leading and lagging indicators to better understand the organization’s DEI history, lessons learned, and challenges; set up stretch goals for the future.
- Increase transparency of DEI data by granting access to business leaders. Leverage DEI data to uncover WHAT (issues that stand in the way), use insight and intelligence to explain WHY (root cause), and commit to HOW (SMART plans to tackle the issues).
- Converse with business leaders regularly. Use Bayes’ theory to actually update our beliefs when we encounter new evidence and theories that conflict with what we already know. Validate pre-existing beliefs, while reviewing new evidence (data), by asking if the new evidence confirms our beliefs or if alternatives exist that better explain the challenges we are facing. Then focus on an action plan to tackle current missing links.
- Create an accountability system with explicit measures to gauge progress on a regular basis. Neuroscience and psychological studies show that it is not enough to hold DEI data up as proof of progress. It takes a common motivation and shared purpose to move the needle.
- Convey a consistent message through all communication channels. Articulate the narrative at every possible venue and business meeting.
3. Failure of Practices: Standalone Program vs. Holistic Ecosystem
Last year, I had a conversation with Dr. Frank Dobbin, co-author of the Harvard Business Review article, “Why Diversity Programs Fail.” Our discussion involved the findings of research based on data collected over three decades from more than 800 U.S. companies and hundreds of in-depth interviews with line managers and executives. “It shouldn’t be surprising that most diversity programs aren’t increasing diversity. Despite a few new bells and whistles, courtesy of big data, companies are basically doubling down on the same approaches they’ve used since the 1960s—which often make things worse, not better. Companies have long relied on diversity training to reduce bias on the job, hiring tests and performance ratings to limit it in recruitment and promotions, and grievance systems to give employees a way to challenge managers. Those tools are designed to preempt lawsuits by policing managers’ thoughts and actions.”
Many of today’s DEI programs are designed with a one-size-fits-all approach, mandatory requirement, or control and commend style. They are based on fixing others’ attitudes.
We know that standalone DEI programs and raising awareness do not change people’s mindsets and behavior. Take unconscious bias training as an example. Dr. Brian Nosek, professor of psychology at the University of Virginia, in his study reviewing the state of evidence for implicit bias and implications pursuing effective strategies for DEI, states the following: “There is little evidence supporting the effectiveness of implicit bias training in improving diversity and inclusion.” To close the gap between conventional wisdom and effective outcome, we must rethink and redesign DEI programs by propelling mindset and behavior change, growing curiosity, and teaching management how to solve complex problems in the digital age. More important, we need to build DEI into the talent lifecycle through well-thought-through policy, process, procedure, and practice.
Strategy to bend the curve:
- By using design thinking, offer resourceful and supportive platforms that attract, motivate, and retain a large base of employees (top-down and bottom-up), rather than standalone start-stop programs. Some examples include a mentoring/sponsorship platform with well-curated content and discussion guides, an employee resource group/business relations group platform with executive support and system of development with targeted learning and up-skilling opportunities, and a social media platform where employees can share their stories, ideas, and experiences.
- By adopting an agile approach, develop and distribute action-based tools to help managers advocate for DEI and make better decisions. For example, craft a “de-bias” card for each major talent decision scenario (hiring, talent review, promotion, performance evaluation, succession planning) with implicit bias callouts, standard procedure reminders, and a strategy to mitigate the bias.
- Instead of pushing a mandatory DEI training, provide an education curriculum and menu from which employees may choose course materials, based on their individual needs. This approach helps reduce the feeling among users that the training is being imposed on them and increase a sense of personal ownership and relevance.
- Teach inclusive leadership (characteristics, competencies, behaviors), including how to model it day to day, and how to lead a diverse team effectively and efficiently.
- Make DEI an integral part of every business and people decision, rather than an afterthought. Ensure that we have the processes and procedures in place to make it real. The ultimate goal of this effort is to infuse DEI into the DNA of the business.
I’d like to conclude by borrowing the four stages of building grit for success, introduced by Angela Duckworth in her New York Times bestseller Grit: the Power of Passion and Perseverance: Commit to stretch goals with passion; focus on practices with discipline and dedicated efforts; cultivate a meaningful purpose; and uphold your hope with perseverance.
Failure will never beat us if our determination to succeed is strong enough.
Donald Fan serves as Senior Director in the Global Office of Culture, Diversity & Inclusion at Walmart Inc.