In September 2016, Fortune published a compelling article profiling companies that are doing diversity right. At the time of the article, Texas Health Resources was touting a workforce that was 77% women and 41% minorities. According to Fortune, Texas Health Resources offers ESL classes, gives benefits to same-sex partners, and hosts a whopping 32 events a year that connect employees with peers from different backgrounds.
The same article describes an open CEO letter that Marriott President and CEO Arne Sorenson published, urging Donald Trump to use his position to promote inclusiveness, starting with the workplace. (It should be noted that at Marriott International, African American, Latino, and other ethnic minorities make up 64% of the workforce and 15% of executives, according to the Fortune article, and 2.7% of their very large workforce identifies as LGBT.)
Delta Airlines, ranked as #2 in Fortune’s 50 Best Workplaces for Diversity for 2016, has a Managing Director of Global Diversity who is responsible for achieving diversity-related recruitment and retention goals. Their medical care covers gender confirmation surgery, and they offer formal programs, such as resource groups, mentorship, and professional development for under-represented groups, such as disabled employees.
Imagine if every company could tout such diverse workplaces or such inclusive policies and events. Yet, a variety of obstacles can get in the way of such efforts. It is perhaps not surprising that many of the companies on Fortune’s list, for example, are large, meaning they may have the means—more resources—as well as the motivation of heightened scrutiny.
As organizations of varying sizes consider what they can do to promote meaningful diversity and inclusion efforts, such as these profiled companies have done, we might first want to take a step back and consider what we mean by “diversity” and “inclusion”…and to define some of the pros and cons of these efforts.
Diversity in the workplace traditionally refers to the presence of individuals who are from varied backgrounds or who possess certain traits, to include differences in gender, age, socioeconomic status, sexual orientation, religion, ethnic origin, and more. Inclusion, a concept often brought up in discussions of workplace diversity, is perhaps an even more important concept to examine. A company can tout a diverse workforce if it, for example, employs many women in leadership roles; however, do those women feel respected or treated fairly? That’s where inclusion comes in.
Edward Carberry and Joan Meyers, both researchers who studied Fortune’s “100 Best Companies to Work For” list related to diversity and inclusion, define inclusion as such: “the core values and norms of an organization” promote “both the inclusion of employees from all backgrounds in benefits programs,” such as training and healthcare, and “the inclusive treatment of employees from all backgrounds across a range of social processes in the workplace” such as hiring, promotion, and feedback on job performance. In other words, an inclusive workplace treats all employees fairly and equally.
The positive impacts of diversity on company culture and performance
For many companies, the first goal is often recruiting diverse individuals. Increasing diversity in the workplace can have a broad range of impacts on company culture and company performance—some impacts that we might consider benefits, and others we would consider challenges. While diversity often tends to carry a positive connotation when we talk about a “diverse workplace,” many researchers have studied the effects of diversity on workplace culture and outcomes, and the findings are “far from conclusive in terms of the positive or negative effects,” according to Paulo Renato Lourençoa, Isabel Dórdio Dimasb, and Teresa Rebeloa in the Journal of Work & Organizational Psychology. The issue is complicated, and some of the benefits and detriments can even overlap.
Diversity breeds innovation and customer loyalty
In terms of benefits, diversity has the potential to improve your customers or users’ opinion of your brand. As Neil Kokemuller points out in a Chron.com article on diversity, when a workplace’s employees represent the basic makeup of the community population, the company is typically better received by customers and even the public.
Along these lines, having diverse members on your team can help a company gain better insight into the values, beliefs and customs of the company’s target market. Steven Benson, the CEO of Badger Maps—a route planner for field salespeople, echoes this sentiment in relationship to his company. He tells us that “having team members who really understand our diverse customers allows us to get a better sense of our customers’ needs. We understand their culture and buying practices better, and at times have come across differences in the way we need to go to market in different places that are really not intuitive.” For example, he notes that they sell to field sales teams, and the ways those teams function is very different in various countries compared to America.
As corporations work to understand their customers better, they may also find that diverse work groups can generate both more frequent and more innovative ideas because of the diverse perspectives brought to the table by the group members. Specifically, Kokemuller says that ethnic and cultural diversity contribute to global companies’ abilities to better understand global markets. Especially if a company is working towards promoting diverse individuals into top leadership roles, diversity can help broaden a company’s strategic perspective.
Diversity positively impacts outcomes, performance, and profits
Diversity has also been linked to improving company outcomes, performance, and profits. Individuals with different backgrounds and perspectives can not only come up with innovative ideas, but they also bring unique talents and skills to help bring those ideas to fruition. While we hope that efforts toward diversity extend well beyond a simple desire to make more money, some research has shown that increased diversity in the workplace can also drive profits. Patrick Colvin, Strategic HR Business Partner at the USA Today Network, makes the point that in many situations, a product or service needs to be adapted to succeed in international markets. “Having a diverse employee population,” Colvin says, “can assist with understanding customs, various regulations, and local laws, as well as the competitive landscape…Having that cultural understanding in your workforce can increase the company’s bottom line exponentially.”
McKinsey & Company research on diversity supports this hypothesis through data. They examined (1) the composition of companies’ executive boards, (2) returns on equity (ROE), and (3) margins on earning before interest and taxes (EBIT). They did this for 180 publicly traded companies in France, Germany, the U.K., and the United States. The research focused on “women and foreign nationals on senior teams,” and found that companies ranking in the top quartile of executive board diversity had 53% higher ROE and 14% higher, on average, EBIT. While they acknowledge that this data alone does not prove a direct correlation between earnings and diversity, they describe key diversity initiatives stemming from these companies that seem to clearly link diversity and financial performance.
Improved financial performance, in turn, can positively impact the company culture. Increased profits can go toward inclusion initiatives or toward offering bonuses to work groups for a job well done.
Potential challenges diversity brings to the workplace culture
As the makeup of a company becomes less homogenous, there can be some negative effects, too. One such problem is exclusion. Being part of a minority group in the workplace can make an employee feel isolated. In a scientific study of social service organizations, for example, researchers Liora Findler, Leslie Wind, and Michalle Barak found that women in their study felt more excluded than men, particularly feeling excluded from information networks and decision-making processes. On the other hand, they found that older employees felt more included in the company (due to the length of time they had worked for the company), a concept that runs contrary to many concerns about age discrimination in the workplace.
Additionally, certain diversity characteristics may impact a worker’s overall stress level at work. In Findler, Wind, and Barak’s study, they found that country of origin (immigrant versus non-immigrant status) was directly related to role overload and role conflict dimensions. Participants who were native-born reported more stress due to overload, but they experienced less stress due to role conflict, indicating that the immigrant workers felt more stress in terms of role conflict, which they define as incompatible job expectations from different sources.
In The Journal of Diversity Management, Giilian Coote Martin identifies miscommunication as another negative effect of diversity in the workplace. Miscommunication can stem from issues such as language barriers to more complicated concerns such as conflicting beliefs and ideals. The same benefits we see, such as bringing in diverse viewpoints to a brainstorming session, can also lead to interpersonal conflict.
Some would argue that diversity, in itself, does not bring about any negative effects, but that by employing diversity as a buzz word, or simply paying a lot of “lip service” to it, as Janelle Coleman, managing partner of Four Letter Consulting, puts it, we are not truly doing justice to our employees. Coleman argues that we should follow up with action: “True diversity means that we are actively working to address the biases we all have. Asking questions about diversity, talking about it, and seeking out more education about it, is absolutely critical to being better able to successfully bring more diversity into our organizations. And ultimately diversity is better for our bottom lines.”
What can companies do to foster diversity and inclusion?
Most would argue that the benefits of a diverse workplace clearly outweigh the challenges, and those challenges can actually turn into very productive and innovative experiences if diversity and inclusion efforts are managed properly. Company leaders must consider not only how to recruit diverse employees but how to retain them and help them feel included in the workplace culture.
Casting a wide net for recruitment
Managers and HR employees can play an important role in fostering workplace diversity and inclusion. In terms of recruiting diverse employees, which may be the first step, a common goal is to try and match the makeup of the people you serve. In other words, aim to recruit individuals whose demographics are similar to those of your customers.
When writing a job posting, try to make it appeal to a wide group, thus casting a wide net. Make policies that are more appealing for diverse candidates, and highlight those policies in the job ad; for example, flexible schedules have been shown to be the #1 company culture value that women care about. Compared to older generations, Millennials more strongly prioritize work-life balance and are even willing to give up “a bit of pay,” according to Forbes, to work for a company with similar values. Opportunity for advancement has shown to be a stronger motivator (PDF) for African Americans and Latinos than their white counterparts. Depending on the type of individuals your company seeks to recruit, do some research to determine the types of policies these individuals value.
In the recruitment process, you might also try to recruit from universities that have many underrepresented students. Showcase your company’s perspective on diversity on your website to show that your organization values inclusion. Ultimately, find ways to open up the talent pool and then pick the best candidates.
Another consideration, once you delve into applications, is to try and form diverse hiring committees. Doing so can have an early impact on diverse hiring.
Sometimes, companies may need to go beyond their own internal resources in order to recruit diverse talent and foster inclusion. For example, the non-profit, Workforce Opportunity Services (WOS), develops untapped talent from underserved and veteran communities by partnering with companies that are devoted to workplace diversity. WOS founder and chairman, Dr. Art Langer, tells us that some companies may be “ill-prepared to assimilate underserved talent into the workplace because they don’t have the infrastructure or management experience to properly develop individuals from underserved communities.” These individuals may be motivated, he says, but face personal or professional challenges that keep them from being successful. Workforce Opportunity Services recruits and trains these workers and gives them the support they need to stay successful in their careers long-term.
Companies with minimal diversity resources or training may consider connecting with organizations such as WOS, particularly if the company struggles with issues such as recruiting and retaining diverse talent, since these organizations help prepare the employees for sustainable success in the workplace.
Retaining diverse talent
As leaders in the organization shift from thinking about recruitment to retention, consider ways to make these employees feel included. Janelle Coleman says that once you have a diverse staff, it is important to then provide “opportunities for minority team members to take on leadership roles on projects and contribute equally to discussions.” “If you notice certain members of your team dominating the conversation,” Coleman notes, “find ways to bring others in by asking questions directly to them, or asking them if they want to add anything.”
USA Today Network’s Patrick Colvin recommends that managers foster a sense of inclusion by “incorporating behavior in performance evaluations to motivate employees to think actively about their own conduct.” Managers can build in goals or measures, such as participating in cultural trainings, aiming to “weave inclusion into the company fabric and DNA.”
Yet, others advise treading lightly when it comes to trainings, especially if they are mandatory. While many advise that mandatory training on diversity topics is important, Dr. Cortney Baker, owner of KidsCare Home Health, tells us that mandatory training can actually “backfire on the very individuals it’s supposed to protect.” She suggests that, instead, companies should have open discussions through voluntary steering committees—although leadership must be involved for lasting change to occur. All trainings should also, Baker advises, be tailored to the organization’s specific needs.
Leaders in the company can also help foster working groups that will work on inclusion from the ground up. Heather Hogan, Senior Vice President of Foundation & Mission Services at Envision, suggests that “giving employees a voice in the decisions that affect their work is critical.” At Envision, she says, “this led to the creation of an Employee Advisory Group (EAG). The EAG’s most recent accomplishment was the creation of “Employee Standards of Behavior” that make every employee accountable for creating and fostering a culture where everyone feels welcome and respected for his/her unique talents and contributions.” This type of approach spreads the responsibility and concern for inclusion across the organization.
Anne Loehr—an international keynote speaker, writer, consultant, and trainer, as well as the Executive Vice President for the Center for Human Capital Innovation—recommends a variety of Harvard IAT Tests, which she argues can help individual workers identify unconscious biases. While many workers within an organization may not pursue taking these tests of their own accord, they could be worked into trainings and advisory groups in valuable ways.
Another way to promote inclusion may be, frankly, to have a little fun in the office. Steven Benson describes how his company has worked to create an inclusive culture by “keeping the same ‘office hobby” across all the offices.” All of his company’s offices have a Foosball table. “Foosball helps everyone get to know each other, deepens relationships, and gives people a way to blow off steam together,” he says. “It’s a simple but surprisingly fun game, and it’s very inclusive as it cuts across gender, culture, and natural physical ability, so that everyone can play it.” While foosball certainly isn’t the answer for everyone, a company hobby, common outing, or fun event probably can’t hurt!
Although our last solution is a tad playful, diversity in the workplace is a serious issue. Let’s go beyond paying lip service to diversity. As discussed in positive impacts section, recruiting diverse talents can pay off literally and figuratively for your company, including helping your employees better connect with customers. Once you recruit diverse employees, working on inclusion can breed employee loyalty and help you retain employees for years to come.