Diversity Is a Competitive Differentiator

By Dr. Francis Eberle

Several years ago, as a CEO, I hired a talented and experienced professional woman for an executive position who also happened to represent a minority group. That in of itself is not worthy writing about, and should be unremarkable. What happened next was.

She was often questioned about what she was doing. I was sometimes asked to intervene about her decisions without evidence, except it was not the way they would have done it. This did not occur with the same frequency for others on the leadership team. To her credit, in a short time she helped our organization break a cycle of exclusion from several major city markets, expanded our reach through new programs and brought additional diversity into the organization. The expansion efforts were in the long-term interest of the organization, and the increased revenue associated with them.

Why were her decisions regularly questioned? It is difficult to answer this question as the workplace is not always an open book. There is implicit bias everywhere. This bias is exaggerated in workplace cultures that are not inclusive. The question has prompted me to share this story, examine the impact of bias with the hope that other leaders may be more effective.

Let’s clarify terms first. Diversity is the condition of having or being composed of different elements such as variety. And, it is the inclusion of different types of people (such as race or cultures) in a group or organization. Inclusion is the act of including or the state of being included. It respects values and seeks to make each person feel they are a respected contributor.

Other than the workforce changing rapidly in both age and diversity (which is huge), why should diversity and inclusion be important to leaders? What is the likelihood that companies in the top quartile for diversity financially outperform those in the bottom quartile?

For gender diverse companies, they are 15% more likely to outperform their peers. For ethnically diverse companies, they are 35% more likely to outperform their peers. In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: For every 10% increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes rise 0.8 %, according to a study by McKinsey & Company:

The unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator shifting market share toward more diverse companies. (Hunt, Layton & Prince)

Leaders should care and act on diversity and inclusion. Unfortunately, leaders aren’t always great at judging themselves. In a recent article in Harvard Business Review, authors Zenger & Folkman found leaders overrated their value of diversity. Those that were the worst at valuing diversity were more likely to overrate their abilities in this area.

Diversity and inclusion involves behaviors. A leader’s efforts to build systems to recruit and support their employees, particularly women and minorities, is necessary, but not sufficient to change behaviors. People make decisions about whether they are valued based on their daily interactions. Values, models and behaviors need to be visible and active to be inclusive. Here are some possible actions to be more inclusive:

Strive to have an unbiased recruiting and interviewing process. Ensure that candidates match the behaviors and responsibilities needed for the position. There are job benchmarking tools that can help identify the best fit.

Have specific criteria for success and how it can be met. This clarity should be in job descriptions and project completion criteria. Reviewing these regularly helps everyone from getting off track and promoting a culture of continuous feedback.

Highlight models of successful diverse leaders. Recognize role models and discuss how they have developed and built their strengths and competencies. This can occur informally, such as quick interactions in the hallway or mentor lunches, and more formally, such as in regular meetings and larger group events.

Invest in support that is ongoing. Have a better understanding of the skills and experiences of the person and how to help them be successful in that position. This might include coaching, mentoring and group support systems. This is enhanced with assessments of individual competencies for identifying what actions are helpful for them.

Be a partner and champion. Identify a new project or a stretch role for them and then advocate for them to take it, illustrating your belief in them as a leader.

Provide direct encouragement. Employees, particularly younger ones, want a work environment with continuous support such as coaching. Help them be their authentic selves.

Leaders should not assume that their or the senior management’s views reflect those of the employee base. Therefore, ensure the value of inclusion is embedded at all levels and that it is continuously supported. For example, people at all levels in the organization should have access to development opportunities that meet their needs. The diversity of your workforce can be a part of your design, development, implementation, and evaluation of your organization’s performance, as suggested in a Harvard Business Review article by Ballard.

This is not easy. To attract, develop, mentor, and retain the next generation of all types of leaders requires having a plan and acting on it. This can’t be left to happen on its own. I can personally attest to this by ending my story: Within eight months of my leaving the organization, the leader I hired was asked to leave. Her hires were gone about a year later. My failure to develop a more inclusive workplace hopefully can inform other leaders.

One last point, I am happy to say she is succeeding in her new organization and is doing very well. This is no surprise to me.