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Diversity and Inclusion Are Priorities for Top Executives, SHRM Research Finds
 

By Rebecca R. Hastings, SPHR  6/23/2009
 


Workforce diversity is becoming a top-level initiative around the world, according to Global Diversity and Inclusion: Perceptions, Practices and Attitudes, a Society for Human Resource Management (SHRM) study conducted by the Economist Intelligence Unit (EIU) and released June 2009. At 60 percent of companies surveyed, the main advocates of workplace diversity and inclusion are the CEO and top management or the board of directors.

But human resource involvement is key.

In 59 percent of companies surveyed the point person for diversity efforts is usually the head of HR or one of his or her direct reports. A further 6 percent of companies named the chief diversity officer. And in a significant minority (26 percent) of companies surveyed, the point person for diversity and inclusion is a direct report of the CEO.

Of the 546 senior executives from five continents who participated in the study, 257 were C-level executives. Thirty percent of respondents are in North America.

Participants were asked what diversity means in their regions, the challenges they face, the goals they have, the groups they target and the business motivations they have for doing so.

“Perhaps the most basic finding of our study—and a most welcome one—is that companies worldwide overwhelmingly recognize that diversity and inclusion (D&I) strategies are important for them,” according to Shirley Davis, director of diversity and inclusion initiatives for SHRM. “More than half—55 percent—of the respondents have policies in place that promote diversity and inclusion either ‘strongly’ or ‘very strongly.’ Another 31 percent have policies that support D&I ‘moderately.’ That makes a total of 86 percent with moderate to very strong D&I programs.”

Moreover, diversity efforts are increasingly tied to specific business objectives. The SHRM/EIU study identified four main drivers of diversity in companies around the world:

  • Fairness and justice—ensuring an equal chance for members of disadvantaged groups.
  • Guaranteeing a large enough talent pool in the future.
  • Mirroring the customer base, increasing cultural competence and delivering decisions that are based on a broader palette of considerations.
  • Legal compliance.

Overcoming Resistance

Diversity efforts with a direct connection to business aims and which are driven from the top down are more likely to be able to overcome any resistance employees might have to including those perceived as different.

The survey confirms that the main barrier to diversity and inclusion is cultural resistance from within the company itself, particularly at the middle management level. Nearly half (46 percent) of respondents say the task of changing HR practices and policies to encourage diversity is either “somewhat difficult” or “very difficult.”

“Middle managers typically have time horizons of anywhere from one year to five years, and much of their work is measured with hard numbers: how many widgets did we produce, how many new accounts did we open, how many cases did we win, etc.,” according to Eric Peterson, manager of diversity and inclusion initiatives for SHRM. “More than the top or the bottom of the organization, those in the middle often don't see the benefit of investing time and resources into diversity and inclusion, and all too often, organizations don't do anything to incentivize those in the middle to do any work in this area.”

Participants who were interviewed said diversity programs must focus on changing the company’s own culture to make employees receptive to differences of background and view.

Yet such change takes time.

“Diversity does not necessarily enable speed,” cautioned Deborah Elam, chief diversity officer of General Electric, in the report. “When people are alike, they will reach the same conclusions more quickly. Diversity, in contrast, is like having 360-degree vision. It may take a little longer to reach a decision, but the company will have a better and more robust solution as a result of including diverse views.”

This means employers must create opportunities for employees to understand each others’ work styles.

Alice Leong, vice president and global head of diversity for software giant SAP, headquartered in Walldorf, Germany, told SHRM/EIU researchers that team-building efforts for diverse teams are essential: “In the German offices alone, SAP has more than 75 nationalities represented in its workforce. If that diversity is not managed properly, the workplace could become a Tower of Babel,” she said. “We move at the speed of light on many projects, and that means that teams sometimes start working before a team-building discussion has taken place. This can lead to miscommunication, particularly when groups are working internationally or virtually.”

Regional Differences Exist

“The notion of ‘thinking globally and acting locally’ is one that is particularly apt in this business environment, where the marketplace is increasingly globalized each year, but there's still an absence of a single ‘global business culture,’ with widely accepted norms and values,” Peterson added. “Cross-cultural competence has never been more important, and this report provides an excellent business case to support that statement.”

This means global employers must understand regional differences and adapt their diversity and inclusion efforts to fit local needs.

For example, when compared to other parts of the world, North American companies are more receptive to organizational changes that promote diversity, open to the need for strong diversity measurements, attuned to increasing diversity in the very senior ranks, and committed to diversity efforts that target many underrepresented and underincluded groups.

Western European companies, meanwhile, are highly engaged in promoting diversity and inclusion and are more likely to have hands-on CEOs, but are more concerned with complying with equal opportunity laws than companies located in other parts of the world. And companies there tend to focus more efforts on the needs of women rather than those from other groups such as workers over the age of 50 and ethnic minorities.

By their own estimation, companies in the Asian/Pacific region are already diverse, with a broad representation of ethnic, religious and caste minorities. That’s why Asian companies tend to allow diversity to grow within the organization organically, rather than forcing it through management programs, incentives, and measurements. However, being “different” inside the company is not necessarily rewarded in Asia; persons with disabilities and individuals holding unpopular social/political views tend to fare worse there than elsewhere, according to the report.

And diversity by nationality is at the top of the agenda in the Middle East because some countries, particularly oil-rich Arab nations, want to hire more local nationals to replace expatriate workers, with the aim of avoiding a type of cultural colonization by guest workers. Middle Eastern companies are therefore more likely to track whether their workforce is representative of the local population with this aim in mind.

Common Focus on Women

Though regional differences exist, the SHRM/EIU study finds that all regions tend to focus on women in their diversity and inclusion activities.

Forty-five percent of survey respondents say their organization’s diversity and inclusion efforts are most strongly directed to women. And when asked to name up to three groups that should be better represented in the company, the vast majority (79 percent) of survey respondents cite women, followed by 46 percent naming people over 50 years of age and 39 percent ethnic minorities.

The major reason for this is that women, who make up 50 percent of the population, represent a large, untapped (or undertapped) resource, which companies will need in the future as Baby Boomers begin to retire. Women are also comparatively easy to integrate into organizations, since—gender issues aside— they typically have grown up in the same country as their male colleagues, and hence tend to share the prevailing cultural norms.

But some companies have other reasons to target women.

“We are fighting corruption [in Brazil] and we believe the [anticorruption] idea is held more profoundly by women than by men,” Michael Haradom, chief executive officer of Brazilian fertilizer and agricultural products manufacturer Fersol, is quoted in the report as saying. “We have also seen that women have less of a tendency than men to jump from one branch to another. They are also cleaner and more organized. In other words, women are really fantastic human beings to work with.”

As a result, many diversity policies target issues of particular concern to women such as work/life balance, flexible hours and work-at-home opportunities.

Yet women aren’t the only ones who can reap the benefits of diversity and inclusion efforts worldwide, the study finds.

The SHRM/EIU study reveals a systematic underrepresentation of three kinds of workers: those over 50 years of age, religious and ethnic minorities, and individuals with disabilities.

But ensuring a representative workforce is not enough, respondents said.

“Inclusion is about making sure people can make the contribution they were brought in to make,” said Hugh Mitchell, HR Director of Royal Dutch Shell, a multinational oil company. “If I hire someone because he or she is different, and then I don’t draw that difference into my business thinking, then what is the point?”

Best Practices

The report lists a number of best practices that emerged from interviews with senior diversity and inclusion executives from 40 companies worldwide, along with examples from specific companies that have put these strategies into place. The practices fall into four broad categories:

  • Management structures—Companies are encouraged to lead diversity and inclusion from the top, make diversity a core value, build an infrastructure to support diversity, focus on diversity in the entire talent pipeline, network intensively with business-unit managers, leave room for national variation in implementation, and revise business processes to support diversity.
  • Metrics and rewards—Organizations should set clear diversity targets, establish metrics and track progress and offer appropriate management incentives.
  • Internal communications and training—It is important to make diversity training a way of life, use training programs to learn from employees, emphasize mentoring and coaching, include employees through employee networks, allocate resources for team-building, pay attention to diversity of thought and to focus on the business case for diversity.
  • External outreach—Employers are encouraged to cast a wide recruiting net, partner with outside organizations to broaden recruitment efforts and use employee networks to support external outreach.

SHRM Diversity Readiness Index

An added resource of the SHRM/EIU study is the Diversity Readiness Index, a ranking of 47 countries from five continents on a scale of 0 to 100, with 100 being the best, based on their readiness to effectively manage and leverage diversity and inclusion.

This benchmarking model assesses 18 separate indicators within five areas of diversity and inclusion including the heterogeneity of a country’s general population, levels of diversity and attitudes in the workplace, societal attitudes toward minorities, diversity and inclusion among publicly elected officials and the existence and enforcement of equal-rights laws.

The top 10 countries scored between 64.3 (Ireland) and 73.0 (Sweden). The United States came in at number 14 on the list with a score of 61.5. The lowest ratings were assigned to Nigeria, at 31.3, Indonesia, at 30.8 and Saudi Arabia, at 22.7.

Scandinavia, North America and Western Europe demonstrate the best regional performance for diversity and inclusion while Asia, Eastern Europe, South America, Africa, the Middle East and South Asia score below the world average. This does not mean that Scandinavian, European or North American countries have fulfilled their potential for diversity and inclusion, SHRM noted. The best regional score is only 70 out of 100, and the world score of 52 out of 100 suggests that much work is left to be done on diversity and inclusion globally.

An appendix to the SHRM study provides further details about the index. An interactive online tool will be available on SHRM Online in summer 2009.

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.

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