How Improving DE&I Can Make Organizations More Competitive

​The bewildering array of activities, initiatives and programs designed to help employers achieve diversity, equity and inclusion (DE&I) in the workplace can be focused and prioritized by following a simple model. It was developed 25 years ago by Dave Ulrich, a human resource thought leader and professor at the University of Michigan Ross School of Business, who found that HR professionals can make their employers more competitive by contributing as a:  

• Strategic partner.
• Employee champion.
• Change agent.
• Administrative expert.

These roles set out the agenda for how HR and people managers should address DE&I challenges as follows:

Strategic Partner

A number of companies make DE&I a strategic objective. Target Corp. sees DE&I as a business function, assigning goals and targets to management, which is key to helping the company understand and respond to its diverse population of customers. Proctor & Gamble (P&G) also sees diversity as a strategic objective as it designs products that reflect diverse customer requirements. For example, P&G hires candidates with disabilities to help develop products accordingly.

Pfizer follows the strategic reasoning of Target and P&G while adding the third strategic objective of greater productivity in the interaction between diverse employees. Indeed, more than 200 different studies have found that achieving greater diversity in business leads to higher levels of innovation, customer service, employee engagement and long-term growth.

Nevertheless, "Companies often treat recruiting diverse people as compliance or risk mitigation, rather than a business opportunity," said Art Hopkins, a consultant at executive search and leadership advisory firm Russell Reynolds Associates. 

Luke Visconti, chairman of DiversityInc, writes, "It's obvious that the overwhelming majority of senior management are white and male and accepting of the discrimination that results in disparate outcomes for everyone who is not a white man."

A recent Gartner survey of 113 HR leaders revealed that 88 percent felt their organization has not been impactful in increasing diverse representation. Gartner further found that only 10 percent of senior-level corporate positions are held by a woman from a racial or ethnic minority, and only 18 percent by a man from a minority segment.

Experts point to a lack in the strategic priority of DE&I in many companies despite their stated intentions. Mellody Hobson, co-CEO of Ariel Investments, said CEOs chronically say, "We're working on it," rather than delivering results, while consultant Josh Bersin emphasizes that DE&I improvements come only when HR and the business are strategic partners, since HR measures alone are not impactful for DE&I. HR can sharpen the internal dialogue by linking specific DE&I initiatives with concrete strategic and normative objectives, raising itself to a strategic partner, they say.

Employee Champion

Three examples of common forms of workplace bias are illustrated by the following claims and court cases brought against prominent U.S. companies:

Status over Skills

Bloomberg News was sued for discriminatory practices by former reporter Nafeesa Syeed from Dubai. She was never promoted to a foreign policy correspondent position; instead, those positions were filled by male colleagues, some of whom were far less qualified. Following one unsuccessful application, she spoke about her non-selection to a male editor, who replied the "position was not designated a 'diversity slot' and, therefore, she would not be considered." Syeed did not have the status "male." Similar biases can result from the status conferred by a prestigious educational background or work experience.

Companies aiming to reduce this kind of status bias can implement the "Rooney Rule," which requires a qualified diversity candidate for each vacancy. Or they can actively seek minority candidates in job areas where minorities have been traditionally underrepresented. Target, PwC and Ford have all launched new recruiting efforts at historically Black colleges and universities (HBCU), as well as universities with large Hispanic populations.

A more thorough remedy for such bias is to remove the status of the candidate as a factor in recruiting and promotion decisions. For instance, requiring a bachelor's degree as a screening mechanism often doesn't make sense when job duties don't truly demand it, said Byron Auguste, CEO and co-founder of the nonprofit Opportunity@Work. According to Auguste, such a requirement immediately excludes 75 percent of Black workers and 80 percent of Hispanic workers, as well as many rural residents.

Ginni Rometty, the former CEO of IBM, calls for companies to focus on a "skills-first" hiring approach. Mike McNamara, chief information officer at Target, said changing job requirements, such as removing the requirement for a four-year computer science degree to be considered for a software engineer position, greatly expanded the talent pool. Unilever uses its Talent First Program to identify at the local level the skills that contribute most to achieving value for the business strategy, then hiring and promoting accordingly to attain DE&I objectives.

Many companies, including Google, Apple and IBM, no longer require applicants for salaried positions to have college degrees. "We believe many employees of the future will not need a bachelor's or associate degree," said Jim Daniels, senior program manager of Global Digital Credential Strategy at IBM.

A step even further is for employers to support minorities in developing their skills. Companies can partner with a number of charities or nongovernment organizations (NGOs) for this purpose. For example, the RISE program run by The Mom Project is a scholarship program for mothers of color to gain a skilled certification and job placement support. Companies also can create nontraditional pathways into jobs, such as by investing in apprenticeship and internship programs. Similarly, employers such as Amazon Web Services, Apple and Facebook partner with colleges to include industry credentials in their curriculum. Google goes a step further to offer career certificate programs without prerequisites that generate "job-ready skills" as an alternative to a college education.

Microaggressions and Lack of Respect

Kevin Nadal, a professor of psychology at John Jay College of Criminal Justice in New York City, has spent years researching and writing books on the effects of microaggressions. He defines them as "the everyday, subtle, intentional—and oftentimes unintentional—interactions or behaviors that communicate some sort of bias toward historically marginalized groups."

Several Black employees at Adidas USA wrote protest letters and demonstrated against the biased interactions they regularly face in the company, including microaggressions and stereotypes forcing code-switching, which is when Black people change the way they speak, act and interact with colleagues. In addition, Fortune documented dozens of personal stories from Black employees at all levels and in all industries about their daily perceptions of disrespect and unequal treatment.

According to Leela Srinivasan, chief marketing officer of recruiting software company Lever, organizational culture is crucial to improving interactions. Lever champions cross-functional empathy to support the daily experiences of employees from all backgrounds.

Avoidance and Othering

Kaseam C. Seales, a former bellhop for Marriott in Newport, R.I., sued for discrimination. He asserted that the bell captain assigned shifts with fewer elevator passengers—thus, fewer tips—for him and other Black bellhops while favoring white employees. In "avoidance," minority employees are ignored or shunted to the side.

A related bias is "othering," in which groups of insiders and outsiders are formed, akin to cliques. For example, Pinterest shareholders sued the company and top management for harming investors by creating a discriminatory environment in which a white, male clique was formed around the CEO, marginalizing women. In addition, two Black female former employees complained about white, male managers acting like a clique. In response, the CEO wrote in a letter to employees, "It's been devastating to hear the stories of Black employees who feel like they don't belong at Pinterest." A common remedy for avoidance and othering is to bulk up coaching and career support for minorities.

When behaving in ways to improve business performance, employees may unwittingly build barriers. HR tools and processes to remove the barriers can be aligned to specific kinds of performance enhancement and likely will impact all employees, not just minorities, to unleash everyone's potential. In this way, HR can address diversity issues and improve business performance without generating fear of bias against certain groups, such as white males, and be the employee champion for all.

Change Agents

Initiatives to change organizational culture and mindset are the most widespread and numerous of DE&I activities, since this kind of thinking is key to DE&I effectiveness.

Pre-Conditions

Two pre-conditions are required when reviewing DE&I efforts. First, employees need to feel safe talking about their concerns. That includes minorities who may want to speak up about current shortcomings, as well as non-minorities who may want to investigate the nature of the problems and the advantages and disadvantages of proposed solutions.

Second, leadership needs to be humble about not necessarily knowing everything on the topic and thus be open to listening to employee communication. Ford works on both pre-conditions by partnering with different organizations, such as MARC (Men Advocating Real Change). MARC is an immersive program focused on engaging men in the inclusion conversation to raise awareness and increase advocacy for women.

Systematic Change

The hundreds of initiatives needed to advance DE&I, which typically include training and employee surveys, are most effective when structured into a change program. For example, Harvard professor Robert Livingston structures his change program into a five-step plan called PRESS:

1. Problem awareness to define the extent of the issues and the willingness to change them.
2. Root-cause analysis to identify the social and organizational sources.
3. Empathy to experience the hurt and anger that minorities feel.
4. Strategy to address personal attitudes, informal cultural norms and formal institutional policies.
5. Sacrifice very little to achieve equitable treatment of all employees.
   

Systematic change in an organization requires senior management sponsorship. Neville Isdell, former CEO of Coca-Cola Co., said that "the message has to come from the top and people will march to the tune. What matters is the clarity of the message and the leader walking the talk."

Ford illustrates a systematic approach to DE&I that's driven from the top and well-organized throughout the company. A number of initiatives at Ford run under the oversight of the Executive Council on Diversity and Worklife, a 26-member committee that provides strategic direction and aligns DE&I programs with other initiatives. The Corporate Diversity and Worklife Office manages implementation, the Global Diversity Council, diversity managers in key global markets and a local diversity council in nearly every manufacturing plant.

The Global Diversity Council actively benchmarks Ford's performance against that of other companies and shares best practices from around the world. The annual Global Diversity and Worklife Summit refines implementation work, such as the rollout of anti-harassment training, which defines the responsibilities of each manager and employee in maintaining a fair and respectful factory environment. Nine employee resource groups (ERGs) are each championed by a senior executive who regularly meets with them. Along with supporting DE&I objectives and initiatives, the ERGs are engaged in business operations by giving advice on product development, marketing strategies and business plans.

Objectives and Targets

As with any change initiative, it makes sense to have DE&I objectives and targets. However, only a small minority of U.S. companies have concrete DE&I targets; 76 percent have no diversity or inclusion goals at all. And only 17 percent of S&P 500 companies report that diversity issues impact incentive pay outcomes for senior management.

However, a single-minded focus on targets relating to percentages of minority persons in management positions may be well-intentioned but misleading. Diversity targets showing people in positions say nothing about inclusion, which includes integrating minorities into the organizational culture. Diversity without inclusion will fail since minority recruits will only stay at the company if inclusion is practiced. That is, inclusion should be the goal and diversity the result.

Indeed, stakeholders generally have expectations regarding targets for outcomes, such as the share of minorities in management positions. Therefore, HR and company leaders should consider "educating" stakeholders to also acknowledge three other kinds of DE&I objectives: first, core metrics such as the share of minorities among new recruits, training programs and employee turnover; second, employee metrics from surveys; and third, progress metrics on the rollout of specific DE&I programs and initiatives.

Change Management Framework

Change management is nothing new. Practitioners established systematic frameworks for change long ago, and the process traditionally is managed via top-down sponsorship and bottom-up energy. It begins with a vision, establishes measurable objectives and tracks progress. The frameworks specify techniques to move the change forward, such as gaining quick wins and communicating widely about them. And it includes levers to integrate change into daily operations, such as systems, training and processes. The points made above about pre-conditions and approaches can be applied to these general change frameworks to adjust them to DE&I.

Administrative Expert

The three roles above call for HR as an administrative expert to develop and implement new policies and practices while collecting new kinds of information and data, which can be evaluated to generate new insights and improve organizational competitiveness. In addition, serving as a strategic partner focuses on the strategic suitability of HR as an employee champion on a range of levels. That includes aiding with employee development; acting as a change agent on organizational culture, mindset and oversight of change programs; and providing expertise on administrative issues.

In the end, HR should deliver the fundamental basis for data-driven DE&I decision-making and apply AI tools to generate even more new insights.

Benjamin Wall is a Switzerland-based management consultant with more than 30 years of experience, including at KPMG, and has taught at a range of business schools. Wall's fields of specialty include strategy, HR, diversity, organizational development, performance management and knowledge management. He is the author of Amazon: Managing Extraordinary Success in 5-D Value (Morgan James, 2019).