October 11, 2017 – Committed leadership, from the top down, is the key to companies having effective diversity and inclusion strategies, according to a newly released report by Russell Reynolds Associates. The survey, “Diversity and Inclusion Pulse: 2017 Leader’s Guide,” illuminates the challenges that businesses face and steps leaders can take to achieve D&I success.
“Our new research shows that in spite of the clear advantages of committing to a D&I strategy, many companies still struggle to execute it effectively,” said one of the study’s eight authors, Amy Hayes, a leader of the diversity and inclusion, assessment and succession planning practices for the firm. “In order to ensure real progress toward these goals, leaders need to evaluate policy and processes, and be public in modeling inclusive behaviors.”
The study polled 2,167 executives worldwide to better grasp how businesses align around diversity and inclusion. At the heart of the study, the search firm and leadership advisor wanted both male and female executives to share how they understood their organization’s D&I strategy and the barriers faced in executing it effectively.
The report indicates that although progress has been made, companies are still falling short of their potential when it comes to diversity and inclusion. Among the more revealing results, the study found that only 47 percent of the executives surveyed believe that their companies have a “clear, holistic understanding of diversity.” And only 24 percent “are aware of a definition of inclusion.” Similarly, the findings revealed that many more companies publicly align their business strategies with diversity than with inclusion, according to their executives.
Commitment is Needed
Russell Reynolds defines “inclusion” as “the establishment of an environment that creates opportunities for all employees to realize their unique potential,” said the firm. “An inclusive culture is what unleashes the power of diversity and instills a sense of belonging, which is the extent to which individuals feel they can be their authentic selves within the organization.”
Among the challenges that companies face, the study showed, is the need for a full-fledged commitment to diversity and inclusion. On one hand, 74 percent of the executives surveyed believe D&I is crucial to the success of their organizations. Yet just 50 percent said that their leaders make a visible effort to support it. Just 38 percent, meanwhile, said that their leaders hold themselves accountable to create inclusive cultures. Twenty seven percent said their company has no D&I strategy whatsoever.
Many companies, the study said, fall short of achieving the full benefits of a diverse workforce. “Companies with a proactive and authentic approach are better positioned to compete globally, understand their customers and innovate,” said another of the authors, Jamie Hechinger, a leader in Russell Reynolds’ diversity and inclusion practice and global leader of the social justice and advocacy practice. “We know that D&I is a business priority for our clients, and for decades we have helped them build more diverse teams and inclusive cultures.”
The study offered six key steps companies can take to maximize D&I success:
1) Agree on the Meaning of D&I — Ensure that all executives understand the organization’s specific definition of diversity and inclusion so that they can act as informed advocates.
2) Develop a D&I Strategy — Establish a D&I strategy to fully realize human capital benefits, such as increased employee engagement and creativity.
“The majority of companies have established D&I strategies, but ownership is fragmented and best practices have not emerged,” said the report. Indeed, 73 percent of the executives surveyed said that leadership sets the D&I strategy at their companies. Yet only 49 percent indicated that it was their CEO who set the strategy. Thirty one percent said the CHRO was responsible, while 1p percent attributed it to the general manager or business unit leader, followed by chief D&I officer (10 percent), other D&I officer (seven percent), chief legal officer or legal executive (seven percent) and other (seven percent).
3) Publicly Commit to D&I — Transparently commit to D&I and hold leadership accountable for results.
Here’s the Single Biggest Challenge Facing Diversity Leaders
Those who step into a new job as chief diversity officer tend to carry a heavy load. Theirs is an increasingly vital role. The challenges they face are complex and the demands of the position are many, with pressure coming from all sides.
“Companies are increasingly aware that they need to commit to D&I as a corporate objective and establish systems of accountability,” said the report. “For a D&I strategy to succeed, however, leaders must be motivated to drive it. To get these leaders on board, companies are moving beyond treating D&I as a compliance obligation and are instead broadcasting the commercial benefits it promises if truly embedded into the company’s DNA.”
“Further, they are encouraging D&I goal setting across the employee base, and specifically the leadership team, as an important step in displaying commitment to D&I. Formal accountability mechanisms, such as adding D&I targets to leadership performance criteria, ensure that real progress is made over time,” the report noted.
Among the business reasons that the executives gave for organizations to commit to diversity and inclusion, 44 percent said to empower their workforce, followed by strengthen employer brand (40 percent), compete globally (39 percent), deepen understanding of customers (36 percent), innovate (33 percent) and improve financial performance (19 percent).
When asked how their organization commits to D&I, meanwhile, the executives said: “sets workforce diversity goals” (46 percent), “measures its level of inclusion via surveys and employee feedback (40 percent) and “sets senior leadership diversity goals” (39 percent).
4) Use D&I to Attract Top Talent — Demonstrate commitment to D&I to attract top talent, which is increasingly seeking out companies that “walk the walk.”
“Companies are failing to recognize D&I as a critical solution to the challenge of identifying and attracting top talent,” said the study. “While 74 percent of executives view D&I as crucial to the success of their organization, most companies do not take advantage of D&I to attract top talent. By failing to embed D&I into their talent strategy, companies not only miss out on exceptional talent, but also on the benefits realized by diverse talent and an inclusive culture.”
5) Incorporate D&I into Talent Strategy — Understand how the absence of an overarching process or strategy will ultimately obstruct talent attraction, development and retention.
Fifty three percent of the companies surveyed prioritize the hiring of diverse talent, the study found. But only 47 percent are focused on talent retention. “Further, only a quarter of companies are ultimately effective at talent attraction and retention, suggesting there are significant obstructions to an effective D&I strategy,” said the study. “Leaders must understand that while isolated efforts, such as hiring programs or flexible work arrangements, may get diverse employees through the door, the lack of an overarching process or strategy ultimately impedes talent attraction, development and retention.”
Key Activities to Drive Diversity and Inclusion Strategies
While diversity and inclusion initiatives have become a ‘must-have’ for 21st century employers, successful ones are often contingent upon having a clear plan and framework that resonates with diverse talent and aligns with overall business goals.
6) Lead by Example — Personify the organization’s D&I agenda and philosophy to influence others to do the same. “D&I strategy is most effective when leaders are visibly committed to D&I and modeling inclusive behaviors,” said the report.
Among the approaches that leaders take to commit to D&I, according to the executives surveyed, are: making a visible effort to support D&I (50 percent), communicate the importance of D&I (45 percent), hold themselves accountable for fostering a culture of inclusion (38 percent) and include inclusive behavior in criteria for promotion (33 percent).
Russell Reynolds also offered ways that leaders could further the effectiveness of their approach to diversity and inclusion. Among them:
1) Increase Visibility and Awareness — Establish a D&I task force, ensure that diverse role models be given a voice, provide a platform for underrepresented groups to share success stories, and support cross-cultural mentoring and global talent rotations.
2) Put Structure and Strategy in Place – Set and communicate D&I goals, appointing a chief diversity officer who partners with the CEO, remove process bias from talent attraction, development and retention, create assisted succession planning for underrepresented groups, and ensure that the CEO, board and senior leaders have an unbiased view of barriers to an effective D&I strategy.
3) Enhance Accountability — Develop dashboards and scorecards to track D&I metrics, tie performance KPIs and compensation to D&I targets and behaviors, acknowledge and reward inclusive employees and managers, and embed D&I objectives into business plans.
4) Foster an Inclusive Culture — Diagnose the company’s level of inclusion to uncover pain points, provide unconscious-bias training to all managers, hire and promote inclusive leaders and invest in inclusive leadership assessment, and develop an inclusive definition of great talent and ensure that the need for “culture fit” is not an excuse to reject diverse talent.
In addition to Ms. Hechinger and Ms. Hayes, the authors of the report are: Kalpana Denzel, Harsonal Sachar, Molly Forgang, Kristyna Jansova, Jacob Martin and Ian Coyne. All are with Russell Reynolds Associates.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media