What CHROs Need to Know About DEI Moving Forward

September 20, 2023 – What obstacles stand in the way of promoting diversity, equity, and inclusion within the companies of today and tomorrow? What approaches can leaders adopt to drive the necessary changes? And what comes next for chief human resources officers in the context of DEI? These are some of the pressing topics that CHROs explored in a recent report from Egon Zehnder’s Dirk Mundorf, Wasko Rothmann, and Ruth Neuhaus.

“To really understand something, you first have to be able to name it,” the study said. “Diversity can be defined as all the ways in which people differ. This includes gender, age, ethnicity, race, disability, sexual orientation, and language. That said, diversity can mean different things to different people.”

Mercedes Alonso, executive vice president renewable polymers and chemicals at Neste, a Finland-based oil refining and marketing company said: “Diversity is about bringing the person to the table. Inclusion, meanwhile, is about having that person participate in the conversation at the table and the practices and behaviors that we do to create an environment to make that happen.”

Equity is the third and final DEI pillar, according to the Egon Zehnder report. “This is about treating people fairly, offering opportunity and advancement for all and considering issues that might put particular groups at a disadvantage,” the report said. “Belonging is about how these three DEI aspects make employees feel safe, valued, and supported as their true, unique self. When implemented successfully, DEI can bring together a team of people who have a sense of being part of something bigger than the job that they do.”

What are CHROs doing to get the best out of diverse teams? CHROs are currently endeavoring to shape their organization to include individuals from diverse backgrounds, care for their wellbeing, and listen to their personal and professional goals while not tolerating harassment in any shape or form. The best approaches to implement DEI to prepare for the future, according to the CHROs Egon Zehnder spoke with, include:

• Better KPIs.
• Create psychological safety.
• Engagement surveys.
• Leading by example.
• Appraisals.

Egon Zehnder asks how do you manage conflicting goals out of your responsibility, or what recommendations do you have?

How CHROs are Meeting Key Challenges

With just 4,800 people, a company like Neste may be small but it has succeeded in incorporating many different people from different cultures to its workforce. Thirty-two percent of its employees are women, with 30 percent of women acting as line managers, and 26 percent reaching top management. Moreover, 22 percent of top management are not Finnish. “These are things we are constantly monitoring because if you don’t measure, then you don’t change anything,” said Ms. Alonso.

It’s important to remember that bringing in people from different countries and different backgrounds, whether from a global corporation or a small start-up, means combining differing working cultures and different ways of thinking, says Egon Zehnder. While this may naturally hold the potential for conflicts, friction may create heat: if managed and handled properly, the combination of different opinions and ways of thinking can generate more ideas, encourage people to try new things and spark innovation. “Therefore, companies need extreme active management to make sure misunderstandings and endless discussions are avoided,” the report said. “Essentially, collaboration is the best way forward.”

Related: How DEI is Impacting How We Recruit and Retain Talent

Unconscious bias is a real danger to be aware of, say the CHROs – we all tend to gravitate towards what is familiar. Tellingly, of the 21 CHROs asked using a Menti survey, all 21 claimed to have experienced unconscious bias during their working lives. When asked how they deal with it, one CHRO surveyed says they “question the assumption.” Another executive preferred to “try and have a discussion,” while for another “open feedback” was the preferred approach. 

How Leadership Needs to Act

The growing significance of the role played by DEI in companies is indisputable. Nevertheless, DEI also presents a number of challenges for leadership. “Managing diversity demands much more of an effort from leaders in terms of discussion and communication with their team,” one CHRO told Egon Zehnder. “In other words, leaders need to become coaches and communicators as they raise awareness of both conscious and unconscious biases,” the Egon Zehnder report said.

The Evolving Role of Chief Diversity Officers in Shaping DEI
In a new report, JM Search says diversity leaders have an opportunity to drive widespread change for organizations as well as help define their own profession. Unfortunately, a lack of clarity around the position—along with inadequate resources for some CDOs— contributes to higher turnover rates for the job.

Answers from the Menti survey confirmed that open communication, transparency, and dialogue can help leaders. “Providing scenarios, arguments and showing the mid-term impact are other suggestions to enable leaders to manage conflicting goals,” said the report”

“Improving DEI in the workplace is a huge challenge for leaders,” Egon Zehnder said. “All they can do is to keep on taking small steps forward in order to make progress, advises one CHRO. Ultimately, management needs to embrace diversity as something positive before being able to reap the benefits. That means a lot of work ahead for leaders. Then again, they have no choice.”

Going forward, Egon Zehnder says that CHROs must make sure that they don’t expect too much from leaders who are facing ever increasing pressure from all angles, including in terms of reaching DEI targets. “It is unrealistic to expect perfection but instead CHROs need to allow leaders to make mistakes as everyone learns together,” the report said. “Changing learned behavior can be challenging – even for the best of leaders. In a year’s time, CHROs and leaders will doubtless have progressed further in reaching their company’s DEI targets as the business case for DEI becomes stronger.”

“This is a journey that will take time and require patience,” said Mr. Mundorf. “It will be exciting to see where we will be 12 months from now and to see which behavior has changed, what we have seen and what we have experienced.”

Egon Zehnder currently ranks as a Top 5 global executive search firm, according to Hunt Scanlon Media. With more than 500 consultants in 68 offices and 40 countries around the globe, Egon Zehnder works with public and private corporations, family-owned enterprises, and non-profit and government agencies to provide board advisory services, CEO and leadership succession planning, executive search and assessment, and leadership development solutions. Since 1964, the firm has been at the forefront of defining top leadership in the face of changing economic conditions as well as major transitions in the executive search field.

Related: Navigating the Road to Diversity

Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media