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Diversity and inclusion

The Paradox of Diversity & Inclusion

Anthony Tattersall

The Paradox of Diversity & Inclusion

umbrellasCompanies often talk about the business benefits of D&I, but when it comes to building a case for investment, they often end up focusing on up-front costs instead of the measurable outcomes.

The issues that surround unconscious bias, gender equality and promoting diversity in the workplace are being reported on with greater focus than ever before. Every day, I come across another article exposing blatantly unethical hiring practices, full of furious rhetoric aimed at the alleged perpetrators.

Many companies have launched significant PR offensives, proactively demonstrating their willingness to take action against workplace prejudice. And admirable as they may be, these initiatives aren’t just feel-good attempts to do the right thing – there are countless studies that show a causal link between improvements in diversity and equality and better business outcomes.

A study from PwC reports that, "Of the CEOs whose companies have a formal diversity and inclusiveness strategy, 85% think it's improved the bottom line." Research from the Center for Talent Innovation shows that companies with diverse leadership are 70% more likely to have expanded their market share in the last year, and 45% more likely to have improved the value of that market share as well.

All the analysis suggests there are huge advantages to be won from more diverse and inclusive hiring practices – from significant improvements in revenue and margin, to more innovation, team commitment and greater employee engagement.

There are plenty of solutions available that can help companies address issues of unconscious bias, the root cause of many diversity issues that plague organisations today. From training programmes focussing on awareness to software solutions that can systematically identify potential bias and provide actionable feedback, there are many ways in which companies can apply services and technology to make real improvements.

So what's the issue?

The challenge seems to be in building a business case for investment. While many senior leaders will nod in agreement about the importance of diversity, the moment an investment case is presented that’s tied to business outcomes, it hits a wall.

I spoke to one HR Director who, upon reviewing an approach to improve diversity, immediately dismissed the idea that it could be directly linked to boosting revenue. This wasn't about whether or not revenue gains could be achieved – the individual in question simply wasn’t interested in the promise of improved revenue – it wasn’t part of their metrics and they weren’t incentivised to care about it.  

I had a very similar conversation with the Head of Diversity and Inclusion at a major organisation, one that had talked publicly about many of the positive business outcomes that could be achieved through better diversity practices. Yet, when exploring possible paths towards those practices, there was an insistence that any business case would have to be presented in terms of the hard costs that would be saved.

And therein lies the paradox: while there may be some cost savings arising from improved diversity practices (from gains in operational efficiency, reduced time to hire and lower attrition), to base your decision on them is to miss the bigger point. The value of diversity and inclusion is two-fold – it’s both the ethical thing to do and will also lead to better business outcomes.

Revenue and market share gains fall squarely in the remit of a CEO, and yet many CEOs see this whole area as an HR issue. HR departments typically have limited budgets and struggle to build a solid business case for real investment.

Complex Problems Demand Multi-faceted Solutions

Even at companies with a more enlightened view about investing in diversity, it's still incredibly hard to build a business case around outcomes. Addressing diversity is rarely resolved through one simple solution – it requires a holistic approach that encompasses awareness, training and commitment from all leadership levels. Structural changes are likely to be needed in the systems, processes, data and analytics that drive organisational activity.

Innovative solutions from technology and services providers offer a part of the answer, but will generally work best as complements to other initiatives. It also takes time for the results to materialise. It might take months or even years to build a more diverse workforce and leadership team. That diversity also needs time to demonstrate the expected business performance improvements. Even if the company does see a remarkable increase in its fortunes, how much of that increase can be tied back to those diversity initiatives?

The following example will help make this more tangible: you've been approached by a supplier that offers innovative technology to help address unconscious bias, but the investment required is £250K. There are no obvious cost savings, but you are completely bought into the fact that you will see real improvements in diversity. Instinctively, you know that if you get this right, better business outcomes will follow.

The first question you must ask is: how much and by when? Will revenues improve by 1%? By 5%? 10%? How long will it take for these improvements to arise? What will the board sign up for, and what will they reject? How do we actually measure success?

The second question is: where should the budget be held? Is this the domain of HR? Or should this be a strategic initiative for a business with budget held at the CEO level?

I would love to hear from those who have solved this challenge, found a way forward or simply have ideas on the subject. It’s this problem, and not one of hard costs, that today’s firms should be striving to solve when it comes to diversity and inclusion.

(Main image credit: Pexels)

Anthony Tattersall

Anthony Tattersall is Chief Sales Officer at LaunchPad Recruits