Governing and advancing diversity - a guide for directors

In the ever-evolving global landscape, it's imperative organizations acknowledge and deeply integrate diversity into their foundation. As diversity shapes innovation, creativity and the broader social fabric of our communities, it becomes a cornerstone for business success. This report delves into how boards can challenge senior management on how well they are integrating diversity at various levels and driving internal and external transformational change.

Quick take:

• Champion diversity from the board on down, clarifying overarching diversity ambitions and tracking measurable goals aligned with broader organizational objectives.
• Engage cross-functional leadership, train managers and champion diversity considerations in all decision-making processes.
• Build diversity into the employee lifecycle, from diversifying talent pools to engaging alumni
• Diversify the supply chain, vet third-party diversity practices and forge collaborations that propel the organization’s broader diversity ambitions.
• Communicate diversity success and challenges effectively and cultivate a mindset of continuous improvement.

For the purpose of clarity, this article uses diversity in the broadest sense: demographic diversity (e.g., gender, age, religion, disability, sexual orientation, socioeconomic status, education), diversity of experience and diversity of thought. All these are powerful contributors to better decision-making. A glossary of other terms used in this article can be found at the end.

10 questions for boards

#1. How are we governing and modeling diversity at the board level?

Effective governance is foundational for instilling and nurturing diversity throughout the organization:

• Establish robust board oversight: How often does our board discuss diversity initiatives? Are these discussions reflecting evolving societal and business landscapes? Are there regular updates on progress and challenges?
• Designate diversity roles to board committees: What is the role of management development and compensation committee on diversity? Beyond board diversity, what role does the nominating and governance committee play?
• Champion board diversity: How diverse is our board in terms of gender, ethnicity, experience and thought? How are we working to further enhance this diversity?
• Cultivate sustained leadership commitment: How are we making sure leadership remains consistently committed to diversity? How aligned are the board and management on diversity objectives and desired outcomes?
• Allocate dedicated resources: Have we set aside sufficient dedicated resources for diversity initiatives? How are these resources prioritized and periodically reviewed for adequacy?
• Establish clear diversity policies: How updated and transparent are our diversity policies? How often are they reviewed? How do we assess whether these policies resonate throughout the organization?

#2. How does our operating model support diversity?

Diversity should be woven into the operational fabric of the organization:

• Engage cross-functional leadership: How do different departments align and coordinate on diversity objectives? How often do cross-functional leaders discuss and strategize around diversity?
• Embed diversity in decision-making: How is diversity factored into daily operations and decision-making processes? Are there frameworks in place that champion diversity considerations in strategy meetings and business operations?
• Empower managers: How are we training and enabling managers to drive and champion diversity? Are they well equipped with necessary tools and understanding?
• Mobilize human resources (HR) for diversity: What leadership role is HR playing in driving and supporting diversity? How they are building diversity into everything we do across the employee lifecycle?
• Appoint diversity champions: Do we have diversity champions within departments and teams who advocate for diversity-related causes and provide insights to senior management on progress, roadblocks and successes?
• Use outside expertise: Do we periodically seek insights and guidance from external diversity experts? How are we integrating their feedback into our operating model?

#3. How aligned are our diversity ambitions with our corporate strategy?

For meaningful change, strategy and ambition must go hand-in-hand, echoing an organization’s commitment to diversity:

• Clarify diversity ambitions: What are our overarching diversity ambitions? How do these align with our broader purpose, values and corporate strategy? Do our ambitions go beyond diversifying our workforce and, if so, how? How do we incorporate diverse views into strategic decisions? How frequently do we revisit our diversity strategy?
• Set measurable goals and key performance indicators (KPIs): How are we measuring diversity, including at board and management levels? Are we emphasizing real outcomes and impacts over mere numerical targets? Are these metrics tied to broader sustainability and organizational objectives?
• Align with stakeholders: How are our diversity ambitions and strategy informed by and resonating with our employees, customers, suppliers and partners?
• Integrate goals into compensation: How are diversity objectives factored into performance reviews and compensation decisions? Are leaders and managers incentivized to meet and surpass diversity objectives?

#4. How well do we understand the challenges we will face in achieving our diversity ambitions?

A comprehensive diagnosis of the organization’s strengths and weaknesses, and of external trends and practices, is vital to addressing diversity gaps and creating impactful interventions:

• Evaluate the situation: How are we evaluating the current state of our diversity strengths and improvement opportunities? Beyond surface-level symptoms, are we diving deep to understand the systemic or structural barriers to diversity within our organization? How frequently do we update our assessment?
• Gather internal and external input: How are we collating insights from internal and external stakeholders about our diversity efforts? How do our diversity efforts compare to industry peers or best practices?
• Leverage data: How are we using technology and data analytics to assess diversity progress? Are we leveraging modern tools to gain insights, predict trends and identify areas of improvement in our diversity journey?
• Identify and mitigate risks in executing strategy: What potential risks or challenges have we identified in our diversity strategy? How are we mitigating these risks so those challenges don't derail our diversity objectives?

#5. How are we integrating diversity into the entire employee lifecycle?

Embedding diversity at every step of the employee journey fosters an inclusive environment and promotes long-term retention:

• Strengthen sourcing, attraction and marketing: How are we assessing whether our employer branding resonates with a diverse audience? Are our marketing channels inclusive? Do our attraction strategies target a wide variety of talent pools and colleges?
• Optimize recruitment and hiring: Are our recruitment processes free from biases? How diverse are our hiring panels? Are job descriptions formulated to be inclusive?
• Enhance onboarding: Is our onboarding process tailored to welcome diverse backgrounds and experiences? Are new employees introduced to our diversity initiatives from day one?
• Promote allyship and belonging: How are we fostering a sense of belonging within the organization? How active and supported are affinity groups? How are we promoting mentorship, sponsorship and the importance of diverse role models?
• Prioritize training and development: How is diversity integrated into our training modules? Are there specific trainings focused on diversity and inclusion (e.g., unconscious bias, microaggressions and cultural sensitivity)?
• Implement inclusive practices and policies: Are our policies, from flexible work to maternity, tailored to cater to diverse needs? How adaptable are our compensation and benefits packages to diverse needs? How are we assessing whether mental health resources and support systems are inclusive and sensitive to diverse backgrounds?
• Nurture a conducive work environment: How are we making our workspaces inclusive and considerate of diverse needs? How are we making our physical and digital work environments are accessible to everyone, including those with disabilities? How regularly do we solicit feedback on workspace inclusivity?
• Promote compliance: Are we staying compliant with employment-related regulations and laws, including those concerning protected groups, equal pay and pay disclosures? Are there procedures in place to promote consistent adherence to such requirements?
• Broaden professional opportunities: Are there equal opportunities for all regardless of background or identity? How are we considering diversity in project allocation, team formations and leadership opportunities?
• Refine performance management and reviews: Are our review processes free of biases? How are we making feedback mechanisms inclusive and constructive?
• Consider fairness in promotions and succession plans: How transparent and unbiased is our promotions process? How are we achieving diversity in leadership and senior roles? Are diversity considerations embedded in our succession plans?
• Leverage offboarding: How are we capturing feedback from departing employees on our diversity initiatives? Are there channels for continuous engagement even after they leave?How are we leveraging our alumni networks to gain insights on our diversity efforts and to attract back diverse talent?

#6. How are we factoring diversity in our products and services?

Product offerings should resonate with a diverse customer base to expand reach and impact:

• Optimize offerings for diverse needs: Are our products and services meeting the diverse needs of our customer base? Are our products and services culturally sensitive and appropriate? How are we making sure they resonate across different cultural, ethnic and social backgrounds?
• Factor in inclusive design principles: How are we integrating diversity in our design processes? Are we gathering feedback from diverse user groups during product and service development? How are we making sure design teams are diverse, thereby reflecting multiple perspectives in the creation process?
• Broaden access through location and channels: Are we making our products and services accessible across different regions and to various communities?
• Implement fair and inclusive pricing: Is our pricing strategy reflective of the diverse economic backgrounds of our customers? Are we offering flexible payment options or plans to cater to varied income levels?
• Maintain authentic marketing and representation: Are our marketing campaigns showcasing diversity authentically? How are we factoring in representation in our advertisements, promotions and other communications?
• Consider compliance risks: How are we factoring in compliance requirements (e.g., to address disparate impact) in decisions on our products and services and distribution channels?

#7. How are we integrating diversity into our direct external interactions and partnerships?

Leveraging external relationships can amplify an organization’s impact on diversity:

• Diversify the supply chain: Are we partnering with diverse suppliers, including minority-owned, women-owned and other under-represented groups' businesses? How are we aligning our procurement practices accordingly?
• Engage diverse advisors: When selecting external advisors (e.g., consultants, lawyers, auditors) are we considering whether those organizations value and represent diversity? How is the diversity of these partners influencing our decision-making?
• Forge diverse partnerships and collaborations: How are we factoring diversity in our choice of other commercial partners and collaborators?
• Vet third-party’s diversity practices: When engaging with external entities, how are we assessing whether they uphold the same diversity values as ours? Are their practices scrutinized for alignment with our diversity objectives?

#8. How are we pursuing broader ambitions to diversify the wider ecosystem?

Engaging with other partners can propel an organization’s diversity agenda on a grander scale:

• Collaborate with advocacy groups: Are we actively collaborating with advocacy groups that promote diversity? How are these collaborations driving change internally and in the community? Are we playing a role in influencing or supporting public policies or regulations that promote diversity and inclusion?
• Participate in industry initiatives: How are we engaging with industry-specific diversity initiatives? Are we playing a leadership role in such efforts?
• Champion community engagement and volunteering: Are we encouraging our employees to participate in community-oriented activities that support diversity? How are these engagements fostering a culture of inclusion and societal impact?
• Direct philanthropy to diversity: How are we targeting our philanthropic activities to support diverse communities? Are our charitable efforts and donations aligned with promoting diversity and inclusion?
• Invest in and leverage research: How are we supporting or using research on diversity? Are we collaborating with academic institutions or think tanks to gain insights and drive data-driven diversity strategies?

#9. How effectively are we communicating our diversity efforts and accomplishments?

Transparent communication instills trust and accountability, fostering genuine engagement around our diversity objectives:

• Maintain transparent reporting: How are we presenting our diversity statistics, initiatives and progress (including board-level diversity) to internal and external stakeholders? Is our reporting accessible, comprehensive and regular? Are we benchmarking our disclosures against best practices?
• Promote success: Are we sharing success stories that highlight our diversity accomplishments? How are we celebrating individuals or teams that exemplify our diversity values? How are these stories shared with external stakeholders?
• Engage shareholders on diversity: How are we communicating with our shareholders on our diversity activities and their interests in such matters? Are we tracking diversity-related shareholder proposals to identify potential future challenges or opportunities?
• Establish feedback channels: Do we have dedicated channels for stakeholders to share feedback or concerns related to our diversity communications?

#10. How are we promoting continuous improvement in our diversity initiatives?

A commitment to diversity requires constant evolution, aligning with best practices and learning from past experiences:

• Review diversity strategy and performance: Are we consistently measuring and reviewing our diversity-related KPIs? How are we using these insights to refine our strategy and activities? When initiatives don’t deliver as expected, how are we learning and making necessary changes?
• Promote employee engagement: How are we actively involving employees in shaping and championing our diversity efforts? Are there channels (e.g. pulse surveys) for employees to voice their concerns, ideas or feedback on diversity-related matters? How quickly are these insights translated into actionable changes?
• Gather stakeholder feedback: Do we mechanisms in place for regular feedback from other stakeholders, including customers and partners, to continuously refine our diversity initiatives?
• Stay updated with global best practices: How often are we benchmarking our diversity initiatives against industry leaders and global best practices? Are we agile enough to adapt to new methods and approaches?
• Conduct periodic third-party reviews: Are we considering periodic audits by external consultants to objectively assess our diversity practices? How are we implementing their recommendations?

In conclusion

The pursuit of diversity is now a business imperative and societal expectation. From board governance to external partnerships, the value of diverse perspectives is evident in innovative solutions and broader engagement. An organization’s commitment to continuous introspection and actionable steps, is essential to make progress inside the organization and beyond.

Glossary of key terms

As our understanding of diversity deepens, the vocabulary encompassing this area has broadened. These are some of the key terms touched on in this article:

• Equity: The fair treatment, access, opportunity and advancement for all people, while at the same time striving to identify and eliminate barriers that have prevented the full participation of certain groups.
• Inclusion: The act of creating an environment where all individuals feel valued, respected and have access to the same opportunities, irrespective of their differences.
• Belonging: A sense of being accepted and included within a community or organization, where individuals can bring their authentic selves to work.
• Allyship: The active and consistent practice of using privilege to advocate for those without that privilege. Allies recognize their own privilege and take action to support others in spaces where they hold that privilege.
• Sponsorship: A workplace relationship where a senior individual advocates for and supports the career advancement of a more junior individual. Sponsors actively push for their sponsee’s next promotion and open up opportunities for them.
• Mentorship: A relationship where a more experienced person (mentor) guides, advises and supports a less experienced person (mentee) in their professional or personal development.
• Affinity groups: Groups formed around common characteristics, experiences or goals, such as gender, ethnicity or sexual orientation, to provide support and pursue shared objectives.
• Unconscious (or implicit) bias: Prejudices that individuals are unaware of and which affect their understanding, actions and decisions in an unconscious manner.
• Microaggressions: Small, often unintentional, comments or actions that convey prejudice or disdain toward a marginalized group.
• Cultural sensitivity: Awareness and respect for different cultural backgrounds and values. It involves recognizing one's own biases, approaching interactions with an open mind and adapting behavior to communicate inclusively and respectfully.
• Authentic: On the personal level, being genuine and true to one's own identity, experiences and values, especially in diverse settings. In another sense, representing diversity in a genuine and accurate manner, avoiding superficial or stereotypical portrayals.

The views in this article are mine. The insights reflect an engaging and sparring discussion between me (as governance and risk expert, and accomplished author) and Open-Source AI ChatGPT (as know-it-all and so-so author). Copyright: Mark Watson