Why Diversity & Inclusion still remain elusive ? Part One

Why Diversity and Inclusion (D&I) still remain elusive for a majority of organisations despite renewed commitment from these organisations towards achieving D&I ? There are several reasons, but the most important reason is the fact that the industry still does not acknowledge and accept the fact that D&I is the source of one of the most sustainable competitive advantages in today’s age when technology is proving to be evanescent.

A survey carried out by Rocio Lorenzo & Martin Reeves in partnership with Technical University of Munich found statistically significant relationship between diversity and innovation outcomes in eight countries where the survey was carried out- US, France, Germany, China, India, Brazil, Austria and Switzerland. The most diverse countries in this survey were also the most innovative as measured by the freshness of their revenue mix.

A Mckinsey report titled ‘Delivering Through Diversity’, which was released in January,2018 revealed that gender diversity in management positions actually increases profitability more than thought previously. The likelihood, that companies in top 25th percentile for gender diversity in their executive teams are likely to experience above-average profitability, has increased from 15% to 21%.

This report was alarming because of the revelation that in UK while black and minority ethnic people make up 22% of all university graduates only 8 % of all executive roles are held by members of that group. In US, black Americans held only 4 % of senior executive positions despite the fact that they represent 10 % of university graduates. Hispanics and Latinos held 4 % of all senior executive positions while being 8 % of college graduates.

The progress on D&I has been painfully slow because the solutions are focused on individuals. Traditional initiatives such as unconscious bias training (UBT) and other diversity training efforts were all built on the premise that bias comes only from one person. The fact is bias may begin with individual/s, but it may quickly become systemic- codified into processes and culture.

Also, there is a perceptible lack of energy at the top. Leaders have been largely from populations that were not marginalised, and hence they were not able to fathom the criticality of D&I , and this inability or lack of willingness perpetuated the lack of diversity at leadership levels. Fortunately, now leaders are understanding business imperatives of a diverse organisation at all levels, and also the fact that an inclusive culture means addressing problems at the systemic level.

Surprisingly, companies across the world are not realising the fact that racial disadvantages in particular are intertwined with social class disadvantages that remediation of former is impossible without attending to latter. Paul Ingram, professor at Columbia Business School, insinuates companies of forgetting the not so obvious dimensions of diversity. He posits that in discriminating against people from a lower social class, we are, in fact, discriminating against a majority of workforce because 3/4th of Americans originates from lower social-class origins.

Even if the fact stated by Paul Ingram is true, companies don’t discriminate against people from lower social class by their volition. ?It is true that workers from lower social-class are less educated, with some exceptions of course, but a more plausible cause of discrimination is ‘stereotype threat’ – a phenomenon whereby people perform worse because of negative stereotypes attached to their identity. An entrenched negative bias for lower social-class people leads to their limited/ restricted access to resources/opportunities for advancement in the workplace. The bottlenecks in accessing the resources are reflections of lack of inclusion actually.

How can a company serve a diverse range of customers, say, women from all ethnicities and walks of life if managers in the company don’t viscerally understand them? Managers have an inherent tendency to avoid the brutal facts; the same way they don’t accept the fact that sustainability is not only for reporting but it is the requirement of the business, they also don’t accept the fact that their workforce is insufficiently representative of the diverse set of customers that they are serving, and which they intend to serve. Diverse teams better represent the customers they serve, make decisions with fewer blind spots, and bring more varied and innovative ways to problem-solving.

The use of data in the analysis of D&I has become ubiquitous. Data is critical for companies because they reflect gaps in D&I interventions, assess the experience of specific groups and pre-empt and forestall employee attrition. The data, if interpreted correctly, more than often, expostulates the truth, however, companies do not know which data to extract and where to look for possible gaps. Usually, companies have lots of data/ analytics on one group, but far less on others. E.g. a company may have data on how women are faring in general but they may not be having any data on ?Asian women /black Hispanics women in particular. So, companies pool data of smaller sections and structure their diversity efforts accordingly- one size fits all. This approach fits only a subset of employees.

Why companies fall prey to the faulty logic of small numbers is because they focus on aggregate numbers, and then, for example, difference in attrition rates among smaller groups gets obscured. For a company having data on whole population a smaller population is not a problem. Say, out of 50 black women, 20% exited in 2020-so 10 black women left, but if the attrition rate for all women is 6 % then the narrative becomes ‘attrition in women is low’ from ‘attrition of black women is alarmingly low’. This obscured narrative can impede future retention efforts.

It is a fact that legislation in some countries prohibits collecting data on sexual preferences or age, and hence there is a greater need for transparency with people about the need to collect this data and the intended use of this data.

Another reason behind the pathetically slow progress of D&I in the corporate world is the inability to understand the learning orientation towards diversity. When people draw on their identity- related experiences to reconceive tasks, products, business processes and organisation norms the companies employing them are able to increase their effectiveness.

Increasing only the number of traditionally underrepresented groups in the organization will never automatically produce benefits. Rather business leaders need learn how to harness diversity, and must be willing to reshape the power structure in their organizations.

In fact, there is no scholarly evidence to corroborate the claim of consulting firms that diversity increases the bottom line of a firm or that an increase in the number of women on boards of companies leads to a better financial performance. The scholarly researchers have concluded that diversity leads to a higher-quality work, better decision-making, greater team-satisfaction, and more equality under certain circumstances, and these circumstances are -when team members are able to reflect on and discuss team functioning; when status differences among ethnic groups are minimized, and when team members orient themselves to learn from their individual differences rather than marginalise or deny them.

In order to actualize the learning-and – effectiveness paradigm, leaders need to build trust, actively work against discrimination and subordination and embrace a wide range of styles and voices. To build trust, leaders need to set the tone for honest disclosure and getting comfortable with vulnerability-one’s own and others. In order to be successful against discrimination and subordination the business leaders need to educate themselves on how systems of privilege and oppression-racism, sexism, ethnocentrism operate in a wider culture.?