What does Diversity mean for a company?

Everyone talks about diversity and wants to be diverse. But what does it actually mean and why is it important to be diverse across all hierarchies?

Content:

1. The benefits of diversity
2. Recruitment & promotion
3. Internal training & guidelines
4. Work culture & representation

Diversity is a term that describes differences between a group of people, based on numerous characteristics. For businesses and organizations, it means ensuring that a company employs people of different backgrounds, genders, ethnities, etc., and develops a work culture that ensures the well-being of everyone without discrimination or other hindrances (e.g. accessibility, sensitivity around religious customs, etc.).

What initially started as a way to create equal employment opportunities has been proven to be a real gain for a company in the last decades.

The benefits of Diversity

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According to a study from Bersin by Deloitte, successful companies not only hire diverse but align their diversity strategy with organizational objectives. They also support their diversity efforts with learning, performance management and succession management.

In fact, among "454 global organizations that generated more than $750 million in revenue in 2013, the study showed that organizations with mature talent strategies that included diversity strategy, had 2.3 times higher cash flow per employee over a three-year period."

Meaning, that diversity is a long-term key for success.

And this study is not an outlier. Boston Consulting Group found that companies with diverse management teams saw a 19% increase in revenue.

And a McKinsey study (PDF) from 2018 also tied board diversity to significantly higher profits. The study showed that diversity is important across all hierarchies and is needed in executive teams. "Companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation."

So, what makes a diverse organization?

Recruitment & promotion

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Many organizations want to hire diverse but fail to make the right adjustments to create a recruitment process that actually allows for more diversity. Studies have shown that many hiring managers still have unconscious biases and will make decisions based on names or profile pictures alone, or even prefer prestigious organizations on the CV over regular ones, ignoring that these often are tied to a certain socioeconomic background (source: HBR).

Therefore, it's important to create a recruitment system that ignores data that can lead to unconscious bias (such as the name, age, or gender) and instead focuses on objective data (work experience, skills) to choose appropriate candidates.

Rethink jop descriptions

Many women will not apply to a job unless the description fits completely, the description should therefore be very clear what is a "must have" and what is a "nice to have". Additionally, the inclusion of soft skills as well as a call for diverse applicants can help communicate that the organization is inclusive.

Offer part-time & remote work

Full-time positions at the office can already exclude many candidates who might not be able to be away from their home the entire day. Women who might still be the main care takers in their families can profit from work models that are more flexible to their needs. But part-time and remote work can also be more accessible for disabled people and even has been found to be less stressful for people of colour (sources: CNN & techrepublic).

Offer fair payment & flexible benefits

Standardized payment and flexible benefits are a great combination to prevent discrimination (e.g. by paying female employees less), without ignoring individual needs. Incentives such as special vacation days (including paid leave when the children are ill), subsidies for child care or fitness offers, as well as training options can support diversity without favoring one specific group.

DIGITALL offers employees the possibility for part-time and remote jobs. If you're interested, check out our job positions.

Internal promotions can be biased, too

Aside from the hiring process, internal promotions are also prone to hinder more diversity in organizations. There are studies suggesting that people are more likely to support and promote people that remind them of themselves. This also means that a predominantly male and white management might be more inclined to promote more white men that have the same characteristics that they have (source: HBS).

However, a diverse leadership works best if it combines different personality types, world views and backgrounds. It is therefore counterproductive to promote people who all share the same characteristics.

Robin Ely, Professor of Business Administration at Harvard Business School, suggests that companies need to change the organizational structure, to create more transparency for employees and more individual visibility towards the leadership.

The right tools, trainings, and the freedom to take risks can help employees to prove themselves even without specific mentorship. However, it is important that everyone receives constructive feedback and support on a regular basis to develop strengths and identify as well as promote qualities.  

Internal training & guidelines

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The tricky thing about unconscious bias lies in the "unconscious" part of it. How can you reflect on something that you're not aware of? Internal trainings can help people, especially those who are tasked with recruitment, mentoring, and promotions, to identify and work on their own unconscious biases. Every person has different prejudices that they might not even know about.

The right training by diversity and inclusion experts can help to detect and work on biases, and give the right tools to create more objective decision processes and communication strategies. Furthermore, education can help with identifying microaggressions which can create a hostile workplace environment without being overtly discriminatory. By being able to recognize and address microaggressions, executives and/or colleagues can help create a much more open work environment.

Learning to recognize microaggressions

Microaggressions are often very subtle expressions, actions and decisions that are hardly perceived as discriminatory from the outside. For example, if a colleague's Arabic name is consistently mispronounced by the boss, while no other names cause a problem, then this already can be a microaggression because with this small action, the colleague is othered and can feel less respected.

Microaggressions can be very difficult for those affected because others do not recognize these actions as problematic and therefore do not take them seriously. But if one is confronted with it on a daily basis, the work environment can sooner or later become stressful and unhealthy. However, if colleagues are able to identify microaggressions and other forms of discrimination, they can actively address and prevent them.

Internal guidelines direct towards a diverse culture

The whole organization can profit from internal guidelines that help create an equal work culture. At DIGITALL, for example, we have communication guidelines that support

Constructive criticism: constant negative feedback without any praise is not welcome, instead, criticism should not devalue someone or look for "culprits" but instead help optimize processes and results as a team.

Eye-to-eye communication: expertise trumps hierarchies

A general culture of supporting and mentoring: every new employee has a "mentor", everyone at the company agrees to support if they can.

Work culture & representation

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At the end of the day, an organization can only ever be diverse if its culture supports it. Recruiting and promotion processes, guidelines, and trainings can only do so much. If the organization as a whole doesn't want to change, it will be hard to actually keep the new talent. In fact, according to a survey by McKinsey in 2020, many surveyed employees did remark especially negative sentiments regarding leadership accountability, inclusion, and equality.

One of the key aspects to ensure a healthy culture is representation. "Companies should focus on advancing diverse talent into executive, management, technical, and board roles." Furthermore, McKinsey suggests going beyond gender and ethnicity and broaden the definition of diversity.

McKinsey also stresses that the core leadership should lead the diversity strategy and not just put it on HR and other employee-facing units. Even more so, upper management should account for diversity goals.

"Companies should build a culture where all employees feel they can bring their whole selves to work."

It sounds so easy but this is one of the most challenging aspects of a diverse workplace environment. It's a fine balance to allow the organization to grow and learn (and make mistakes) without allowing this learning phase to be an excuse for ongoing discriminatory behavior.

At the end, diversity depends on the "want" vs. the "need". Although organizations need to be more diverse to tackle the lack of skilled personnel, be a strong competitor and meet legal requirements, a truly open, diverse and inclusive organizational culture can only develop and exist if the leadership and all employees truly want it.

The DIGITALL values are all based on teamwork, diversity and shining a light on individual strengths and qualities. Find out more and maybe even join our team.