Why inclusion matters now more than ever
November 05, 2020
As a global pandemic has forced organizations and employees to consider the new world of work, it’s clear that companies have been given a pivotal opportunity to advance performance, best practices, and societal accountability as part of their sustainable economic recovery.
Earlier this month, the women’s networks of Bloomberg and BlackRock hosted a virtual forum to discuss the business case for diversity and inclusion (D&I) in the wake of COVID.
Moderated by Stephanie Flanders, Senior Executive Editor, Bloomberg Economics, panelists included:
- Keynote presenter Dame Vivian Hunt, Senior Partner, McKinsey & Company
- Tina Fordham, Partner & Head of Global Political Strategy, Avonhurst
- Rachel Lord, Senior Managing Director, Head of EMEA (Europe, Middle East and Africa), BlackRock
With the conversation centred on key findings from McKinsey’s recent report Diversity wins: How inclusion matters, valuable insights emerged around the benefits of incorporating D&I into business decisions during this time of global disruption.
Diversity & inclusion at risk
With diverse representation taking a notable step backwards during the last two recessions, D&I is at real risk of becoming a casualty of this crisis as we rebuild our businesses. For example, although women represent just 39% of the global workforce, they have accounted for 54% of worldwide job losses during COVID.
Inclusive practices have also eroded due to the new remote working environment. Not only can it be challenging to lead teams inclusively over digital platforms, 1 in 3 mothers say they’re spending at least 15 more hours every week on household responsibilities than they did before the pandemic.
A quick and clear causality was the UK Gender Pay Gap reporting which was suspended by the Government Equalities Office in March. This decision, a new report has found, risks the UK falling further behind in what is already a “light-touch approach” to tackling the gap.
Advancements in leadership diversity, meanwhile, had already been slow for some time, with McKinsey’s data indicating that:
- Two-thirds of companies made only moderate progress at best between 2014 and 2019
- A full 20% of companies showed no movement at all
Overlaid with today’s COVID-exposed vulnerabilities, this represents an extremely fragile situation for women and minority groups.
An important opportunity for growth
A key takeaway from McKinsey’s report is that higher diversity in senior teams correlates to financial outperformance. This, according to Dame Vivian Hunt, is a critical finding – from not only a profitability and sustainable recovery perspective, but because history shows we need more than a moral and ethical argument to move behavior.
With over 90% (a new high) of companies in a recent McKinsey survey saying social purpose and relevance should be considered in how they think about their business, D&I represents a significant strategic opportunity for growth for several reasons:
- Diversity and inclusion can enhance the problem-solving necessary to rethink businesses and reimagine industries in the face of unprecedented disruption
- More diverse teams are better at anticipating changes in consumer needs and buying patterns, which can lead to more rapid product and service innovation
- Strengthened by society-wide feelings of solidarity, remote work has the potential to widen talent pools, providing the chance to hire high-value, diverse talent and promote more agile, productive, inclusive work cultures
As solidarity and purpose gain prominence throughout society, companies that deprioritize D&I are increasingly likely to be penalized. The penalty for a low performance on diversity is growing. In 2019, the bottom quartile of companies for gender diversity were 19% more likely to underperform their peers.
According to Rachel Lord, female representation within her EMEA Executive Committee has jumped from 15% to 42% in the past seven years. Rachel also highlighted that the industry is identifying more examples of a correlation between gender diversity and stronger performance.
Investor opinion has also shifted significantly. Data suggests that more than 80% of investors now put ESG (environmental, social, and governance) criteria at the forefront of their decision making – a factor that Tina Fordham says was more of a footnote just a few years ago.
Building through diversity, managing through inclusion
McKinsey’s research suggests that companies that are more gender, ethnically and culturally, diverse, relative to the environment they’re in, are more likely than ever to financially outperform their peers.
That said, it’s important to note that only you cannot focus on diversity alone, inclusion is key. Only 29% of employee comments on inclusion in the workplace are positive, compared with 52% on diversity. So, while hiring based on increased representation is a good start, managing that diversity well through inclusion is the extremely important follow-up.
Hunt suggests five best practices that can go a long way toward giving companies a large and growing competitive advantage:
- Fair hiring practices
- Developing, promoting and retaining diverse talent for leadership roles
- Best practice inclusion on values, operating behaviors, management techniques, and confidential reporting lines
- Appointment of women and historically underrepresented groups to leadership positions
- Accountability
Not only is progress more likely when best practice targets are adopted, but a more data-driven approach can help businesses blend D&I into their agendas in a systematic, quantifiable way, linking it to other performance metrics.
Some suggestions for better incorporating social purpose and relevance into business decisions include:
- Setting bold, ambitious targets – nothing gets accomplished without making it a goal
- Building concrete, measurable, objective-driven actions into COVID recovery plans
- Systematically de-biasing work environments with the help of real-time data and tools and analytics designed to test, measure, and train against prejudices
There’s a great deal companies can do to improve openness and equality in their operating practices, says Hunt, that simply hasn’t been done enough.
Diversity leaders to model the way forward
One of the biggest positives to come out of this year may well be the expansion of our notion of what’s possible. With new metrics available and a renewed focus on diversity and social issues, the world needs bold, confident leaders who can continue to model the way forward.
Here are some top panelist tips for prioritizing D&I in the workplace:
- Be active. CEOs and other leaders must be seen taking an active role in promoting and embracing their diversity agendas. Leadership appointments matter – particularly in gender and historically underrepresented groups – because those in a leadership position can change culture more quickly
- Be flexible. An agile, fully supported hybrid-working environment may prove to be a critical opportunity as we rebuild, particularly for women. With one-third of the economic benefit of women’s participation in the workforce stemming from flexibility, it’s important to seize the major advantage this represents.
- Be vulnerable. COVID has humanized business in a way that’s extremely constructive. The more we communicate and listen, and the more honest we are, the better we’ll understand one another. Individual and collective needs can co-exist. The more we emphasize that, the easier it will be to make lasting change.
According to Hunt, the real key, in terms of what companies that are ‘Diversity leaders’ are already doing well, is building inclusion and diversity into business objectives.
At Bloomberg, our commitment to hiring diverse talent and building an inclusive culture is central to everything we do.
Although these goals may look different depending on company context and geographic location, achieving critical mass in diversity, and managing it well, is the key to inclusive practices that allow all individuals to perform at their peak.