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We know that diversity is good for business. Organisations that invest in diversity report seeing a number of advantages, such as an increased ability to attract talent, greater innovation, and improved financial performance. But what does it take to build a Diversity and Inclusion programme that is able to realise these benefits, and which leading practices are actually being adopted by companies around the globe?

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Diversity and Inclusion in the Workforce

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Diversity and Inclusion in the Workforce

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Learning Objectives

By the end of this section, you will be able to:

Explain the benefits of employee diversity in the workplace

Discuss the challenges presented by workplace diversity

Diversity is not simply a box to be checked; rather, it is an approach to business that unites ethical management and high performance. Business leaders in the global economy recognize the benefits of a diverse workforce and see it as an organizational strength, not as a mere slogan or a form of regulatory compliance with the law. They recognize that diversity can enhance performance and drive innovation; conversely, adhering to the traditional business practices of the past can cost them talented employees and loyal customers.

A study by global management consulting firm McKinsey & Company indicates that businesses with gender and ethnic diversity outperform others. According to Mike Dillon, chief diversity and inclusion officer for PwC in San Francisco, "attracting, retaining and developing a diverse group of professionals stirs innovation and drives growth."

Living this goal means not only recruiting, hiring, and training talent from a wide demographic spectrum but also including all employees in every aspect of the organization.

Workplace Diversity

The twenty-first century workplace features much greater diversity than was common even a couple of generations ago. Individuals who might once have faced employment challenges because of religious beliefs, ability differences, or sexual orientation now regularly join their peers in interview pools and on the job. Each may bring a new outlook and different information to the table; employees can no longer take for granted that their coworkers think the same way they do. This pushes them to question their own assumptions, expand their understanding, and appreciate alternate viewpoints. The result is more creative ideas, approaches, and solutions. Thus, diversity may also enhance corporate decision-making.

Communicating with those who differ from us may require us to make an extra effort and even change our viewpoint, but it leads to better collaboration and more favorable outcomes overall, according to David Rock, director of the Neuro-Leadership Institute in New York City, who says diverse coworkers "challenge their own and others' thinking."

According to the Society for Human Resource Management (SHRM), organizational diversity now includes more than just racial, gender, and religious differences. It also encompasses different thinking styles and personality types, as well as other factors such as physical and cognitive abilities and sexual orientation, all of which influence the way people perceive the world. "Finding the right mix of individuals to work on teams, and creating the conditions in which they can excel, are key business goals for today's leaders, given that collaboration has become a paradigm of the twenty-first century workplace," according to an SHRM article.

Attracting workers who are not all alike is an important first step in the process of achieving greater diversity. However, managers cannot stop there. Their goals must also encompass inclusion, or the engagement of all employees in the corporate culture. "The far bigger challenge is how people interact with each other once they're on the job," says Howard J. Ross, founder and chief learning officer at Cook Ross, a consulting firm specializing in diversity. "Diversity is being invited to the party; inclusion is being asked to dance. Diversity is about the ingredients, the mix of people and perspectives. Inclusion is about the container-the place that allows employees to feel they belong, to feel both accepted and different."

Workplace diversity is not a new policy idea; its origins date back to at least the passage of the Civil Rights Act of 1964 (CRA) or before. Census figures show that women made up less than 29 percent of the civilian workforce when Congress passed Title VII of the CRA prohibiting workplace discrimination. After passage of the law, gender diversity in the workplace expanded significantly. According to the U.S. Bureau of Labor Statistics (BLS), the percentage of women in the labor force increased from 48 percent in 1977 to a peak of 60 percent in 1999. Over the last five years, the percentage has held relatively steady at 57 percent. Over the past forty years, the total number of women in the labor force has risen from 41 million in 1977 to 71 million in 2017.

The BLS projects that the number of women in the U.S. labor force will reach 92 million in 2050 (an increase that far outstrips population growth).

The statistical data show a similar trend for African American, Asian American, and Hispanic workers ((Figure)). Just before passage of the CRA in 1964, the percentages of minorities in the official on-the-books workforce were relatively small compared with their representation in the total population. In 1966, Asians accounted for just 0.5 percent of private-sector employment, with Hispanics at 2.5 percent and African Americans at 8.2 percent.

However, Hispanic employment numbers have significantly increased since the CRA became law; they are expected to more than double from 15 percent in 2010 to 30 percent of the labor force in 2050. Similarly, Asian Americans are projected to increase their share from 5 to 8 percent between 2010 and 2050.

Much more progress remains to be made, however. For example, many people think of the technology sector as the workplace of open-minded millennials. Yet Google, as one example of a large and successful company, revealed in its latest diversity statistics that its progress toward a more inclusive workforce may be steady but it is very slow. Men still account for the great majority of employees at the corporation; only about 30 percent are women, and women fill fewer than 20 percent of Google's technical roles ((Figure)). The company has shown a similar lack of gender diversity in leadership roles, where women hold fewer than 25 percent of positions. Despite modest progress, an ocean-sized gap remains to be narrowed. When it comes to ethnicity, approximately 56 percent of Google employees are white. About 35 percent are Asian, 3.5 percent are Latino, and 2.4 percent are black, and of the company's management and leadership roles, 68 percent are held by whites.

Google is not alone in coming up short on diversity. Recruiting and hiring a diverse workforce has been a challenge for most major technology companies, including Facebook, Apple, and Yahoo (now owned by Verizon); all have reported gender and ethnic shortfalls in their workforces.

The Equal Employment Opportunity Commission (EEOC) has made available 2014 data comparing the participation of women and minorities in the high-technology sector with their participation in U.S. private-sector employment overall, and the results show the technology sector still lags.

Compared with all private-sector industries, the high-technology industry employs a larger share of whites (68.5%), Asian Americans (14%), and men (64%), and a smaller share of African Americans (7.4%), Latinos (8%), and women (36%). Whites also represent a much higher share of those in the executive category (83.3%), whereas other groups hold a significantly lower share, including African Americans (2%), Latinos (3.1%), and Asian Americans (10.6%). In addition, and perhaps not surprisingly, 80 percent of executives are men and only 20 percent are women. This compares negatively with all other private-sector industries, in which 70 percent of executives are men and 30 percent women.

Technology companies are generally not trying to hide the problem. Many have been publicly releasing diversity statistics since 2014, and they have been vocal about their intentions to close diversity gaps. More than thirty technology companies, including Intel, Spotify, Lyft, Airbnb, and Pinterest, each signed a written pledge to increase workforce diversity and inclusion, and Google pledged to spend more than $100 million to address diversity issues.

Diversity and inclusion are positive steps for business organizations, and despite their sometimes slow pace, the majority are moving in the right direction. Diversity strengthens the company's internal relationships with employees and improves employee morale, as well as its external relationships with customer groups. Communication, a core value of most successful businesses, becomes more effective with a diverse workforce. Performance improves for multiple reasons, not the least of which is that acknowledging diversity and respecting differences is the ethical thing to do.

Adding Value through Diversity

Diversity need not be a financial drag on a company, measured as a cost of compliance with no return on the investment. A recent McKinsey & Company study concluded that companies that adopt diversity policies do well financially, realizing what is sometimes called a diversity dividend. The study results demonstrated a statistically significant relationship of better financial performance from companies with a more diverse leadership team, as indicated in (Figure). Companies in the top 25 percent in terms of gender diversity were 15 percent more likely to post financial returns above their industry median in the United States. Likewise, companies in the top 25 percent of racial and/or ethnic diversity were 35 percent more likely to show returns exceeding their respective industry median.

These results demonstrate a positive correlation between diversity and performance, rebutting any claim that affirmative action and other such programs are social engineering that constitutes a financial drag on earnings. In fact, the results reveal a negative correlation between performance and lack of diversity, with companies in the bottom 25 percent for gender and ethnicity or race proving to be statistically less likely to achieve above-average financial returns than the average companies. Non-diverse companies were not leaders in performance indicators. Positive correlations do not equal causation, of course, and greater gender and ethnic diversity do not automatically translate into profit. Rather, as this chapter shows, they enhance creativity and decision-making, employee satisfaction, an ethical work environment, and customer goodwill, all of which, in turn, improve operations and boost performance.

Diversity is not a concept that matters only for the rank-and-file workforce; it makes a difference at all levels of an organization. The McKinsey & Company study, which examined twenty thousand firms in ninety countries, also found that companies in the top 25 percent for executive and/or board diversity had returns on equity more than 50 percent higher than those companies that ranked in the lowest 25 percent. Companies with a higher percentage of female executives tended to be more profitable.

Achieving equal representation in employment based on demographic data is the ethical thing to do because it represents the essential American ideal of equal opportunity for all. It is a basic assumption of an egalitarian society that all have the same chance without being hindered by immutable characteristics. However, there are also directly relevant business reasons to do it. More diverse companies perform better, as we saw earlier in this chapter, but why? The reasons are intriguing and complex. Among them are that diversity improves a company's chances of attracting top talent and that considering all points of view may lead to better decision-making. Diversity also improves customer experience and employee satisfaction.

To achieve improved results, companies need to expand their definition of diversity beyond race and gender. For example, differences in age, experience, and country of residence may result in a more refined global mind-set and cultural fluency, which can help companies succeed in international business. A salesperson may know the language of customers or potential customers from a specific region or country, for example, or a customer service representative may understand the norms of another culture. Diverse product-development teams can grasp what a group of customers may want that is not currently being offered.

Resorting to the same approaches repeatedly is not likely to result in breakthrough solutions. Diversity, however, provides usefully divergent perspectives on the business challenges companies face. New ideas help solve old problems-another way diversity makes a positive contribution to the bottom line.

The Challenges of a Diverse Workforce

Diversity is not always an instant success; it can sometimes introduce workplace tensions and lead to significant challenges for a business to address. Some employees simply are slow to come around to a greater appreciation of the value of diversity because they may never have considered this perspective before. Others may be prejudiced and consequently attempt to undermine the success of diversity initiatives in general. In 2017, for example, a senior software engineer's memo criticizing Google's diversity initiatives was leaked, creating significant protests on social media and adverse publicity in national news outlets.

The memo asserted "biological causes" and "men's higher drive for status" to account for women's unequal representation in Google's technology departments and leadership.

Google's response was quick. The engineer was fired, and statements were released emphasizing the company's commitment to diversity.

Although Google was applauded for its quick response, however, some argued that an employee should be free to express personal opinions without punishment (despite the fact that there is no right of free speech while at work in the private sector).

In the latest development, the fired engineer and a coworker filed a class-action lawsuit against Google on behalf of three specific groups of employees who claim they have been discriminated against by Google: whites, conservatives, and men.

This is not just the standard "reverse discrimination" lawsuit; it goes to the heart of the culture of diversity and one of its greatest challenges for management-the backlash against change.

In February 2018, the National Labor Relations Board ruled that Google's termination of the engineer did not violate federal labor law

and that Google had discharged the employee only for inappropriate but unprotected conduct or speech that demeaned women and had no relationship to any terms of employment. Although this ruling settles the administrative labor law aspect of the case, it has no effect on the private wrongful termination lawsuit filed by the engineer, which is still proceeding.

Yet other employees are resistant to change in whatever form it takes. As inclusion initiatives and considerations of diversity become more prominent in employment practices, wise leaders should be prepared to fully explain the advantages to the company of greater diversity in the workforce as well as making the appropriate accommodations to support it. Accommodations can take various forms. For example, if you hire more women, should you change the way you run meetings so everyone has a chance to be heard? Have you recognized that women returning to work after childrearing may bring improved skills such as time management or the ability to work well under pressure? If you are hiring more people of different faiths, should you set aside a prayer room? Should you give out tickets to football games as incentives? Or build team spirit with trips to a local bar? Your managers may need to accept that these initiatives may not suit everyone. Adherents of some faiths may abstain from alcohol, and some people prefer cultural events to sports. Many might welcome a menu of perquisites ("perks") from which to choose, and these will not necessarily be the ones that were valued in the past. Mentoring new and diverse peers can help erase bias and overcome preconceptions about others. However, all levels of a company must be engaged in achieving diversity, and all must work together to overcome resistance.

Companies with Diverse Workforces

Texas Health Resources, a Dallas-area healthcare and hospital company, ranked No. 1 among Fortune's Best Workplaces for Diversity and No. 2 for Best Workplaces for African Americans.

Texas Health employs a diverse workforce that is about 75 percent female and 40 percent minority. The company goes above and beyond by offering English classes for Hispanic workers and hosting several dozen social and professional events each year to support networking and connections among peers with different backgrounds. It also offers same-sex partner benefits; approximately 3 percent of its workforce identifies as LGBTQ (lesbian, gay, bisexual, transgender, queer or questioning).

Another company receiving recognition is Marriott International, ranked No. 6 among Best Workplaces for Diversity and No. 7 among Best Workplaces for African Americans and for Latinos. African American, Latino, and other ethnic minorities account for about 65 percent of Marriott's 100,000 employees, and 15 percent of its executives are minorities. Marriott's president and CEO, Arne Sorenson, is recognized as an advocate for LGBTQ equality in the workplace, published an open letter on LinkedIn expressing his support for diversity and entreating then president-elect Donald Trump to use his position to advocate for inclusiveness. "Everyone, no matter their sexual orientation or identity, gender, race, religion disability or ethnicity should have an equal opportunity to get a job, start a business or be served by a business," Sorenson wrote. "Use your leadership to minimize divisiveness around these areas by letting people live their lives and by ensuring that they are treated equally in the public square."
Critical Thinking
Is it possible that Texas Health and Marriott rank highly for diversity because the hospitality and healthcare industries tend to hire more women and minorities in general? Why or why not?

Summary

A diverse workforce yields many positive outcomes for a company. Access to a deep pool of talent, positive customer experiences, and strong performance are all documented positives. Diversity may also bring some initial challenges, and some employees can be reluctant to see its advantages, but committed managers can deal with these obstacles effectively and make diversity a success through inclusion.

Assessment Questions

Google ________.

Endnotes

1 Novid Parsi, "Workplace Diversity and Inclusion Gets Innovative," Society for Human Resource Management, January 16, 2017. https://www.shrm.org/hr-today/news/hr-magazine/0217/pages/disrupting-diversity-in-the-workplace.aspx.

2 Novid Parsi, "Workplace Diversity and Inclusion Gets Innovative," Society for Human Resource Management, January 16, 2017. https://www.shrm.org/hr-today/news/hr-magazine/0217/pages/disrupting-diversity-in-the-workplace.aspx.

3 Novid Parsi, "Workplace Diversity and Inclusion Gets Innovative," Society for Human Resource Management, January 16, 2017. https://www.shrm.org/hr-today/news/hr-magazine/0217/pages/disrupting-diversity-in-the-workplace.aspx.

4 Novid Parsi, "Workplace Diversity and Inclusion Gets Innovative," Society for Human Resource Management, January 16, 2017. https://www.shrm.org/hr-today/news/hr-magazine/0217/pages/disrupting-diversity-in-the-workplace.aspx.

5 "Labor Force Statistics from the Current Population Survey. Household Data Annual Averages. 2. Employment Status of the Civilian Noninstitutional Population 16 Years and Over by Sex, 1977 to date," U.S. Bureau of Labor Statistics. https://www.bls.gov/cps/cpsaat02.htm (accessed July 22, 2018).

6 "Indicators (2013)," U.S. Equal Employment Opportunity Commission. https://www.eeoc.gov/eeoc/statistics/employment/jobpat-eeo1/2013_indicators.cfm (accessed January 10, 2018).

7 Google, https://diversity.google/annual-report/# (accessed July 10, 2018).

8 "Diversity in High Tech," U.S. EEOC. https://www.eeoc.gov/eeoc/statistics/reports/hightech/ (accessed January 12, 2018).

9Lisa Eadicicco, "Google's Diversity Efforts Still Have a Long Way to Go," Time, July 1, 2016. http://time.com/4391031/google-diversity-statistics-2016/.

10Pubali Neogy, "Diversity in Workplace Can Be a Game Changer," Yahoo India Finance, June 18, 2018. Neogy states that greater diversity in the workplace fosters "creativity and innovation," "opens global opportunities" for the firm, "fosters adaptability and better working culture," and generally "improves companies' bottom lines." https://in.finance.yahoo.com/news/diversity-workplace-can-game-changer-heres-183319670.html.

11 Vivian Hunt, Dennis Layton, and Sara Prince, "Why Diversity Matters," McKinsey & Company, January 2015. https://www.mckinsey.com/business-functions/organization/our-insights/why-diversity-matters.

12 Marcus Noland, Tyler Moran, and Barbara Kotschwar, "Is Gender Diversity Profitable? Evidence from a Global Survey," Working Paper 16-3, Peterson Institute for International Economics, February 2016. https://piie.com/publications/working-papers/gender-diversity-profitable-evidence-global-survey.

13Daisuke Wakabayashi, "Contentious Memo Strikes Nerve inside Google and Out," New York Times, August 8, 2017. https://www.nytimes.com/2017/08/08/technology/google-engineer-fired-gender-memo.html.

14Bill Chappell and Laura Sydell, "Google Reportedly Fires Employee Who Slammed Diversity Efforts," National Public Radio, August 7, 2017. https://www.npr.org/sections/thetwo-way/2017/08/07/542020041/google-grapples-with-fallout-after-employee-slams-diversity-efforts.

15Sara Ashley O'Brien, "Engineers Sue Google for Allegedly Discriminating against White Men and Conservatives," CNN/Money, January 8, 2018. http://money.cnn.com/2018/01/08/technology/james-damore-google-lawsuit/index.html.

16Daisuke Wakabayashi, "Google Legally Fired Diversity Memo Author, Labor Agency Says," New York Times, February 16, 2018. https://www.nytimes.com/2018/02/16/business/google-memo-firing.html.

17Michael Bush and Kim Peters, "How the Best Companies Do Diversity Right," Fortune, December 5, 2016. http://fortune.com/2016/12/05/diversity-inclusion-workplaces/.

18Michael Bush and Kim Peters, "How the Best Companies Do Diversity Right," Fortune, December 5, 2016. http://fortune.com/2016/12/05/diversity-inclusion-workplaces/.

Glossary

diversity dividend

the financial benefit of improved performance resulting from a diverse workforce

inclusion

the engagement of all employees in the corporate culture

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Diversity and Inclusion in the Workforce

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By the end of this section, you will be able to: Explain the benefits of employee diversity in the workplace Discuss the challenges presented by workplace diversity Diversity is not simply a box to be checked; rather, it is an approach to business that unites ethical management and high performance.

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Diversity and inclusion as transformative forces

In 2013, Qantas posted a record loss of AUD$2.8 billion. This low point in the airline's 98-year history followed record-high fuel costs, the grounding of its A380s in 2010 for engine trouble, and the suspension of its entire fleet for three days in 2011 after a series of bitter union disputes. Across the country, predictions surrounding the fate of Australia's national carrier were dire.

Fast-forward to 2017, and the situation couldn't be more different. Qantas delivered a record profit of AUD$850 million, increased its operating margin to 12 percent,won the "World's Safest Airline" award, ranked as Australia's most trusted big businessand its most attractive employer,and delivered shareholder returns in the top quartile of its global airline peers and the ASX100.

Transformation is an overused word, but for Qantas it's a perfect description. How did it happen? The company's 2017 Investor Roadshow briefing sounded like a textbook in disciplined operational and financial management, as well as employee, customer, and shareholder focus. Yet for CEO Alan Joyce, the spectacular turnaround reflects an underlying condition: "We have a very diverse environment and a very inclusive culture." Those characteristics, according to Joyce, "got us through the tough times . . . diversity generated better strategy, better risk management, better debates, [and] better outcomes."

To accelerate that conversation, this document presents eight powerful truths about diversity and inclusion. It is the culmination of our work with approximately 50 organizations around the world, representing a footprint of more than 1 million employees. In this article, we draw upon the findings of seven major research studies that cut into new ground, covering topics such as diversity of thinking, inclusive leadership, and customer diversity. Our aim is to inspire leaders with possibilities and to close the gap between aspiration and reality.

1. Diversity of thinking is the new frontier

"The most innovative company must also be the most diverse," says Apple Inc. "We take a holistic view of diversity that looks beyond usual measurements. A view that includes the varied perspectives of our employees as well as app developers, suppliers, and anyone who aspires to a future in tech. Because we know new ideas come from diverse ways of seeing things."

Apple's insight lines up with Joyce's. It's about looking beyond demographic parity to the ultimate outcome-diversity of thinking.

This is not to say that demographic characteristics, such as gender and race, are not important areas of focus. Organizations still need to ensure that workplaces are free from discrimination and enable people to reach their full potential.

But there is a horizon beyond this.

Our view is that the goal is to create workplaces that leverage diversity of thinking. Why? Because research shows that diversity of thinking is a wellspring of creativity, enhancing innovation by about 20 percent. It also enables groups to spot risks, reducing these by up to 30 percent. And it smooths the implementation of decisions by creating buy-in and trust (figure 1).

So how can leaders make this insight practical, and not neglect demographic diversity?

The answer lies in keeping an eye on both. Deloitte's research reveals that high-performing teams are both cognitively and demographically diverse. By cognitive diversity, we are referring to educational and functional diversity, as well as diversity in the mental frameworks that people use to solve problems. A complex problem typically requires input from six different mental frameworks or "approaches": evidence, options, outcomes, people, process, and risk. In reality, no one is equally good at all six; hence, the need for complementary team members. Demographic diversity, for its part, helps teams tap into knowledge and networks specific to a particular demographic group. More broadly, it can help elicit cognitive diversity through its indirect effect on personal behaviors and group dynamics: For example, racial diversity stimulates curiosity, and gender balance facilitates conversational turn-taking.

The truth is, optimal diversity of thinking cannot be achieved without a level playing field for all talent, and clearly there is still work to be done on that front.

2. Diversity without inclusion is not enough

Deloitte's research identifies a very basic formula: Diversity + inclusion = better business outcomes. Simply put, diversity without inclusion is worth less than when the two are combined
(figure 2).

This insight is gaining traction, helping to position diversity and inclusion as separate concepts with equal importance. But there's a problem. The definition of "inclusion" is often left to personal interpretation, and many organizations seem unclear about what it means. Without a shared understanding of inclusion, people are prone to miscommunication, progress cannot be reliably evaluated, leaders can't be held accountable, and organizations default to counting diversity numbers.

What does inclusion really mean? Deloitte's research reveals that a holistic definition comprises four related yet discrete elements (figure 3).

First, people feel included when they are treated "equitably and with respect." Participation without favoritism is the starting point for inclusion, and this requires attention to nondiscrimination and basic courtesy.

The next element relates to "feeling valued and belonging." Inclusion is experienced when people believe that their unique and authentic self is valued by others, while at the same time have a sense of connectedness or belonging to a group.

The truth is that only when organizations are clear about the objective can they turn their attention to the drivers of inclusion, take action, and measure results.

At its highest point, inclusion is expressed as feeling "confident and inspired."

3. Inclusive leaders cast a long shadow

Deloitte's research shows that the behaviors of leaders (be they senior executives or managers) can drive up to 70 percentage points of difference between the proportion of employees who feel highly included and the proportion of those who do not. This effect is even stronger for minority group members. Furthermore, an increase in individuals' feelings of inclusion translates into an increase in perceived team performance (+17 percent), decision-making quality (+20 percent), and collaboration (+29 percent) (figure 4). Pause for a second to let those numbers sink in. This phenomenal difference reflects the power of a leader's shadow.

What distinguishes highly inclusive leaders from their counterparts? Deloitte's research identifies six signature traits, all of which are interrelated and mutually reinforcing (figure 5):

1. Commitment: They are deeply committed to diversity and inclusion because it aligns with their personal values, and they believe in the business case for diversity and inclusion. They articulate their commitment authentically, bravely challenge the status quo, and take personal responsibility for change.

2. Courage: They are humble about their own capabilities and invite contributions by others.

3. Cognizance of bias: They are conscious of their own blind spots as well as flaws in the system, and work hard to ensure opportunities for others.

4. Curiosity: They have an open mind-set; they are deeply curious about others, listen without judgment, and seek to understand.

5. Culturally intelligent: They are attentive to others' cultures and adapt as required.

6. Collaboration: They empower others and create the conditions, such as team cohesion, for diversity of thinking to flourish.

Clearly, these traits are much more than just being "nice" to people, or even just being aware of unconscious biases. Our view is that inclusive leadership is broader and a much more intentional and effortful process. In essence, inclusion of diversity means adaptation. Leaders must alter their behaviors and the surrounding workplace to suit the needs of diverse talent, ideas, customers, and markets.

The truth is, the rules of the game have changed, and the old "hero" style of leadership is . . . old. As the context has become much more diverse, inclusive leadership is now critical to success.

4. Middle managers matter

"Ah, the middle managers conundrum," the authors of a 2007 research paper wrote. "The grassroots are energized, the executives have seen the light, and the top-down and bottom-up momentum comes to a screeching halt right in the middle girth of most organizations."

This may sound harsh, but in the context of diversity and inclusion, middle management is a historically underserviced group. While many executives have been afforded time to learn, reflect, and debate, mid-level managers are often given directives. A change-management process that leaves questions unaddressed results in managers feeling unable to move forward.

To say this is problematic is an understatement. While change needs to be driven from the top, the middle manager cohort is vital to the success of an organization's diversity and inclusion strategy. As Jonathan Byrne of MIT observes, "Regardless of what high-potential initiative the CEO chooses for the company, the middle management team's performance will determine whether it is a success or a failure."

Clearly, organizations should engage middle managers. But when they do, they should also stop treating middle managers as if they are a single mass. Deloitte's research identified six distinct archetypes, or "personas," that individuals tasked with implementing change need to engage with and understand. These personas range from those who are deeply committed to those who can act as saboteurs (figure 6). Against that backdrop, one size will not fit all with respect to the way that information is delivered, experiences shaped, and boundaries set.

Senior leaders can influence middle managers in a variety of ways, including:

1. Using storytelling to help move people emotionally and engage them on the purpose of the D&I agenda. For example, senior leaders could share their personal stories of commitment.

2. Addressing myths and misconceptions by ensuring that middle managers understand the fundamentals-for example, by communicating the difference between equality and equity (figure 7).

3. Having open conversations to enable questions and concerns to be surfaced. Senior leaders should enter these conversations with curiosity and courage-two of the trademark characteristics of highly inclusive leaders.

4. Exposing middle managers to influential role models and other powerful experiences, such as putting them on high-performing, diverse teams; presenting them with counter-stereotypic examples; offering them mentoring opportunities; and giving them experiences that put them in the minority. These tactics should help managers walk in someone else's shoes and enable perspective-taking.

5. Making tough decisions when needed to ensure that the organizations' values are upheld. Inclusion is not a euphemism for "anything goes."

5. Rewire the system to rewire behaviors

Diversity training programs come in many shapes and sizes: educational vs. experiential, voluntary vs. mandatory, inspirational vs. shaming. At its best (voluntary, experiential, inspiring, and practical), training raises awareness, surfaces previously unspoken beliefs, and creates a shared language to discuss diversity and inclusion on a day-to-day basis. These objectives are a positive and important first step in the change journey.

However, when it comes to behavior change, training is often only a scene-setter. The more complete story is that, to change people's behavior organizations need to adjust the system.

Why? First, biases can only be reduced rather than completely eliminated, and it is difficult to control biases that are unconscious. Second, biases can be embedded into the system of work itself, causing suboptimal diversity outcomes. Strategies to rewire the system make it easier to tackle biases and create a more comprehensive and sustainable solution.

There are four steps to system rewiring:

1. Using data to pinpoint leaks in the talent lifecycle. To do this, organizations can look at the profile of their employees from recruitment to retirement, coupled with data on inclusion experiences.

2. Identifying and remodeling vulnerable moments along the talent lifecycle. These are points within specific talent processes where decision-makers are more susceptible to bias: for example, when decisions are discretionary and not subject to review.

3. Introducing positive behavioral nudges, such as altering the default setting. In 2013, telecommunications firm Telstra introduced "All Roles Flex," which made flexibility the starting point for all jobs rather than a special arrangement for some.

4. Tracking the impact. Periodically review diversity and inclusion data to assess the effectiveness of changes made.

When the BMO Financial Group, one of the 10 largest banks in North America, introduced an initiative based on these steps along with a communications and education campaign, it achieved significant impact. First, a record 83.5 percent of people managers voluntarily completed the initiative's learning module within the first few months of its launch, signifying the program's value. Second, there was an unprecedented year-over-year increase in employees' perceptions of inclusion (+2 percent) and of having a "voice" at work (+2 percent). In addition, the hiring rates of minority group candidates increased by 3 percent in 12 months.

The truth is, rewiring the system is equally, if not more, important than retraining behaviors.

6. Tangible goals make ambitions real

When it comes to diversity and inclusion, nothing ignites greater debate than goals, targets, and quotas. On the one hand, the setting of specific diversity goals has been found to be one of the most effective methods for increasing the representation of women and other minority groups. On the other hand, contentious arguments about targets vs. quotas, accusations of reverse discrimination, and fears of incentivizing the wrong behaviors have arisen around goal-setting efforts.

Our view is that tangible goals are important. (By goals, we mean measurable objectives set by an organization at its own discretion, as distinct from dogmatic quotas.) However, their impact is tied to four conditions: communication, coverage, accountability, and reinforcement.

Second, tangible goals should incorporate measures of inclusion, not just diversity. If diversity is the only metric, the organization misses half the story. Leading organizations know this. The financial firm Westpac, for example, not only measures diversity outcomes, but also uses the annual employee survey to test whether individual "people leaders" are committed to the creation of a diverse-thinking workplace. In the United States, facilities and food management firm Sodexo includes a diversity and inclusion competency in its performance management process, and 40 percent of a manager's scorecard is devoted to inclusive behaviors.

Third, tangible goals can only work when key decision-makers are accountable. By taking accountability for goals, leaders signal the importance of diversity and inclusion as a business priority and help focus people's attention.

There has been an overemphasis on diversity, and an underemphasis on inclusion, as well as on the broader ecosystem of accountability, recognition, and rewards. The truth is, without appropriately crafted tangible goals, ambitions are merely ephemeral wishes.

Finally, tangible goals are most effective when combined with broader acts of recognition and reward. This powerful truth sits behind the success of global initiatives such as MARC (Men Advocating Real Change), the 30% Club, the CEO Action for Diversity & Inclusion, and MCC (Male Champions of Change)-each of which implicitly recognizes the seniority and influence of its members. Conversely, there is embarrassment when leaders are called out for their organization's poor diversity and inclusion track record.

Our view is that tangible goals have often been bluntly crafted and poorly communicated. There has been an overemphasis on diversity and an underemphasis on inclusion, as well as on the broader ecosystem of accountability, recognition, and rewards. The truth is, without appropriately crafted tangible goals, ambitions are merely ephemeral wishes.

7. Match the inside and the outside

In 2015, Samsung launched its "Hearing Hands" commercial. Built around a day in the life of Muharrem, a hearing-impaired man, it revealed a new world in which Muharrem's neighbors engage with him for the first time in sign language, allowing him to feel much more connected to his community. In 2017, TV2 Denmark launched its "All that we share" campaign with a commercial that starts with the physical separation of people into line-drawn boxes based on stereotypical differences, and ends with a single larger group who now understands their shared points of commonality. That same year, Nike ran a commercial entitled "Equality," which promoted the message that if diverse athletes can be equal on the playing field, they "can be equal anywhere" because "worth outshines color."

Each of these commercials went viral: 19 million views for Samsung, 4.5 million views for TV2 Denmark, and 5 million views for Nike. The question of why they were like cups of water spilled on dry earth underscores two compelling points.

First, customer diversity and inclusion have often been largely overlooked, with the lion's share of attention devoted to employee diversity. And when customer segmentation is considered, it is more in terms of a customer's financial profile than who customers are as people. As a consequence, services and products often reflect a stereotypical view of the customer. Lloyds Banking Group's 2016 review of British advertising found that many minority groups were underrepresented in advertising, and only 47 percent felt that they were accurately portrayed. Similarly, Deloitte research from 2017 revealed that up to 1 in 2 customers from minority groups felt that their customer needs were often unmet over the past 12 months.

Second, customers are becoming, and starting to lean into, a sense of empowerment; they communicate what they stand for with their wallets and social media shares, and messages of equality have a pervasive appeal. Deloitte's 2017 research found that up to one-half of customers had been influenced to make a purchasing decision in the past 12 months because of an organization's support for equality-whether around issues of marriage equality, gender, disability, age, or culture. The purchasers did not come only from the groups directly targeted by the message (such as the hearing-impaired in the Samsung campaign); they included anyone who felt that the message of equality had spoken to their personal values.

The truth is that while many organizations have prioritized workplace diversity over customer diversity, both are equally important to business success. Moreover, customers are often more ready to support diversity and inclusion than organizations perhaps realize. But a word of caution: This is not about vacuous marketing. Commercials that lack authenticity will be shamed by the very customers they seek to attract.

8. Perform a culture reset, not a tick-the-box program

What prevents the translation of these intentions into meaningful progress? Our experience suggests that organizations frequently underestimate the depth of the change required, adopting a compliance-oriented or programmatic approach to diversity and inclusion. For most organizations, change requires a culture reset.

This is no simple task. Cultural change is challenging irrespective of the objective, but it is perhaps even more so when the objective is an inclusive culture. Resistance is common: Those who are currently successful are likely to believe the system is based on merit, and change to the status quo feels threatening. Consequently, change toward greater inclusion probably requires more effort than many other business priorities. And yet it usually receives much less.

Workplaces have emerged as a venue in which these disparate pressures have manifested and become much discussed. Caught in the middle, workplace leaders around the world tell us that they feel ill-equipped to navigate these swirling waters.

So what does the path to an inclusive culture look like?

Deloitte research identifies four levels of diversity and inclusion maturity: (1) compliance, (2) programmatic, (3) leader-led, and (4) integrated (figure 8). Level 1 is predicated on the belief that diversity is a problem to be managed, with actions generally a consequence of external mandates or undertaken as a response to complaints. At level 2, the value of diversity starts to be recognized, with this stage often characterized by grassroots initiatives (such as employee resource groups), a calendar of events, and other HR-led activities (such as mentoring or unconscious bias training). At levels 1 and 2, progress beyond awareness-raising is typically limited.

More substantial cultural change begins at level 3-a true transition point-when the CEO and other influential business leaders step up, challenge the status quo, and address barriers to inclusion. By role-modeling inclusive behaviors and aligning and adapting organizational systems (for example, by tying rewards and recognition to inclusive behavior), they create the conditions that influence employee behaviors and mind-sets. Communications are transparent, visible, and reinforced. And at level 4, diversity and inclusion are fully integrated into employee and other business processes such as innovation, customer experience, and workplace design.

The truth is, significant change will not happen until organizations go beyond tick-the-box programs and invest the appropriate level of effort and resourcing in creating diverse and inclusive cultures.

Eight powerful truths, seven powerful actions

To borrow from Charles Dickens, this is the best of times and the worst of times to be advocating for diversity and inclusion. On the one hand, there is a groundswell of global energy directed toward the creation of workplaces that are more inclusive: 38 percent of leaders now report that the CEO is the primary sponsor of the diversity and inclusion agenda, and the formation of global initiatives speaks to the importance of these issues for the broader business community. On the other hand, some communities have become mired in divisive debates about equality (for instance, around issues related to sexuality, race, and religion).

Workplaces have emerged as a venue in which these disparate pressures have manifested and become much discussed. Caught in the middle, workplace leaders around the world tell us that they feel ill-equipped to navigate these swirling waters. Believing in the business case, but feeling time-poor and uncertain, leaders question what to say (and what not to say) as well as what to do (and what not to do).

To address these eight powerful truths, we propose seven powerful actions:

1. Recognize that progress will take a culture reset

2. Create shared purpose and meaning by broadening the narrative to diversity of thinking and inclusion

3. Build inclusive leadership capabilities

4. Take middle managers on the journey

5. Nudge behavior change by rewiring processes and practices

6. Strengthen accountability, recognition, and rewards

7. Pay attention to diverse employees and customers

The truths we have presented challenge current practices, which are heavily weighted toward diversity metrics, events, and training. Our view is that the end goal should be redefined, cultures reset, and behaviors reshaped. Leaders should step up and own that change. Embracing these truths will help deliver the outcomes that exemplars have experienced. It will deliver the promised revolution.

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The diversity and inclusion revolution: Eight powerful truths

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In 2013, Qantas posted a record loss of AUD$2.8 billion. This low point in the airline's 98-year history followed record-high fuel costs, the grounding of its A380s in 2010 for engine trouble, and the suspension of its entire fleet for three days in 2011 after a series of bitter union disputes.

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Diversity and inclusion: The reality gap

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Diversity and inclusion: The reality gap

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Introduction
Diversity and inclusion has become a CEO-level issue around the world. The digital organization of today, which operates as a network of teams, thrives on empowerment, open dialogue, and inclusive working styles. Leading organizations now see diversity and inclusion as a comprehensive strategy woven into every aspect of the talent life cycle to enhance employee engagement, improve brand, and drive performance. The era of diversity as a "check the box" initiative owned by HR is over. CEOs must take ownership and drive accountability among leaders at all levels to close the gap between what is said and actual impact.

In this year's survey, the proportion of executives who cited inclusion as a top priority has risen by 32 percent compared with our 2014 survey.

Over two-thirds (69 percent) of executives rate diversity and inclusion an important issue (up from 59 percent in 2014).

Thirty-eight percent of executives report that the primary sponsor of the company's diversity and inclusion efforts is the CEO.

In today's political, economic, and global business environment, diversity has become increasingly important. The number of executives who cited inclusion as a top priority has risen 32 percent from the Human Capital Trends 2014 survey, and in the last three years, the percentage of companies that rate themselves excellent at gender diversity went up by 72 percent. Based on this year's survey, 48 percent of companies consider themselves adequate at focusing on global cultural diversity, and 69 percent of companies consider themselves adequate or excellent at supporting a variety of family models in the workforce.

This year, the issue is broader than the standard business case and requires a more comprehensive view: Diversity and inclusion now impacts brand, corporate purpose, and performance. Not only is the public increasingly aware of the issue (witness the scrutiny of gender and racial diversity in the technology industry), but employees are also expressing stronger views on diversity and inclusion. Millennials, for example, see inclusion as a mandatory part of corporate culture, defining how the company listens to them at work. Shareholders, customers, and suppliers are all taking a closer look at this issue.

As awareness around diversity and inclusion grows, diversity and inclusion have become more important for talent acquisition and a company's employment brand. Many organizations operate in an environment of high transparency, which employees demand. For younger workers, inclusion is not just about assembling diverse teams but also about connecting team members so that everyone is heard and respected. Companies should align their approach with the expectations of Millennials and others, or they will likely lose talent.

If one considers the fact that organizations now operate as networks, it becomes even clearer that diversity and inclusion can reinforce organizational performance. New research by Deloitte and other academic institutions demonstrates that diverse and inclusive teams are more innovative, engaged, and creative in their work. Our research comparing high-performing teams against lower-performing teams supports the view that people must feel included in order to speak up and fully contribute.

Despite this increased emphasis and scrutiny, however, we believe businesses face a reality gap: Results appear to be too slow. CEOs who have abdicated responsibility for this issue to the CHRO or chief diversity officer must now take ownership and hold business leaders accountable at all levels. People today are slowly becoming aware of both unconscious and explicit bias, and some organizations are starting to take action to expose the issue and make institutional changes to deal with it.

The most popular solution today is training. But while such interventions are helpful, it appears that making people aware is not enough. Organizations should consider making structural changes, implementing transparent, data-driven solutions, and immersing executives in the world of bias to give them a visceral understanding of how bias impacts decision making, talent decisions, and business outcomes.

We highlight this trend because this issue has become increasingly important. Employees and stakeholders are starting to voice concerns, but solutions built around training and education are not working well enough. A set of "new rules" is being written that will demand a new focus on experiential learning, process change, data-driven tools, transparency, and accountability.

What is driving the rise in concern?

Why has diversity and inclusion become so important? A series of business and cultural changes has come together to spotlight the importance of this issue.

First, the global political environment has heightened employee sensitivity to diversity and inclusion. Immigration challenges, nationalism, and fear of terrorism appear with greater frequency in the press. Organizations report that employees are personally concerned about what they read and hear, and they want their employers to offer perspective. The business issue of diversity and inclusion now touches issues of employee engagement, fairness, human rights, and even social justice.

Second, the need for diversity and inclusion is now an important component at work. Many large organizations now define themselves as global entities, making religious, gender, generational, and other types of diversity a business reality. Programs to raise awareness of unconscious bias are increasingly popular.

Third, a growing body of research indicates that diverse and inclusive teams outperform their peers. Companies with inclusive talent practices in hiring, promotion, development, leadership, and team management generate up to 30 percent higher revenue per employee and greater profitability than their competitors. Without a strong culture of inclusion and flexibility, the team-centric model comprising diverse individuals may not perform well.

Fourth, the topic of equality and gender pay equity has received mounting public attention. Canadian Prime Minister Justin Trudeau made headlines in 2015 by appointing a gender-equal cabinet. There is new emphasis on transparency of executive pay. Companies such as Facebook, Salesforce, and others are publicly highlighting gender equality-and setting a strong example. As an example, after Salesforce performed a comprehensive analysis of 17,000 employees and identified a gender pay gap, the company spent roughly $3 million to even out the disparity.

Fifth, as career trajectories change, issues of age and life transition are becoming more important. Anecdotal evidence suggests that millions of Baby Boomers are delaying retirement, while many Millennials are approaching the age when both spouses often work, and they expect and demand equal treatment. And the prospect of longer careers means a wider generational span in the workforce. Efforts to address such issues are gaining ground. One retailer, for example, developed a program called Snowbird to help older workers transfer to warmer climates to stay with the company. Michelin lets senior white-collar workers stretch out their careers to reduce stress later in life. The US National Institutes of Health offers emergency elder care, allowing employees to modify their work patterns when parents become ill.

Many companies are still not seizing opportunities

Despite the overall increase in focus on and investment in diversity and inclusion, many businesses may be in denial about the reality in their own companies. Our research into HR practices found that, while an overwhelming majority of organizations (71 percent) aspire to have an "inclusive" culture in the future, their actual maturity levels are very low. Only 12 percent have reached level 4, the most mature level in our model.

In some countries, the problems are even more pressing. In Japan, surveys show that 53 percent of women between the ages of 24 and 44 would like to work but are unable to obtain jobs.

Companies must understand the complexity of their workforce

This year's Global Human Capital Trends research shows that 78 percent of respondents now believe diversity and inclusion is a competitive advantage (39 percent say it is a "significant" competitive advantage). Yet, despite this increased level of interest, only 6 percent of companies actually tie compensation to diversity outcomes. Why?

The answer is simple: Solving diversity challenges is dauntingly difficult. Our research and company interviews show that organizations are now considering moving beyond training to focus on measurement, transparency, and personal accountability. Also trending upward is a focus on eliminating measurable bias from talent processes, including hiring, promotion, performance management, leadership development, succession, and compensation.

For instance, organizations are experimenting with eliminating names on resumes because candidates with ethnic-sounding names may experience lower hiring rates. Australia has been a leader in this area; the state of Victoria is experimenting with removing all personal details from job applications. Some companies look at patterns of job offers and compare managers against their peers for signs of gender, racial, or age discrimination.

We are not saying that training is not important; it plays a vital role in education and awareness of the issue. But this year and moving forward, we see an additional emphasis on removing bias from systems and processes. This is what it means to embed diversity into an organization's culture, rather than mounting a merely programmatic effort. By measuring each of its talent processes, removing factors that lead to bias, giving managers a language to discuss bias, and holding them accountable, organizations can move toward true inclusiveness.

One area of change over the past year is the increased focus on bias in recruiting and the use of new tools to help companies reduce bias. This year, 20 percent of our survey respondents believe their organizations provide excellent training against unconscious bias, and 68 percent measure and monitor diversity and inclusion in recruiting. New tools from vendors such as HireVue, SuccessFactors, and Entelo can directly monitor manager hiring practices, including job descriptions and interview scoring patterns, to identify racial and cultural bias.

Organizations are also paying more attention to diversity in succession and leadership. Today, 71 percent of survey respondents believe their organizations are adequate or excellent at identifying and promoting diverse leaders throughout the organization. Investment in this area is increasing, but more work remains to be done. The people organizations desire are out there; if an organization does not have diverse leaders, it raises the question of why.

The role of leadership

We believe issues around diversity and inclusion are challenges that all leaders should address. We identify commitment, courage, cognizance of bias, curiosity, cultural intelligence, and collaboration as the six traits of an inclusive leader. We encourage companies to include these capabilities in their leadership assessment and leadership development procedures.

For diversity and inclusion to become embedded in the organization, leaders should pursue changes in processes and systems. Organizations should transparently measure diversity, and managers should be held accountable for outcomes as well as their own behavior. Organizations would also benefit from expanding the definition of diversity beyond demographic and social identities. Research shows that one of the biggest sources of bias at companies is a lack of diversity of thought. Leaders and managers can benefit by listening to people who think differently, because they often bring some of the team's most innovative ideas.

Lessons from the front lines

Recognizing the many business impacts of unconscious bias, BMO Financial Group, a top North American bank, has pioneered a new approach to diversity and inclusion. It has implemented an initiative aimed at raising awareness and disrupting bias during the recruitment and performance processes, in an effort to enable more objective talent decisions and better diversity outcomes. The company had launched previous efforts to raise awareness of bias, but it wanted to deepen its commitment by actively addressing practices such as recruiting.

The initiative involved four key activities. It began with a review that mapped the major steps in the recruitment and promotion processes, especially areas of high managerial discretion. The review also identified the specific procedures and systems that could influence the impact of bias. For instance, if interviewing decisions were made at the end of the day, when managers were tired and rushed, the potential for similarity attraction bias could be amplified because biases are magnified with tiredness.

Second, the initiative redesigned new tips and practices to nudge managers toward meritocratic decisions to eliminate areas where bias could be present, while taking care to make the new practices both practical and relevant to the business.

The new practices were communicated to managers, and teams were encouraged to discuss ways to reduce bias in recruitment and performance reviews. Finally, the effort developed multiple measures of success and ways to track progress for later review. One key measure of success was the impact on employees' perceptions of inclusion and their voice at work. Both of these measures saw an unprecedented year-over-year increase, with a 2 percentage point increase on perceptions of inclusion, and a 2 percentage point increase on employees' perception of their voice at work.

Training focused not only on identifying potential areas for bias but also on teaching managers to lead conversations to co-develop solutions with staff. Managers learned about different types of biases and where they could show up. Training materials and tools included e-learning modules, an online hub, and one-page handouts concisely conveying key points. The training and support materials are having a positive impact, generating high levels of adoption for the new processes and practices, with 83.5 percent of people managers and one-third of all employees voluntarily completing the e-learning module within the first months of launching the initiative. The organization has also seen a measurable impact on hiring rates of diverse candidates, which has increased over 3 percent in the past year.

Lloyd's Banking Group, a leading UK-based bank, is another example of a company that takes an innovative approach to diversity and inclusion, embarking on a multifaceted effort to embed diversity and inclusion within its culture. The group recognized that putting inclusive behaviors at the core of its operations and making gender equality a priority benefited not only the women they employ but also the organization as a whole and the clients, customers, and communities they serve. Leaders set a clear, transparent target: By 2020, 40 percent of senior roles were to be occupied by women. Recruiting programs were changed to align with this goal, including a requirement that the shortlist for every senior role must include a qualified female candidate-or a convincing explanation for the absence.

This commitment to diversity is delivering results. In 2015, 31 percent of external hires into senior management were women, compared with 17 percent in 2014. The proportion of women promoted into senior roles increased from 26 percent to 33 percent, earning the group recognition among the Times ' top 50 employers for women.

To push diversity and inclusion deeper into the company's culture, all line managers received specialized training in 2015. To assist with these and other initiatives, a member of the group executive committee acts as both executive sponsor for diversity and inclusion, and executive sponsor for gender.

P&G has also become a leader in this area by incorporating a commitment to diversity and inclusion deeply within its culture. Over the past seven years, the company has spent $2 billion annually to support its supplier diversity program, building a broad and diverse supplier base that includes over 1,500 women- and minority-owned suppliers.

The company also focuses on advancing women leaders through a comprehensive leadership development strategy featuring strong mentorship and sponsorship as well as site- and region-specific programs. As a result of these efforts, between 2008 and 2013, women's representation among P&G managers grew from 40 to 44 percent, including 28 percent at and above at the VP level.

Beyond gender diversity, the company has taken a leadership position in supporting employees with disabilities. A reverse mentoring program enables senior staff to understand the daily challenges some of their colleagues face-and how to create an inclusive workplace where all have the ability to contribute. Funding for accommodations is now allocated to a central budget to ensure that all P&G facilities worldwide have the resources needed to accommodate all workers.

To increase accountability at all levels, P&G instituted a new compensation system that reinforces its commitment to diversity and inclusion. Ten percent of executive compensation is linked to diversity goals, which are evaluated as part of performance reviews. Criteria include being an executive sponsor of an employee resource group, being a cross-cultural mentor, and recruitment and promotions in the executive's area of responsibility. Additionally, the stock option awards for the company's top officers are linked to diversity results.

For these and other initiatives, in 2015, DiversityInc ranked P&G second among the top 10 companies for people with disabilities, seventh among its top 50 companies for diversity overall, and eighth for global diversity. DiversityInc credited P&G for highly valuing each employee's unique contributions and for the representation of women, African-Americans, Latinos, and Asian-Americans among management at rates higher than the US average.

Start here

Ensure that top leadership understands the importance of diversity: Share research on the value of inclusion to build consensus at the organization's highest levels. Then hold top leaders accountable through metrics and transparent reports on diversity in promotion, hiring, and compensation.

Use technology and data to identify problems and measure progress: Analytics can now help in identifying patterns of gender and racial bias, disparities in compensation and rewards, and bias in hiring and promotion. Tools to anonymize resumes and help training managers remove bias should become part of the diversity effort.

Move beyond HR: Consider diversity and inclusion as part of the corporate infrastructure, just like compliance, IT, and security; it must be practiced by everyone and owned by all line leaders. Diversity and inclusion is a business responsibility, not an HR responsibility.

Consider global differences:Geographic diversity is increasingly important as more organizations become global. The specific challenges for diversity and inclusion will likely vary widely from region to region, and employees' interests and concerns in different regions will likely differ as well.

Fast forward

Old models of diversity and inclusion are undergoing change, and this trend is expected to accelerate. As employee demands shift and diversity receives greater attention globally, the private sector's responsibilities will continue to grow. As the large Baby Boomer population ages, the need to broaden the focus on diversity and inclusion to account for the elderly in the workplace will increase. In inclusive organizations, the way people operate will shift, and the everyday language of the business will change.

Deloitte's Human Capital professionals leverage research, analytics, and industry insights to help design and execute the HR, talent, leadership, organization, and change programs that enable business performance through people performance. Visit the Human Capital area of www.deloitte.com to learn more.

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Diversity and inclusion: The reality gap

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Diversity and inclusion has become a CEO-level issue around the world. The digital organization of today, which operates as a network of teams, thrives on empowerment, open dialogue, and inclusive working styles. Leading organizations now see diversity and inclusion as a comprehensive strategy woven into every aspect of the talent life cycle to enhance employee engagement, improve brand, and drive performance.

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Equality diversity and inclusion history

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Equality diversity and inclusion history

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Diversity and inclusion corporate research

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Diversity and inclusion corporate research

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In the past 10 years, hundreds of studies have cropped up showing how important it is to build teams that don't look or think the same way. And executive leadership is taking note - according to the latest research from PwC, 87% of global businesses say diversity and inclusion is an organizational priority.

And yet, there's still a lot of work to do.

Only 37% of the businesses surveyed task their leaders with specific diversity and inclusion goals, and 42% admit that diversity is still a barrier to employee progression within the company.

As more organizations start to consider why and how they should build more diverse and inclusive workplaces, we want to make it easy for individual HR leaders and impassioned employees to support the cause. Here are several important studies that lay out the benefits of increased diversity and inclusion:

D&I for Profitability

Several studies have shown that companies with higher rates of diversity regularly out-perform companies with more homogenous demographics. Here are three that dig into the specifics:

McKinsey's 2015 Why Diversity Matters report on public companies found that those in the top quartile for gender diversity and ethnic and racial diversity in management were respectively 15% and 35% more likely to have returns above the industry mean. The consulting company's 2018 Delivering Through Diversity update reaffirms these statistics at 21% and 33%, respectively.

Credit Suisse's 2012 global analysis Gender Diversity and Corporate Performance found that organizations with at least one female board member yielded higher net income growth and higher return on equity than those without a woman on the board.

Morgan Stanley released research in its 2016 study Putting Gender Diversity to Work: Better Fundamentals, Less Volatility that showed companies with high levels of gender diversity have lower volatility and a better return on equity (ROE) than companies ranked low in diversity

For further reading on how diversity and inclusion impact profitability, consider the following:

[Related: Investing in Diversity: How to Make the Case to Your Boss]

D&I for Productivity

As the business world explores the benefits of diversity and inclusion beyond financial performance, more studies are cropping up about how diversity affects important productivity influencers like decision-making, communication and problem-solving. Read more about diversity for productivity in the following studies:

Enterprise decision platform Cloverpop released the study 2017 Hacking Diversity With Inclusive Decision-Making , which found that inclusive decision-making leads to better business decisions 87% of the time, reaching those decisions twice as fast in half the meeting times.

The Scientific American article "How Diversity Makes Us Smarter" features research from several top universities that show how diversity provokes more thought, makes teams work harder, and delivers a higher quality of work.

A 2016 academic paper from SpringerPlus makes the case that diversity facilitates trust and openness in workgroup communication, enhancing work outcomes by positively impacting job satisfaction, sense of inclusion, workgroup identification and knowledge sharing.

For further reading on how diversity and inclusion impact productivity, consider the following:

[Related: 6 Ways to Increase Productivity By Helping Employees Get Enough Sleep]

D&I for Creativity and Innovation

One of the most common benefits attributed to diverse and inclusive teams is enhanced levels of creativity and innovation. As it turns out,

The 2016 Boston Consulting Group study Innovation Through Diversity found that companies surveyed that had higher levels of gender, geographical or industry diversity also had higher revenue from new products and services. The study also found that innovation jumps once the proportion of female managers within an organization rises above 20%.

In a 2015 survey from Witten/Herdecke University titled Board of Directors' Diversity, Creativity, and Cognitive Conflict , researchers found that the higher the level of diversity of board members' backgrounds and personalities, the higher the degree of creativity and cognitive conflict during the decision-making process

For further reading on how diversity and inclusion impact creativity and innovation, consider the following:

[Related: 10 Tips for Retaining Innovators and Creatives]

While the statistics that make headlines may seem bleak at times, we've come a long way in studying and appreciating the impact of diversity and inclusion on important employee performance outcomes like profitability, productivity and creativity. Be sure to reference the studies listed here to make the case for a more proactive approach to diversity and inclusion within your organization.

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Diversity & Inclusion Research Roundup: Top Studies You Need to Know

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In the past 10 years, hundreds of studies have cropped up showing how important it is to build teams that don't look or think the same way. And executive leadership is taking note - according to the latest research from PwC, 87% of global businesses say diversity and inclusion is an organizational priority.

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Future of Work

More innovative, more profitable ... greater diversity isn't just a moral imperative. Image: REUTERS/Jessica Rinaldi

Executive Chairman, QI Group of Companies

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The Business Case For Diversity is Now Overwhelming. Here's Why

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Research shows that diversity in business fosters innovation, improves the bottom line, and even helps with recruitment.

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Not that long ago, Diversity & Inclusion was viewed as a sort of "icing on the cake" issue - companies knew that having a team dedicated to these issues was a good thing to have, but not totally necessary to the bottom line. Thankfully, that viewpoint has shifted over the past few years, as more and more data is showing that diversity and inclusion is actually correlated to value creation and a company's profitability.

Therefore, companies are realizing (some more quickly than others) that focusing on total societal impact is fundamental to driving long-term financial success. But how do we measure total societal impact? What factors do we take into account, and how do we quantify and measure that data? One approach to tackling this problem has come from Thomson Reuters, who recently released its 2018 list of the Top 100 Most Diverse and Inclusive Organizations Globally.

The team behind the annual D&I list looks at more than 7,000 companies across the globe and ranks them according to how they're doing based on environmental, social and governance data spread across four key pillars: Diversity, Inclusion, People Development and News Controversy. Companies that score the highest across all measures are awarded a spot on the list.

It's not easy to become a leader in Diversity & Inclusion, but it's well-worth trying. Many companies who have invested in D&I practices over the years have seen significant growth and financial gains as a result. Here are four of the top leaders in D&I, as well as an overview of what they've been doing right over the past few years to help them gain this ranking.

Accenture PLC: In 2017 alone, Accenture added 1,800 employees of diverse backgrounds, up from approximately 1,000 in 2016, and increased the number of women in their workforce from 36 to 37%, with a goal of hitting 40% by 2020. The company also hired 750 veterans and military spouses, bringing them halfway to their goal of hiring 5,000 by 2020.

Medtronic PLC: Medtronic has made an effort to develop a series of robust diversity networks and employee resource groups for their employees across the globe. Their networks include the African Descent Network, Asian Descent Network Hispanic Descent Network and the Medtronic Women's Network. They also have 12 Employee Resource Groups (ERGs), which are built to engage employees around shared interests and affinities.

Diageo PLC: In addition to boasting 50% female representation on their board and 40% on their executive committee, Diageo has also set goals of hitting 35% female representation on their senior leadership team by 2020, with a goal of 40% by 2025. They've also launched Plan W, a program that's part of Diageo's 2020 sustainability and responsibility targets which aims to build thriving communities by empowering women. As of 2017, Plan W has empowered over 315,000 women through learning, and indirectly impacted more than 1,700,000 people and is building thriving communities across 17 countries.

Gap Inc: In addition to business resource groups and advisory boards designed to provide opportunities for cross-cultural learning, mentoring and relationship building among employees, they've also launched ASCEND, a program devoted to developing an inclusive, diverse workforce and a pipeline of future leaders. ASCEND is designed to help minority leaders realize their potential and achieve their career aspirations through mentorship, building opportunity and individual capability building.

Although the companies on this list represent corporations with employees in excess of 100,000, Diversity & Inclusion practices can begin to take shape at even the smallest of companies, and it serves business owners well to embed these practices into their operations from day one. Developing a culture of inclusion from day one will help set your business up for success in the long term.

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Four Companies That Are Getting Diversity & Inclusion Right - And How They're Doing It

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It's not easy to become a leader in Diversity & Inclusion, but it's well-worth trying. Here are four of the top leaders in D&I, as well as an overview of what they've been doing right over the past few years to help them gain this ranking.

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Not that long ago, Diversity & Inclusion was viewed as a sort of "icing on the cake" issue - companies knew that having a team dedicated to these issues was a good thing to have, but not totally necessary to the bottom line. Thankfully, that viewpoint has shifted over the past few years, as more and more data is showing that diversity and inclusion is actually correlated to value creation and a company's profitability.

Therefore, companies are realizing (some more quickly than others) that focusing on total societal impact is fundamental to driving long-term financial success. But how do we measure total societal impact? What factors do we take into account, and how do we quantify and measure that data? One approach to tackling this problem has come from Thomson Reuters, who recently released its 2018 list of the Top 100 Most Diverse and Inclusive Organizations Globally.

The team behind the annual D&I list looks at more than 7,000 companies across the globe and ranks them according to how they're doing based on environmental, social and governance data spread across four key pillars: Diversity, Inclusion, People Development and News Controversy. Companies that score the highest across all measures are awarded a spot on the list.

It's not easy to become a leader in Diversity & Inclusion, but it's well-worth trying. Many companies who have invested in D&I practices over the years have seen significant growth and financial gains as a result. Here are four of the top leaders in D&I, as well as an overview of what they've been doing right over the past few years to help them gain this ranking.

Accenture PLC: In 2017 alone, Accenture added 1,800 employees of diverse backgrounds, up from approximately 1,000 in 2016, and increased the number of women in their workforce from 36 to 37%, with a goal of hitting 40% by 2020. The company also hired 750 veterans and military spouses, bringing them halfway to their goal of hiring 5,000 by 2020.

Medtronic PLC: Medtronic has made an effort to develop a series of robust diversity networks and employee resource groups for their employees across the globe. Their networks include the African Descent Network, Asian Descent Network Hispanic Descent Network and the Medtronic Women's Network. They also have 12 Employee Resource Groups (ERGs), which are built to engage employees around shared interests and affinities.

Diageo PLC: In addition to boasting 50% female representation on their board and 40% on their executive committee, Diageo has also set goals of hitting 35% female representation on their senior leadership team by 2020, with a goal of 40% by 2025. They've also launched Plan W, a program that's part of Diageo's 2020 sustainability and responsibility targets which aims to build thriving communities by empowering women. As of 2017, Plan W has empowered over 315,000 women through learning, and indirectly impacted more than 1,700,000 people and is building thriving communities across 17 countries.

Gap Inc: In addition to business resource groups and advisory boards designed to provide opportunities for cross-cultural learning, mentoring and relationship building among employees, they've also launched ASCEND, a program devoted to developing an inclusive, diverse workforce and a pipeline of future leaders. ASCEND is designed to help minority leaders realize their potential and achieve their career aspirations through mentorship, building opportunity and individual capability building.

Although the companies on this list represent corporations with employees in excess of 100,000, Diversity & Inclusion practices can begin to take shape at even the smallest of companies, and it serves business owners well to embed these practices into their operations from day one. Developing a culture of inclusion from day one will help set your business up for success in the long term.

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Four Companies That Are Getting Diversity & Inclusion Right - And How They're Doing It

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It's not easy to become a leader in Diversity & Inclusion, but it's well-worth trying. Here are four of the top leaders in D&I, as well as an overview of what they've been doing right over the past few years to help them gain this ranking.

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- Correlational research
- Historical research

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Executive Summary

Research from BCG found that around three quarters of employees in underrepresented groups-women, racial and ethnic minorities, and LGBTQ employees-do not feel they've personally benefited from their companies' diversity and inclusion programs. A survey of over 16,000 employees in 14 countries around the world found that members of majority groups continue to underestimate the obstacles - particularly the pervasive, day-to-day bias - that diverse employees face. Half of all diverse employees stated that they see bias as part of their day-to-day work experience. Half said that they don't believe their companies have the right mechanisms in place to ensure that major decisions (such as who receives promotions and stretch assignments) are free from bias.

It's no surprise then that when employees ranked the efficacy of diversity interventions, there was consensus about getting back to basics and rooting out bias. The top-ranked interventions included robust, well-crafted, and consistently followed antidiscrimination policies; effective training to mitigate biases and increase cultural competency; and removing bias from evaluation and promotion decisions. These should be priorities for any organization that wants to improve diversity. The survey also revealed a set of "hidden gems" for each diverse group - policies they thought were effective, but were undervalued by employees in the majority group.

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We know that diversity matters. In addition to being the right thing to strive for, having a diverse workforce helps companies acquire and retain the best talent, build employee engagement, increase innovation, and improve business performance. Yet corporate diversity still lags, especially at the top levels, which continue to be dominated by white, heterosexual men.

It's not that effort isn't being made. As a senior partner at the Boston Consulting Group and head of our firm's diversity efforts, I know companies are investing in diversity programs. In fact, our research in 14 countries shows that 96-98% of large companies (above 1,000 employees) have such programs.

And yet, despite this investment, we've found that around three quarters of employees in underrepresented groups - women, racial and ethnic minorities, and LGBTQ employees - do not feel they've personally benefited from their companies' diversity and inclusion programs.

So what should companies do to make real progress?

We surveyed over 16,000 employees in 14 countries around the world to see what obstacles they face, which diversity and inclusion interventions are used at their workplace, and which they find most effective for women, racial or ethnic minorities (this data is from the U.S., UK, and Brazil only), and LGBTQ employees.

We found that members of majority groups continue to underestimate the obstacles - particularly the pervasive, day-to-day bias - that diverse employees face. Half of all diverse employees stated that they see bias as part of their day-to-day work experience. Half said that they don't believe their companies have the right mechanisms in place to ensure that major decisions (such as who receives promotions and stretch assignments) are free from bias. By contrast, white heterosexual males, who tend to dominate the leadership ranks, were 13 percentage points more likely to say that the day-to-day experience and major decisions are free of bias.

It's no surprise then that when employees ranked the efficacy of diversity interventions, there was consensus about getting back to basics and rooting out bias. The top-ranked interventions included robust, well-crafted, and consistently followed antidiscrimination policies; effective training to mitigate biases and increase cultural competency; and removing bias from evaluation and promotion decisions. These should be priorities for any organization that wants to improve diversity.

In addition, we identified a set of "hidden gems" for each diverse group - policies they thought were effective, but were undervalued by employees in the majority group. Since most corporate leaders fall in this latter category, this may mean that corporations are prioritizing the wrong initiatives.

For female employees, "hidden gem" interventions are those that provide a viable path forward and give them the tools to balance career and family responsibilities. They wanted to see visible role models in the leadership team (this was ranked 5 th in terms of efficacy by women, but 17 th by men). And they wanted practical tools that would help them progress regardless of their family status: parental leave (ranked 3 rd by women but 10 th by men), appropriate health care coverage (6 th vs 11 th), and childcare assistance, such as backup or onsite childcare (11 th vs 22 nd). The importance of flexibility programs for both women and men (ranked 2 nd by women and 5 th by men) is also worth noting. Yet in spite of its relevance, flexibility is only available in a third of workplaces according to our survey.

Across the employee lifecycle, most male leaders saw recruitment as the biggest obstacle to racial and ethnic diversity. But for employees of color, who have first-hand experience of the daily biases that keep them from rising through the ranks, the top obstacle they reported was advancement. Their "hidden gem" interventions included eliminating bias from the day-to-day, such as in how teams are staffed or how meeting attendance is decided (ranked 8 th in terms of efficacy by employees of color but 14 th by white men). Formal sponsorship programs (which has been shown to boost representation for underrepresented groups) and individual roadmaps for advancement were also valued highly by employees of color (ranked 14 th vs 28 th), who may lack informal networks among the senior ranks of their companies.

Our survey found that approximately half of LGBTQ employees are still closeted at work, so making efforts to create an inclusive day-to-day experience is key for this group. They ranked it 5 th in terms of efficacy, on average, vs a rank of 15 th by heterosexual men. LGBTQ employees also placed greater importance on structural interventions to accommodate a broader gender orientation than simply male and female (such as gender-neutral bathrooms, or non-binary gender choices in surveys and HR data), ranking this 7 th vs heterosexual men's ranking of 24 th.

For leaders who want to make a difference but aren't sure how, the measures above are a good starting point. But to make them stick, companies need to apply the same methodology as they would to any other business priority.

Our work with corporations looking to boost their diversity and inclusion points to three organizational aspects of implementation. The success of each of these initiatives requires leadership commitment, a tailored approach based on the unique needs of the organization, and metrics and tracking for gauging progress.

Leadership commitment: Superficial words and platitudes are insufficient - as evidenced by the 75% of employees we surveyed who see diversity programs in place but feel no effect. Leaders must build a clear case for change and set concrete goals, prioritized in concert with their diverse employees.

A tailored approach: The interventions we've discussed must be tailored to each company, using its specific culture and starting point to determine the best course of action. Employing both top-down approaches (for example, corporate-level training, programs to track promotion and pay across diversity cohorts) and bottom-up approaches (for example, measures to help managers think about who is invited to and runs important meetings) in concert typically leads to the best outcomes. Critically, companies should involve affected employees - minority and majority, frontline employees and managers - in the design and assessment of the programs to ensure they will work and take hold.

Metrics: Last, top-performing companies measure progress over time and use key performance indicators (KPIs) to refine their approach and to hold leaders accountable for results.

There's still a lot of room for progress in achieving corporate diversity and inclusion. But the good news is that there are many measures that diverse employees already find effective in promoting a more diverse workplace. Now is the time to put them into place.

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Survey: What Diversity and Inclusion Policies Do Employees Actually Want?

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Executive Summary Research from BCG found that around three quarters of employees in underrepresented groups-women, racial and ethnic minorities, and LGBTQ employees-do not feel they've personally benefited from their companies' diversity and inclusion programs. A survey of over 16,000 employees in 14 countries around the world found that members of majority groups continue to underestimate the obstacles - particularly the pervasive, day-to-day bias - that diverse employees face.