This year, citizens across the US have united to demand heightened diversity and inclusion within companies, from hiring processes all the way to leadership positions. Numerous organizations responded to these calls, claiming that Diversity and Inclusion (D&I) would be a top priority for them in the coming years, pledging to increase representation among Black, Hispanic, LGBTQ+, and other minority groups.
The business case for diversity is clear. A BCG study found that companies with above-average diversity scores had 19% higher innovation revenue compared to companies with below-average diversity scores. A Gartner report predicts that through 2022, 75% of organizations with diverse decision-making teams will exceed their financial targets. The same report also finds that gender-inclusive teams outperform their homogeneous counterparts by 50%, on average. Therefore, it’s not a surprise that large organizations are prioritizing D&I now – not only has there been a large movement from the public, but executives are seeing the financial incentives attached to diversity.
The State of Diversity and Inclusion
First, some background. In 2018, Black people held only 3.3% of all executive or senior leadership roles in the US. Over ⅓ of S&P 500 companies did not have a Black board member in 2019. By June 2020, there were just four Black CEOs in Fortune 500 companies.
Those are shockingly low numbers, and this is just looking at statistics for Black Americans. Hispanic men and women hold 3.8% and 1.5% of executive roles respectively, and are underrepresented in professional jobs in every US state when compared to the labor force. While LGBTQ+ women make up 5.1% of the US population, they comprise only 1.6% of managers and even smaller shares of senior levels.
All of this data points to a clear need for increased diversity in companies, especially at higher levels. However, D&I doesn’t only apply to leadership positions – it has to impact every level of the organization, even down to the new hires.
A 2020 PwC report that surveyed 3,000 employees in 40 countries and 25 industries found that 76% of respondents said diversity is a value or priority in their organization. Despite that, 33% of respondents viewed D&I as a barrier to progression at their organization, and at even higher levels depending on industry. Nearly half of all respondents from the healthcare industry and 43% in technology stated that D&I was a barrier to progress.
Out of five industries PwC surveyed (healthcare, consumer markets, technology, industrial products and services, and finance), healthcare was the furthest behind when it came to D&I. Only 10% of healthcare organizations had a D&I officer in the c-suite, less than the national average of 14%. Additionally, 40% had not established affinity groups, one of the key – and fairly simple – steps to improve inclusion in large organizations. The survey also found that less than a quarter of healthcare companies embedded inclusive behaviors in jobs.
Consumer markets fare much better in D&I. 65% of respondents believed that diversity is not a barrier to progression, and 24% of organizations had a D&I officer in the c-suite – 10% more than the national average. However, 30% of companies did not have a D&I leader in place, and more than ⅔ did not task corporate leaders with specific D&I goals.
The survey data shows that overall, companies with a D&I leader in place to implement programs had more employees who viewed diversity in their organization as a positive trait. 39% of North American businesses surveyed didn’t even have a leader in place to successfully implement a D&I program. In order for industries to improve their D&I, they need to establish D&I leaders in place to change the mindset of their employees.
A Few Ways to Improve Diversity and Foster Inclusion
There are plenty of solutions when it comes to improving D&I in companies. As mentioned earlier, it is crucial for organizations to appoint a specific D&I leader, especially one in the c-suite, who can effectively implement D&I policies and programs across the board. A D&I leader not only provides much needed structural support at higher levels for increased diversity, but also serves as an alternate avenue for employees to address bias concerns and promote ideas related to D&I.
The Harvard Business Review suggests collecting data and comparing them to goals, akin to how companies do the same to maximize profits. Demographic data collection can lead to plotting trend lines and quantitatively understanding change over time, increasing accountability and transparency around diversity. The data needs to be accurately collected and analyzed – either internally or with the help of an external organization – and achievements can be made available to employees, executives, and key stakeholders. Applying quantifiable metrics to qualitative goals helps to ground those objectives and relay strengths and weaknesses in a simple manner. For example, a company whose main goal is to improve diversity among new recruits can utilize past trends to see which departments are more homogeneous than others, what groups are being underrepresented, and which areas of company diversity need to be addressed.
Finally, affinity groups can help foster inclusion in large companies. More than 1/3 of LGBTQ+, minority, and women respondents in a McKinsey survey reported feeling slightly or very uncomfortable during identity-related discussions at work, and experienced more microaggressions than others. While normalizing various identities in the workplace will require a cultural shift, affinity groups are quick ways to provide safe spaces for employees to discuss their identities without the pressure of doing so in front of employees who don’t share those identities.
There is no doubt that overall, corporations in the US are looking to diversify their staff. However, certain industries are lagging behind and need to quickly find ways to improve diversity and inclusion, be it through appointing specific leaders or setting systems in place to cultivate a more inclusive environment. By celebrating inclusivity and strengthening the foundation of a diverse workplace, companies can attract top talent across the spectrum and potentially reach beyond their financial goals.
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