Diversity in the workplace: A strategic guide to diversity and inclusion best practices
Diversity in the workplace: A strategic guide to diversity and inclusion best practices
For years, companies have made public declarations against racism, bias, and gender inequity. After recent widespread global protests against racial injustice and inequality, employees and customers are prompting companies not just to have more conversations about diversity, equity, and inclusion (DEI), but to make promises and deliver results.
Will DEI finally become a movement, or remain just a moment?
Why is diversity and inclusion important? The business case for gender, ethnic, and cultural diversity is more persuasive than ever when it comes to profitability, collaboration, and innovation.
But what is diversity? For real impact, companies need to embrace a diversity definition that tackles more than one type of discrimination. True diversity and inclusion in the workplace addresses institutional racism, xenophobia, gender bias, ageism, homophobia, and other forms of marginalization.
While some companies have made progress, DEI is lacking in several corporate areas, including leadership, the pay gap, and talent retention. Many industries repeatedly face disappointing results instead of a truly representative workforce in gender, sexual orientation, and race.
For example, of Fortune 500 CEOs in 2020, three are Black men and none are Black women.
Meanwhile, 84% of corporate directors say companies should do more to promote racial and gender disparity in the workplace, but only 34% say it’s very important to have racial diversity on their board, according to the 2020 PWC Annual Corporate Directors Survey.
Clearly, leaders and companies need to do better. While companies make public statements and announce initiatives to support diversity in the workplace, many critique corporate diversity efforts as performative.
So where should organizations begin? The effort to address problems and even reveal them can feel overwhelming, even for companies with deep resources.
Though there is no single most effective panacea to support diversity and inclusion, studies point to some best practices backed up by evidence. Throughout the employee life cycle, companies can best explore how to promote diversity and inclusion in the workplace.
Prioritize accountability and transparency
Workplace inequities are widespread across the world, in small and large companies, and no workforce is immune. Some global estimates indicate that women are paid 77 cents for every dollar earned by men. For women of color, immigrant women, and mothers, the gap increases. There are underrepresented populations in every industry and level of organizations.
To start to tackle these challenges, there are two organizational initiatives at the core of many successful DEI programs: accountability and transparency.
One widely cited research analysis at a large private company tested whether accountability and transparency reduced the pay gap by gender, race, and nationality. Through basic accountability, decision-makers became aware that they would be held accountable for their choices. And with transparency, employees and leaders gained visibility into who was making decisions and shared the results of the company’s performance-reward system.
Companies like Intel and SAP invite accountability and transparency by publishing their progress and specific goals, including increasing the number of women in technical roles to 40% and doubling the numbers of women and underrepresented minorities in senior roles by 2030. SAP’s diversity and inclusion data show 27% of SAP leadership are women, and women comprise 34% of its workforce. The company invited accountability by announcing its aim to double its representation of Black and African American employees in the U.S. within three years.
There are a number of steps companies can take to improve accountability and transparency. Here are some ways companies have implemented these into their DEI strategies:
- Centralize pay data and make it accessible in a way that pay inequity becomes visible across genders, races, and identities and can be changed.
- Enable tools that encourage employees to indicate their interests, achievements, and development goals so they self-select into effective learning opportunities and communities.
Diversity and inclusion training isn’t enough: Leaders need commitment and action
These days, diversity and inclusion training is a de facto educational component of compliance or onboarding requirements. But when it comes to changing attitudes and behaviors, there’s mixed evidence around the effectiveness of this type of mandatory instruction.
Companies need to do more than just rely on one aspect of training – or talk about diversity once a year. In fact, mandatory diversity training in the workplace could actually have adverse effects, including activating bias or sparking backlash. One HBR study of more than 800 firms found companies get better results when they “ease up on control tactics” and invest in other initiatives, like targeted college recruitment, task forces, and mentoring.
Mentoring can engage managers and chip away at their biases, according to HBR’s researchers.
“In teaching their protégés the ropes and sponsoring them for key training and assignments, mentors help give their charges the breaks they need to develop and advance,” as the study puts it. “The mentors then come to believe that their protégés merit these opportunities – whether they’re white men, women, or minorities.”
Here are some other ways mentorship and development can foster DEI in an organization and diversify the ranks of future leadership:
- Analytics tools for intelligent mentoring can ensure mentors and mentees are matched based on desired skills, capabilities, and experiences instead of demographic similarity.
- AI-powered referrals can guide employees to the possibilities of what’s next in their careers and retain top talent.
Meanwhile, companies should also take concrete steps to make sure their internal DEI strategies match their external strategies.
Assessing incentives, disincentives, and decision-making
It’s time for companies to stop supporting businesses that don’t drive change. For example, advertisers like SAP, Pfizer, Chobani, and other companies pulled out their ad dollars from Facebook to pressure the company to take more measures to prevent the spread of hate speech and misinformation. SAP said it will not run paid advertisements on Facebook and Instagram “until the company signals a significant, action-driven commitment to combating the spread of hate speech and racism on its platforms.”
Instead, companies can seek out partners and suppliers who are championing diversity and inclusion. Ryan Williams, the CEO of real estate fintech company Cadre, described how a Black-owned bank helped him start his business when others refused. Investing in Black-owned banks, he explains, could halt racial economic disparities.
There is no doubt that bias and inequity in the workplace have deep-seated causes outside the corporate world. Just one example: Municipalities and nations may be abetting injustice with policies. For example, the World Bank research estimates that 70% of countries place legal restrictions on women’s employment.
Companies often struggle to address DEI as an intersectional issue that affects ethnicities, gender, culture, and abilities. To address an issue intersectionally means understanding that bias is not always the result of one identity trait, like race, but can come from an intersection of several at once, like race, gender identity, and sexual orientation. This is not always easy to understand, much less take action on. It takes commitment and action from the top – and there’s no finish line. The work is constant.
The actions of Hershey’s, for example, show how commitment can lead to tangible results. The company has led a number of initiatives that show resolve on the part of its leaders. For example, it has eight employee-led business resource groups (BRGs), including Abilities First, African American, Asian, GenH (Generations), Latino, Prism (LGBTQ), Veteran’s, and Women’s, to attract and retain employees as part of its diversity and inclusion strategy.
And the company made sure to add members to its executive diversity council who represent the most critical functions in the organization. The group now extends beyond its executive committee leaders and is committed to continuing the advancement of Hershey’s diversity and inclusion strategy. Today, Hershey is one of the few Fortune 500 companies with a female chief executive officer and a female chief financial officer. And 45% of its board of directors are women.
To focus company leaders on investing in diversity, equity, and inclusion efforts and impact, a small number of large companies tie executive compensation to DEI results, including Starbucks. The company is tying its executive pay to diversity targets, including aiming to have 30% of U.S. corporate employees and 40% of U.S. retail employees be people of color by 2025. Whether efforts like these fall under the umbrella of token attempts or quota filling depends on the level of transparency and accountability an organization requires.
Support for DEI from the executive team is only one part of the puzzle, however. From middle management to entry-level hires, organizations can take steps to recognize and stop bias in its tracks.
Other actions that may support equal pay include:
- Basing pay on company averages, not former salaries, and linking pay to performance
- Calculating pay increases using absolute values instead of percentages, which can exacerbate previous bias
Measure diversity, equity, and inclusion impact through the employee experience
Employers should prioritize investments in diversity and inclusion initiatives as a competitive advantage, and there is good evidence to suggest that action is being taken.
The number of people with the job title “head of diversity” more than doubled over the last five years, according to data from LinkedIn. People with the “director of diversity” title grew 75% and “chief diversity officer” increased 68%.
How can leaders then encourage continuous dialogue about diversity and inclusion throughout the organization? Through the employee experience.
To maintain dialogue and measure the impact of a company’s DEI strategy, companies need to understand the workforce and whether employees are reporting a truly inclusive employee experience.
As senior HR value advisor, Aaron Fung said, “You can recruit everyone you want in the organization. But if people don’t stay, you basically have a revolving door for diversity and inclusion.” This leads to the “leaky bucket” problem.
Fung explained, “You don’t retain the best talent because they don’t feel like they are included or welcomed to the organization.”
You can recruit everyone you want in the organization. But if people don’t stay, you basically have a revolving door for diversity and inclusion.
Aaron Fung, senior HR value advisor
Here are some ways companies can assess the impact of their diversity and inclusion initiatives and the employee experience:
- Capture employee sentiment toward diversity and inclusion and check in regularly.
- Review the data to understand employee demographics at all levels of the company and identify root causes of challenges.
- Create measurable targets and ensure that your actions are aligned to the company’s overall diversity and inclusion strategy and objectives and what was highlighted in survey results.
- Open lines of communication via regular leadership roundtables and other feedback opportunities so employees can share their experiences and contribute ideas.
Use technology to identify and improve processes to support diversity in the workplace
Improving DEI is a complex and nuanced topic. One positive development is that the diversity of qualified candidates, such as college graduates, has improved. The STEM workforce, for example, has overall become more racially and ethnically diverse over the past 25 years, according to Pew Research Center. But Black and Hispanic workers continue to be underrepresented in that field.
The problem often lies in company processes that leave bias unchecked and exacerbate inequities. To start, a diversity and inclusion strategy should aim to address critical challenges that lie in the employee life cycle processes. Here, conscious or unconscious bias can plague systems and policies in recruitment, onboarding, development, retention, and succession.
Technology is increasingly playing a major role in providing companies with a more complete picture of their operational and experience diversity, equity, and inclusion data. AI technology, for example, can both reveal problems and support solutions. Through the novel application of AI, companies can now hire, retain, and upskill a diverse workforce with algorithms that do not rely on sex, age, pedigree, or other factors that can trigger bias.
AI systems are only as unbiased as the data that developers and data scientists use to create them. A process as simple as data collection can be riddled with bias without an inclusive approach. Those platforms that include data sourced in the broadest way are the most successful at minimizing the chance of bias.
Here are some other ways that technology can support DEI efforts in company processes:
- Highlight unconscious bias in workforce decisions by applying analytics to ensure the use of inclusive messages and images in job descriptions and on career sites.
- Leverage AI to source, calibrate, and hire candidates who are most likely to succeed in a job based on their skills and potential.
- Use data science and predictive capabilities to develop an unbiased, performance-based profile of potential hires.
Beginning and concluding with culture
Interventions for DEI in a company without an inclusive culture will likely remain ineffective. The “leaky bucket” problem will persist no matter the number of corporate statements that encourage diversity.
Practical steps and solutions can enable better representation and real results. Human experience management (HXM) enables a business to move beyond bias, to recruit and retain diverse talent, and even highlight existing bias in decision-making to support an inclusive culture. Companies can access data and tools to improve each part of the employee life cycle, from a welcoming onboarding experience that assigns “new-hire buddies” to helping employees meet their future potential.
Companies can use HXM to create an inclusive culture in many ways, including:
- Workforce data/record keeping
- Organization structure
- Who applies, is hired, is recognized, and is rewarded
- How people are developed and managed
From equitable pay to a diverse leadership, designing an inclusive culture for everyone starts with intelligent data from the existing workforce. Companies can use data and technology to understand if diversity is concentrated within one function of an organization, creating silos within silos. With a focus on the employee experience, leaders can foster an inclusive experience throughout the employee life cycle.
While many companies will require expertise in these nuanced issues, hiring a chief diversity officer and enabling technology won’t solve these challenges alone. But with a comprehensive strategy and concerted investment in DEI, companies can achieve major progress to create a lasting movement.
SAP Insights Newsletter
Gain key insights by subscribing to our newsletter.