Today many CEO's recognise that effectively managing diversity is imperative for longer-term success. It is a strategy for remaining competitive in the face of changing demographics and a narrowing talent pool, rapid globalisation and unparalleled demand for constant and rapid change. Despite this, a close look at organisations globally reveals that diversity programs are taking a long-time to have an impact. There are still very few women in the managerial ranks and there tends to be a bias towards youth cultures within leading organisations. Few companies have integrated disabled people into the workforce and management teams and boards do not reflect ethnic diversity. There are, however, companies that are managing some aspects of diversity well, and are starting to make inroads in this area. We recently reviewed some of their practices and found seven key success factors for managing diversity effectively.
SEVEN SUCCESS FACTORS FOR MANAGING DIVERSITY
1. A clear articulation of the business case for diversity
A distinguishing feature of companies that have been effective in implementing diversity programs, is that they are able to articulate the clear benefits associated with having a diverse and inclusive culture. Beyond having a vague notion that it is the right thing to do, they understand that diversity can drive enhanced competitiveness through better understanding of, and access to, diverse markets. They understand the benefits of increased productivity flowing from increased morale, job satisfaction and decreased turnover, and the fact that these things are not just driven by pay and conditions but that an inclusive culture can be a key motivator for staff. They value the benefit of enhanced creativity, innovation and problem-solving that comes from diverse perspectives. They also value access to a wider talent-pool and the benefits of retention across a broad array of skills and knowledge. In addition, they see the value of a diverse culture in enhancing a company's adaptiveness and change-readiness. They seek an enhanced ability to build global, or at a minimum, regional relationships. In addition, they see the obvious benefits of a reduction in vulnerability to potential lawsuits. Having clarity on the business impacts of diversity is important in order to engage time-poor management. It also enables the identification of targets and measurable impacts, all key to building support and momentum for a diversity program.
2. A clear understanding about the current situation
Companies who are strong in managing diversity are prepared to hold a mirror to themselves and to understand fully the current situation, not just in terms of data and statistics but also in terms of mindsets and behaviours. Having decided to embark on a diversity program, Eastman Kodak set-up an external diversity panel to conduct an outsider review of the current situation. They wanted to understand not only how hiring policies could redress imbalances, but also the cultural impediments to retaining and developing a diverse workforce. Indeed, many companies “don't know what they don't know”, when it comes to creating an inclusive environment. This means that they can potentially invest too much energy and time into initiatives that are likely to offer lower unstainable returns on their investment.
3. Diversity is championed from the top
It is no surprise that successful diversity programs depend upon visible support from the Chief Executive and Senior Leadership Team. Almost ten years ago Lou Gerstner identified diversity as a key initiative for IBM globally. He publicly spoke about the importance of amplifying differences to seize business opportunities. He established eight task forces representing various minority groups, allocating executive sponsors from his own team and insisting on clear deliverables within specified timeframes for each of the task forces and then personally reviewing progress on these deliverables. A number of companies have set-up Diversity Councils, which typically include the CEO and other senior leaders. Indeed, successfully managing diversity requires fundamental change in most organisations, which can only be achieved through stewardship by the leadership team.
4. Diversity leadership is a stand-alone function at a senior level
Companies who are committed to managing diversity effectively support this by putting in place a senior level executive responsible for the function. This person will often report through to the senior HR professional and will be responsible for managing a sizeable team and budget. Larger global organisations like HP and IBM have had this role for some time. Increasingly Australian-based companies such as Coles Myer Limited, National Australia Bank Limited and Australia & New Zealand Bank Limited are appointing people to these positions. Effective diversity leaders possess a breadth of skills that include an ability to articulate bottom-line impact to the satisfaction of the CFO, while also being able to talk about multicultural marketing opportunities to the Marketing Director. They are strong in influencing skills with an ability to implement pilot programs and to build momentum and support for these.
5. Programs are focused on cultural change rather than just redressing imbalances
Managing diversity is not just about hiring to quotas and costly “touchy feely” programs. Recruiting a diverse workforce is only the first step in the process. Companies that are effective in managing diversity work to ensure that minorities can be successful in the organisation. This requires that diversity programs are not seen as ancillary to the business but rather integral to it. It also requires a change in mindset and behaviours throughout the organisation.
6. Management processes, measurable goals and incentive systems underpin the change
A number of companies have tied diversity objectives to performance pay. For example, the Hyatt Hotel Group ties approximately 15% of the bonus potential to diversity goals. Companies that have been successful in managing diversity have translated it into a core competency used to assess the performance of management.
7. Wide employee engagement and involvement is achieved
Diversity programs that only address the most senior levels within an organisation result in short lived and superficial improvements. In order to create a sustainable change, diversity programs needs to cascade down through the organisation. This requires broad employee engagement and involvement. At IBM, in addition to establishing minority specific task forces, the wider population was asked for their ideas and input in relation to what would make the company a more inclusive culture. These ideas were then channelled to each of the relevant task forces for actioning. It is not sufficient to test the effectiveness of diversity programs just at the board and senior executive level, rather it is at the “grass roots” level where a good deal of the challenge and the potential upside resides.
The seven success factors for managing diversity are not complex concepts, nevertheless, they are difficult to implement and require a concerted and focused effort. It would appear that leading organisations globally and within Australia are beginning to take on this challenge but there is a long way to go.
Sources:
1. The Harvard Business Review on Managing Diversity
2. The Harvard Business Review – “Diversity as Strategy”, by David A Thomas, September 2004
3. Article “Doing Diversity” Chief Executive Group L.P April 2005
4. Business Case for Productive Diversity and its Relationships to Corporate Sustainability - Paper prepared for the Department of Immigration and Multicultural and Indigenous Affairs, March 2002
THE FOCUS ONLINE - Leading trends and expertise in the field of management and leadership
The Focus online, features a series of bi-annual interviews
conducted by Egon Zehnder International, offering top executives
a palette of compelling information examining important developments
in the field of management policy, corporate strategy and executive
search. Read the advice of leading experts. Register for rapid
access to premium, value-added content including interviews
with Paul Anderson, Jack Welch and Michael Dell.
Click
here to register now
diversity
diverse organisation
managing diversity
diversity management
creating diversity
encouraging diversity
long-term success
success factors
implementing diversity programs
diverse culture
value of diversity
innovation
creativity
adaptiveness
change-readiness
situation understanding
ceo leadership
championing diversity
hr
human resources
skills base
cultural change
management processes
employee engagement
