The Business Value of Diversity and Inclusion

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Author: Sue Lam | Source: HCI | Published: May 12, 2016

Most businesses intuitively know that diversity matters and by now, the importance of diversity has been quantified. For example, a McKinsey study found that gender diverse organizations are 15% more likely to financially outperform those in the bottom quartile whereas ethnically diverse companies are 35% more likely to do so. But what is considered diversity? Is it one’s ethnicity, gender, sexual preference, age, veteran status, or their way of thinking? Or is it a combination of factors?

Traditionally, companies examine the impact of individual diversity attributes on performance, but often diversity is more complicated than singular measurements. Shell recently conducted a project headed by Esther Bongenaar and Linda van Leeuwen in our HR Analytics team to examine the impact of a group of diversity attributes. Using data that was available to them, Bongenaar and van Leeuwen created a diversity metric that included gender, age, nationality, position and Shell tenure, and functional background. They then examined the relationship between this metric and inclusion and are currently looking at business performance as well.

Interestingly, the results showed that having diverse teams alone is not enough to drive business value. For example, when teams are diverse but do not have strong leaders, inclusion is lower; a 10% increase in diversity resulted in a 5% decrease in inclusion. The results indicate that diverse teams drive business performance under certain conditions, namely:

  • When inclusive behaviors are shown
  • When there is strong team leadership
  • When there is balanced diversity with no strong sub-groups (i.e., individuals do not group themselves based on diversity sub-groups such as age, gender, ethnicity, etc. in their teams)

The results of the project highlight the importance of strong leadership and inclusive behaviors for harnessing the positive effects of diversity for enhanced business results. Building on this information, below are 3 ways to help drive inclusive behaviors in your organization.

  1. Become aware of your biases. Some people may be well aware of the biases they hold, but some may not or they may hold unconscious biases. Project Implicit offers free implicit association tests (IATs) that assess thoughts and feelings outside of conscious awareness and control. There are a variety of tests examining bias on age, gender, race, sexuality, and more.
  2. Mitigate unconscious biases. In order to raise inclusion in the workplace, alleviating our own biases is critical, particularly the ones that we are not aware of. Google’s  re:Work provides free information and guides on how to make the unconscious conscious so that you can bolster more objective decision-making and create an inclusive work environment.
  3. Work on your communication style. Are you communicating in a way that invites collaboration in your team meetings or are you shutting down other thoughts and opinions? Simple tweaks in your communication style such as asking open-ended questions and inviting and accepting feedback can make your team members feel more inclined to share, thus strengthening feelings of inclusion.

Working on one or more of these areas will enable you and your team to move towards a more inclusive and effective work environment. In turn, your organization can realize the business benefits of having a diverse workforce.

 

Sue Lam is an Advisor in Assessment Solutions at Shell where she supports colleagues in HR, recruitment, learning, leadership development, talent and competence assurance in the delivery of their priorities.