Diversity Management and Inclusion — 3 steps to a successful D&I strategy

Diversity and inclusion are topics that every HR professional is confronted with sooner or later. Unfortunately, these topics are often only discussed publicly on certain days, such as Diversity Day or Pride Day. After all, diversity management should be always a top priority in every company. Why is diversity so important for companies? And what makes a successful diversity management strategy?

Diversity Management — definition

While diversity management in the US refers primarily to discrimination based on skin color, it is mainly associated with gender inequality in Germany.
Diversity management aims to integrate the diversity of employees into the corporate structure and make the best possible use of their skills. In this context, aspects such as character traits, professional competencies, or cultural influences are used for the company’s success. The promotion of the respective competencies is one of the main tasks of diversity management. However, this existing diversity should also be recognized and appreciated within the company. Therefore, a diversity and inclusion strategy should always include the entire workforce.

Why diversity is important

Logitech CEO Bracken Darrell publicly announced in 2020 that he would make diversity and inclusion two of his company’s primary internal topics. But even small companies are increasingly focusing on diversity management — not last because diversity and inclusion are often associated with the shortage of skilled labor in many countries.

What are the benefits of diversity for companies?

Diverse employees with different backgrounds and experiences add significant value to companies. Apart from the most important aspect, everyone should be given a chance at a job, regardless of background, gender, skin color, or other diversity attributes. Here are four of the many benefits at a glance:

Innovation
In 2019, a study conducted by the Boston Consulting Group and the Technical University of Munich revealed that diverse companies are more innovative. Among other things, the study examined the characteristics of gender, nationality, age, and industry in 1600 companies from eight different countries. In her TedTalk on diversity, Rocio Lorenzo elaborates on the study’s interesting findings.

Profitability
According to McKinsey, diverse companies are more profitable. The research found that companies in the top quartile of gender diversity in their leadership team were 21% more likely to have above-average profitability.

Competitive advantage
There are more women in leadership roles than in employee roles on the leadership teams of successful companies. Companies that were in the top quartile of gender diversity on their leadership teams were 21% more likely to have higher EBIT margins, according to a McKinsey study. The link between ethnic and cultural diversity and better profitability was also significant at the board level. The study identified that companies with the most ethnically/culturally diverse boards worldwide were 43% more likely to have higher profits.

Employee retention and satisfaction
According to Michael Page, diversity is essential for employee retention: For 68% of employees, diversity is critical to their retention. In addition, diversity increases productivity as well as employees’ sense of belonging. The diversity factor is increasingly important in the workplace, especially for young professionals. In order to retain young talent in the future, diversity management should therefore be an integral part of every HR strategy.

Inclusion and diversity — where is the connection?

The goal of inclusion is to make all employees feel they belong to the company. The different levels of diversity mentioned are not important here: Every employee can identify with the company values and does not feel excluded because of their identity. Therefore, inclusion is a crucial part of diversity management. After all, hiring diverse individuals is not the end of the story.

Inclusion versus integration

With integration, a person is added to an existing system and must fit in accordingly. Inclusion goes a step further by adapting the system so that everyone feels comfortable in it. This prevents the exclusion of all those who do not feel comfortable in the existing system. Accordingly, this must not be disregarded, especially concerning corporate values.

Successful inclusion within companies

According to Tedx Speaker and Inclusion and Diversity Lead Thais Compoint, there are two very simple steps anyone can take to promote inclusion and diversity:

1. Look beyond first impressions: Within a few milliseconds, we form an opinion about another person based on their appearance. Although this has been helpful in human evolutionary history for spotting enemies, we should try to break this habit. Overlooking first impressions means giving the other person a real chance to get to know them and prove themselves.
2. Network with people who are different from you: We tend to surround ourselves with like-minded people. At first, this seems like a no-brainer. It gives us a sense of security and belonging. To interact with people who are different from you means to live inclusion. This, in turn, fosters a sense of belonging and also innovation in companies.

Building a diversity and inclusion strategy

Building a strategy for inclusion is a major challenge for some companies. How can you integrate it into your existing corporate strategy? And how can you implement it in a hybrid work environment?
According to McKinsey, diversity management can be successfully integrated into corporate strategy through the following four steps:

Define I&D priorities based on what drives the growth strategy

1. Internally research which aspects of I&D act as performance drivers for specific KPI’s such as productivity, customer retention, risk management, or time to market. These emerge from understanding how I&D is linked to specific value drivers such as customer insight, innovation, or decision making.
2. Combine this detailed, data- and analytics-driven understanding with the pipeline.
3. Now use the data to determine the combination of diversity attributes that should be the focus of the I&D strategy

Create I&D initiatives

1. The identified key diversity characteristics are now used by the human resources department to design I&D initiatives
2. In the next step, these can be prioritized and planned using the previous analysis
3. Talent management policies and processes are adapted: Eliminate bias in hiring and promotion processes, promote pay equity, and introduce comprehensive sponsorship programs for high potential talent. Thus, management builds capabilities to support the retention and promotion of specific, diverse talents

Geographic alignment

1. Although the overall alignment of the I&D strategy is essential, large companies should make geographic adjustments
2. Different regulatory frameworks and starting points make this adjustment necessary in many cases. These must be determined regionally, and the I&D strategy adapted accordingly.

Important: However, the previously defined overall I&D strategy must not be disregarded here.

Inclusion in a remote work environment

The inclusion of new employees in a remote work environment is a challenge for many companies. Especially in the onboarding phase, new colleagues need to get to know the team, the company values, and feel the culture.
Digital tools and regular team activities are essential!
Here is a list of the Mystery Minds team’s favorite activities from the home office:

• To get to know each other better in a small group: Ice breaker questions
• To get to know the company and different business units: Virtual coffee break with colleagues you don’t know yet
• For informal fun moments in casual check-in meetings: Skibbl or gartic phone
• Guessing games to strengthen team cohesion: Online Escape Rooms
• Coordinate better with colleagues: Spaceteam
• Get to know your colleagues’ tasks virtually: Virtual jobshadowing
• Spending informal time with colleagues after work? Here we can recommend a virtual wine tasting!

Diversity and inclusion — a dynamic task

However, there is more to open and diverse company culture than defining a strategy. According to Rocio Lorenz, the number of women with university degrees has increased rapidly over the past 20 years. But this has not been linear with the number of women in leadership positions. To make a difference, therefore, companies need to set specific goals. SAP, for example, has a target of filling 30% of all management positions with women by 2022. The target of 25% in 2017 has already been successfully met.

When will you start to set your goal?

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Originally published at https://www.mysteryminds.com on August 18, 2021.