Diversity and inclusion in the workplace (D&I) is a hot topic and one that is being brought to people’s attention by recent public unrest.  In the workplace, leaders have long since recognised that the need to have a diverse and inclusive workforce which is representative of their customers, shareholders, suppliers, and employees is beneficial to the organisation. However, many still struggle to recruit and retain the best diverse talent, and this is detrimental to their long-term business objectives.

What is Diversity and Inclusion?

Typically, when one thinks about diversity and inclusion, one tends to think about diversity as referring to the traits and characteristics that make people unique. Whereas, inclusion refers to the behaviours and social norms that ensure people feel welcome. However, many people use the phrase “diversity and inclusion” interchangeably and, as such, confusion remains on the subject. The following quote is from the February 2017 Harvard Business Review article Diversity Doesn’t Stick Without Inclusion by Laura Sherbin and Ripa Rashid

“Part of the problem is that “diversity” and “inclusion” are so often lumped together that they’re assumed to be the same thing. But that’s just not the case. In the context of the workplace, diversity equals representation. Without inclusion, however, the crucial connections that attract diverse talent, encourage their participation, foster innovation, and lead to business growth won’t happen.”

If we accept the above argument then we can see that diversity and inclusion are very different things. However, to achieve one you must have the other or you risk undermining your efforts to recruit and retain the best talent.

Generational Differences

A report by Deloitte found that there are differences in how generations perceive diversity. Deloitte found that:

“millennials are more likely to define diversity as pertaining to the individual mix of unique experiences, identities, ideas, and opinions. Whereas, older participants, on the other hand, frame diversity in terms of demographics, equal opportunity, and representation of identifiable demographic characteristics.”

What this tells us is that while all generations view diversity as important, they don’t especially view it in the same way. As such, organisations need to be very clear as to what both diversity and inclusion means to the business and they must be able to communicate that in a way that all generations within the workforce can understand.

Millennials view diversity in the workplace as the combining of different backgrounds, experiences, and perspectives, and they believe taking advantage of these differences is what leads to innovation.

Diversity and financial performance

While there has always been an argument that irrespective of any other considerations diversity and inclusion are important because on a human level they are morally right. After all, how can an organisation exist if it is not reflective of society? However, while we can debate the moral obligations of diversity and inclusion forever more, it is important to remember the old saying “money talks”.

In their 2015 study “Why Diversity Matters” McKinsey found that companies which ranked in the top quartile for gender diversity in their executive leadership team were 15 % more likely to experience above-average profitability than companies in the fourth quartile. In their 2018 report “Delivering Through Diversity” this rose to 21% and in their latest report 2020 “Diversity wins: How inclusion matters” the number rose again to 25%.

What is also not really a surprise is that when McKinsey looked at the impact of ethnic and cultural diversity, they found the companies in the top quartile outperformed those in the fourth quartile by 36% in profitability (up from 33% in 2017 and 35 percent in 2014).

Hiring diverse talent

With this in mind, one would think that organisations would be accelerating their hiring of diverse talent into executive leadership roles. However, McKinsey’s data shows that more than a third of the organisations they studied had no women at all on their executive leadership teams. Charlotte Grieve writing in the Sydney Morning Herald on September 17 2020 highlighted that in the past 12 months only one woman was promoted to the role of chief executive out of 25 appointments at Australia’s largest companies.

So why are organisations finding it so difficult to take significant steps forward to increase their diversity at executive leadership level when the data shows that diversity increases financial performance?

Unconscious Bias

Bias is an automatic process that if not recognised can lead to unconscious discrimination. The old saying that “people like people like them”, is true in society as a whole, and as humans we naturally have an inclination, to favour an individual or group of individuals who are similar to ourselves. Bias alone is not detrimental to building an inclusive and supportive business environment as everybody has them. However, hiring manager’s biases if unrecognised can lead to discrimination. As such, hiring managers need to ensure that they are conscious of bias and ensure that they don’t discriminate against those from diverse and under-represented backgrounds. Ultimately the more we expose ourselves to ideas, images and words that challenge negative stereotypes, the less discriminatory we will be.

Every industry’s record on diversity and inclusion is under scrutiny, not only from the talent it needs to attract and retain, but also from consumers, investors and, increasingly, governments and regulators. As diversity and inclusion become critical in influencing how both organisations and sectors are perceived by these key stakeholders, our view at Hoffman Reed is that it is important for diversity and inclusion to be recognised as a business issue and a potential reputational risk, rather than just an HR issue or a “nice to have”.

Supporting our clients

At Hoffmann Reed we support diversity and inclusion in numerous ways. We have adopted the Davies Committee Enhanced Voluntary Code of Conduct for Executive Search firms. We comply fully with the Information Commissioners’ employment practices code, providing candidates with a range of applications in braille, video and audio where required. Most importantly we talk to our clients about how to attract diverse talent when recruiting leaders and provide challenge where necessary.

Recently we were asked by a female chair to recruit a new board member. She was conscious that the balance of the board wasn’t right (80% male, 0% BAME) and that we should work to identify candidates from diverse backgrounds. She then proceeded to give us a list of technical requirements that the individual must possess and industry experience. We pointed out that we can happily find somebody who meets the criteria, however, it would have been highly likely that the successful candidate would be a middle aged white man as there was only one female that we knew of in the UK who could have fulfilled the technical and experience criteria. When we asked why the chair felt these skills were necessary the reply was “well that’s Joe’s [not real name] background and we want to replace his skill set”.

We hear things like this all too often. Hiring managers want to recruit diverse talent but instinctively demonstrate unconscious bias. In these instances, we try and challenge our clients’ thinking. In this example, the chair was shocked to discover she was unconsciously limiting the hiring process. By evaluating the existing boards skills and experience, we were able to advise on how to attract the widest talent pool. By focussing on competencies rather than technical criteria, we were able to attract a highly diverse talent pool resulting in a hire that not only complemented the existing board’s skills and experience but brought much needed diversity.

How Hoffmann Reed Can Help?

At Hoffmann Reed we are experts in finding individuals who will bringing diversity and technical expertise to your organisation. Please feel free to reach out to me on 0203 500 0352 or use the contact form on this website if you would like to discuss further how we can help you.

About the Author

Paul Battye is CEO of Hoffmann Reed a global leadership advisory business providing talent intelligence, talent acquisition, talent assessment and talent development services.

Paul has 19 years’ experience in executive search having led C-suite, Board and Senior Management searches for both private and public sector organisations across the globe. He advises clients on how to attract, retain and develop the best senior leadership talent with diversity and inclusion at the core of all our service offerings.