Company boards should steer organizations towards inclusivity.
Diversity is only half the challenge. Assembling voices from myriad backgrounds – diversity – is a futile endeavor unless those voices are heard. Encouraging those voices – and amplifying them – is the crux of inclusivity. And it is the key to advancing towards equity in organizations: a journey that was stymied by the pandemic.
The disproportionate impact of Covid-19 on women, and on black and Asian ethnic groups, has pushed diversity again to the fore. While diverse teams are a starting point, organizations must commit to deeper inclusion to avoid repeating historical mistakes.
For diversity to have a positive impact on organizations and on society as a whole, leaders must activate and engage the people within their teams. They must be inclusive of the multiple viewpoints, perspectives and styles that are contained in diverse teams. Inclusive leadership makes diversity matter. Without inclusion, diversity is window dressing.
The top is a good place to start – and the diversity of company boards is improving. In 2010, women comprised less than 16% of Fortune 500 company boards, according to Deloitte report The inclusion imperative for boards. By 2018, that had risen to nearly 23%. The share held by people of color, meanwhile, increased from about 13% to more than 16%. Performance varies across the world. My native South Africa is a leader among emerging markets: its top 100 listed companies boast boards that are 29% female, and it is the only developing country to exceed the G20 average of 20%.
As the Deloitte report notes, “it is becoming increasingly evident that focusing on diversity without also focusing on inclusion is not a winning strategy.” Yet that is exactly what most organizations persist in doing. When Deloitte reviewed board charters for major companies, it discovered that more than half mentioned demographic composition – diversity. Only a small minority referenced inclusive organizational cultures, practices and strategies, the foundations of inclusion.
This window dressing – diversity without inclusivity – is bad for society and undermines competitiveness. By contrast, inclusion correlates strongly with success. Organizations generate up to 30% higher revenue per employee, are more profitable than their competitors, and are eight times more likely to achieve positive business outcomes when operating under an inclusive culture and inclusive talent practices, Deloitte found. Boards set the standard and define the pattern for the wider organization. When it compared low- and high-performing boards, Deloitte found that high-performing boards were more likely to exhibit gender balance and inclusive behaviors.
Boards can take five key steps to embed inclusion in their organizations.
The crucial first step is to help the organization define what it means by inclusion. Without a clear understanding of the goal, reaching it will be unlikely – or impossible. Board members must engage with managers and leaders in the organization to create a definition of inclusion that everybody understands and buys into. This should be the foundation of a clear corporate vision that filters out through the entire organization.
Boards have a critical role to play in ensuring the reality of the organization aligns with its inclusivity targets. How does business strategy contribute to, or militate against, inclusion? Boards should provide oversight and input that helps direct strategy towards inclusivity aims. Boards should examine their own decision-making processes too, ensuring they enhance inclusivity both in the boardroom and throughout the organization.
Who are the organization’s inclusivity champions? Boards can hold leaders and managers accountable for hiring people who exhibit inclusive traits and can drive the organization towards its inclusion goals. Inclusive leaders build openness, trust, adapt their behavior to work with other individuals and cultures, and create environments of psychological safety where differences can be explored productively. The recruitment of inclusive leaders is essential to closing the gap between policy and practice.
Inclusivity can and must be measured. Monitoring and reporting on progress is the key to embedding inclusivity in organizations. Boston Consulting Group recommends examining retention, advancement and representation levels to ensure diverse teams are being empowered, promoted and involved in all parts of the business – not only in departments that have typically been more progressive on diversity and inclusion, such as HR and marketing. Boards should oversee monitoring at an organizational level, while requesting that managers and leaders collect and analyse data in their own departments.
External perceptions matter. Boards should ask management to assess how the company is perceived by customers, suppliers and the wider public. Whether or not it is an inclusive organization, how is it perceived from outside? Boards should request that C-suite and departmental leaders frame the organization through an inclusive lens, both internally and externally. Boards should seek external views
and advise the management team on building an inclusive brand.
Be an ally
At the heart of inclusive leadership is allyship. Leaders and employees enjoy a sense of inclusion by personalizing and valuing uniqueness, developing social connectedness and treating people and groups fairly – based on their unique characteristics, rather than on stereotypes. Inclusion is more difficult to achieve than diversity, which can be fostered purely by focusing on recruitment demographics.
Boards must be an ally to their own organization. They can be the lynchpin in delivering inclusivity by driving it forward from the top, finding the right tone, and setting the course towards an inclusive future.
Sharmla Chetty is president of global markets at Duke Corporate Education.