Over the course of the last year or so, several states took initiatives to promote gender diversity among businesses. Specifically, states like California, Massachusetts, Washington, and New Jersey passed state laws that included diversity mandates. Some required specific percentages of women on corporate boards in order to encourage inclusive leadership. Others did the same regarding race, ethnicity and sexual orientation. However, none of these have resulted in significant advances when it comes to promoting authentic diversity and inclusion. And now that such laws have been deemed unconstitutional in California, their merit is even more suspect.
When it comes to diversity and inclusion, there’s little doubt these should be over-encompassing goals for businesses. The advantages of diversity and inclusion in performance outcomes has been proven time and time again. (Read more about the importance of diversity in business in this Bold story.) But diversity mandates aren’t the way to go when trying to create inclusive leadership and diverse environments. In fact, even diversity training programs are often too limited in their effect. If businesses really want to reap the benefits of diversity and inclusion, a cultural shift is required. And without question, this can only be realized when effective leadership commits itself to positive changes throughout the organization.
“We take a holistic view of diversity that looks beyond usual measurements. A view that includes the varied perspectives of our employees as well as app developers, suppliers, and anyone who aspires to a future in tech. Because we know new ideas come from diverse ways of seeing things.” – Apple Inc., Diversity and Inclusion Statement
Defining Real Diversity and Inclusivity for Businesses
There many reasons businesses should be pursuing diversity and inclusion within their organizations well beyond their commitment to social responsibility. But first, companies must appreciate that diversity does not guarantee inclusion by any means. They must also realize both augment the effects of the other when used in combination. In terms of diversity, demographics is only a starting point, which is often what diversity mandates attempt to achieve. But unless this is expanded into diversity thinking, the benefits are lost. At the same time, companies may have tremendous diversity both demographically and in ideas. But without inclusive leadership, here again the advantages cannot be well realized.
When businesses are looking to get ahead, they should be seeking cognitive diversity rather specific quotas of employee types. Cognitive diversity allows a broad exploration of the evidence from different perspectives. From this, diverse options, risks, processes, and outcomes can be considered. At the same time, inclusion means much more than simply asking employees to participate. Inclusivity requires a company culture that promote fairness and respect as well as a sense of value and belonging. It also demands safe and open environments where people are empowered and encouraged to grow. Diversity mandates fall short of these definitions as do programs that lack inclusive leadership.
“Companies that embrace diversity and inclusion in all aspects of their business statistically outperform their peers.” – Josh Bersin, President and Founder, Bersin & Associates
Impacts of Diversity and Inclusivity
There are notably good intentions behind diversity mandates and diversity training programs. In order to achieve cognitive diversity, it’s naturally important to have a degree of demographic diversity as well. At the same time, both diversity and inclusion enhance business performance. When cognitive diversity exists, creativity and innovation increase by 20% on average. Likewise, the ability to identify and address specific risks also increases around 30%. This is why over two-thirds of leading corporations acknowledge diversity as important to success. But none of these advantages are guaranteed by demographic diversity alone.
Inclusivity also offers tremendous advantages for businesses. When corporate cultures promote inclusive and active participation, metrics routinely show notable improvements. Inclusive companies are twice as likely to exceed financial targets and three times like to be high-performing companies. Levels of innovation increase 6-fold among inclusive businesses resulting in an 8-fold increase in business outcomes. In many instances, companies implement diversity and inclusion training programs to help achieve these metrics. But without the right corporate culture and inclusion leadership, these efforts usually fail to achieve their mission.
“Good leadership requires you to surround yourself with people of diverse perspectives who can disagree with you without fear of retaliation.” – Doris Kearns Goodwin, Presidential historian and Pulitzer Prize-winning, New York Times #1 best-selling author
Inclusive Leadership is the Secret Sauce
The most important feature among organizations enjoying real diversity and inclusion isn’t the presence of diversity mandates. It’s also not necessarily whether or not they’ve employed diversity training programs. Educating employees, managers and leaders about diversity and inclusion are certainly important. But the real magic occurs when these organizations have inclusion leadership. When such leadership exists, feelings of inclusion among employees increase by 70% on average. Team performance also increases 17% while decision-making quality receives 120% boost. Ultimately, it’s the presence of inclusion leadership that determines whether a true diversity and inclusion culture exists.
When it comes to inclusion leadership, several qualities can be appreciated. Rather than seeking equity alone among organizational members, these leaders take a more systems approach. Rather than meeting demographic quotas, they strive to remove structure barriers preventing cognitive diversity. They also use data to analyze whether or not inclusivity is being realized. And they invite transparency, open communication, and positive reinforcements to make others feel that they are valued and belong. In essence, inclusion leaders are committed to creating a culture that optimizes the diversity present. This is the strategy that businesses should be adopting in their pursuit of authentic diversity and inclusion.
Moving From Compliance to Integration
Laws like Equal Employment Opportunity statues and diversity mandates only seek to encourage compliance among organizations. Similarly, diversity training programs educate individuals about the importance of diversity and inclusion. But neither of these alone achieve what businesses need to excel in today’s marketplace. Demographic diversity will never guarantee cognitive diversity. And inclusion will never be maximized without effective leadership and a positive organizational culture. This is why diversity mandates and training alone should never be the end-all for any business. Instead, companies must move beyond compliance to an integrated system that promotes diversity and inclusion throughout the organization. These are the strategies along with inclusion leadership that should be the priority for business today.