Best Practices to Increase Engagement, Productivity, Retention, and Innovation | Excerpts from Diversity, Inc.

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It’s been over a year since noted journalist and scholar Pamela Newkirk published Diversity, Inc., an essential account of the promises many companies made to strengthen diversity, equity and inclusion, the billions spent on programs and initiatives over five decades, and the huge gap that still remains in fulfilling those promises. This acclaimed book, which Time Magazine declared a “must-read”, is a deep study of how the most popular responses to calls for justice and equity at work have not only failed to make progress, but even led to declining numbers of Black leaders in Corporate America, a continued racial wealth gap and pay gap, and persistent discrimination in the workplace. Her book also highlights the rare examples of successful progress and the lessons from social science about what actually works to move the needle on workplace equality. 

In the wake of George Floyd’s murder last summer, companies again, as they have many times in the past, made statements and pledges to do more. While some of the responses are more symbolic, others have greater potential for meaningful impact – from shifts in corporate giving and community support to belatedly addressing longstanding criticisms of images, names and branding, recognizing the need to invest in changing systems and practices, and making concrete commitments to hiring benchmarks or other specific and potentially meaningful policy changes. But as Professor Newkirk shows, Corporate America’s track record on racial justice is not promising. Just as longstanding approaches to sexual harassment were more symbolic compliance than meaningful intervention, the world of diversity consulting is a story of as much as $8 billion a year spent with little to show for it.  So what can companies do that can actually make a difference?

In the new paperback edition of Diversity Inc., Professor Newkirk included a series of best practices provided by Working IDEAL — ways that companies can make good on their promises by applying best practices based on social science research and our experience with organizations large and small across multiple industries. 

Here are a few of those recommended practices that Working IDEAL recommends to our clients to hire and retain great people and increase engagement, productivity, retention, and innovation.  Want the whole list?  Get the book!

Expand Recruitment Through Intentional Outreach. For example, work to build relationships with programs in your field, industry and community to access talent, and then tailor recruitment plans to identify the best sources of diverse candidates for specific jobs or groups of jobs. 

Identify and Remove Barriers in Hiring, starting with how you identify and evaluate skills and criteria. Education and specialized training requirements can serve as unnecessary barriers to increasing diversity in key entry-level and higher-level positions, especially when there are equivalent or alternative skills and experience that may add value, or the potential to invest in on-the-job training.

Institute a “Rooney Rule” diverse slate policy but also take steps to ensure its success. This means defining diverse slates to require consideration of multiple women and people of color, and providing the training and tools for hiring managers and holding them accountable to follow the policy. 

Make information on pay practices transparent and accessible to employees.  Instead of guessing about what candidates will accept, or trying to underpay those with less market power or information, affirmatively provide starting salary information to job candidates.  Ensure employees can freely share information about pay — in most cases it’s legally required.

Measure your results like any business process, auditing your hiring, pay and promotion practices — and your culture and developing metrics to track them going forward. You can use anonymous tools like surveys, and internal discussions across functions and levels, to identify issues and source responses. Track attrition and understand why some groups of employees are more likely to leave. And make sure to regularly share all that information with leaders and decision-makers and use it to hold them accountable. 

Don’t ignore problem behavior. Have safe and accessible options to report, address, and resolve workplace problems, and make sure you act quickly to address toxic or harmful workplace culture at any level of the organization. 

Give people in your organization the power to make change.  If you have named an internal DEI leader or officer, make sure they have the information, access, and power needed to successfully carry out their responsibilities. If you are using an internal committee, resource group or affinity group to support and engage employees, provide the resources and processes that empower them to deliver meaningful value and support to leadership.

Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Contact us to learn more about the services we offer.

Author: Pam Coukos

How the SEC Can Harness Shareholder Power to Support Racial and Gender Equity Through a DEI Index

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On its very first day, the Biden-Harris Administration made racial justice and equity, and principles of nondiscrimination and equal opportunity, top priorities on its agenda.  The first of the 17 Day One Executive Orders committed to advancing racial equity and support for underserved communities across the federal government.  The EO requires a review of federal programs and regulatory processes to incorporate equity principles – while rescinding the Trump Administration’s anti-DEI Executive Order. It also includes improvements to data collection, which is a key practice of accountability. Other actions include:

The Administration could bolster this by leveraging the SEC’s  power to regulate publicly traded companies. A Diversity, Inclusion and Equity Index could harness shareholder power to ensure our publicly-traded companies make good on their their commitments to equality. A standard set of disclosures about hiring, representation, leadership and pay would empower customers and investors to make informed choices about where to spend their money. Workers could use this information to find jobs at places that offer true opportunity for all. Companies would compete to show their progress and we could all have a clearer sense of who is living up to their stated values. Competition would be the engine behind genuine, long overdue progress.

All large publicly traded companies should disclose standard information on key measures of DEI performance.

First, demonstrate Board Accountability for DEI, by sharing Board representation, whether the Board uses key best practices to foster diverse membership, and whether the Board provides effective oversight of People and Culture programs to address workplace harassment and promote inclusive culture.

Next, provide data on Leadership Diversity, including how the top 200 highest compensated individuals identify (by gender, race, ethnicity, and if available, by disability and sexual orientation).

Third, disclose Workforce Diversity and Pay Equity metrics, including companywide EEO-1 representation data and standard pay equity benchmarks similar to those already reported in the UK, and corporate performance on its own diversity metrics over time. 

Lastly, share progress on Inclusive Workplace Practices, including whether the company has developed and implemented key best practices to address workplace harassment and promote inclusive culture.

We already recommended that the SEC impose this type of requirement, but there are plenty of other ways this could come about. Indexes could make this a listing requirement. Institutional investors could use it as a factor for their portfolio decisions and federal, state and local agencies could use it as a benchmark in awarding contracts. And companies could voluntarily commit to these disclosures as a way to demonstrate leadership. 

The biggest winners will be the companies themselves. The research we shared with the SEC supports the view that diverse teams can provide key benefits, like increasing productivity and innovation. Strengthening DEI can lead to stronger and more sustainable financial performance.

Indeed, that is exactly the reason that this information is material to shareholders. The traditional view of shareholder disclosure is only aimed at information relevant to short-term shareholder gain. But the modern view includes any matters material to other stakeholder long term interests including investing in employees and fostering diversity, inclusion, dignity and respect, an approach championed by the Business Roundtable.

Despite the benefits, too many companies have not made DEI enough of a priority. Reviewing a typical corporate annual report or 10-K will show frequent touting of corporate physical assets, new product lines, mergers and acquisitions, but see very few, if any, words touting new investments in people and culture, or new efforts to develop, retain and strengthen the workforce. Most annual reports to shareholders virtually ignore the companies’ most important asset: its workforce.

We learned that to create change in a company, someone has to own and drive the change, which means the Board should have a specific subcommittee focused on oversight of People and Culture programs, with regular reporting from management on goals and measures. Through increased transparency of key measures of leadership and workforce DEI, we can use the market to move stalled progress on glass ceilings and wage gaps for people of color as well as for women. 

We want to motivate companies to invest in diversity and inclusion, people and culture, growth and retention. It’s good business that can yield an enormous competitive advantage and allow companies to make good on their commitments to equity.

Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Contact us to learn more about the services we offer.

Authors: Pam Coukos and Cyrus Mehri