Certainly by now, most CEOs understand that building a diverse and inclusive workforce is a business imperative and not just a compliance issue. Several studies have proven that diverse companies are stronger, healthier, and better performers financially.
Research from McKinsey & Company, for instance, showed that companies ranking in its survey’s top quartile for racial and ethnic diversity were 35 percent more likely to report financial returns higher than their industry median. Companies in the top quartile for gender diversity were 15 percent more likely to do so.
Further, McKinsey found that companies in the bottom quartile, both for gender, ethnic, and racial diversity, were less likely to achieve above-average financial returns. As McKinsey noted, these companies lagged instead of led.
CEOs who don’t want to lag have made workforce diversity and inclusion a priority. However, particularly for older CEOs, the second component of their initiative often does lag. Diversity without inclusion ultimately is a half model that does not address today’s dynamic workforce.
Inclusion happens when companies hire employees from diverse cultures, backgrounds, and viewpoints, in addition to leveraging those differences to create an environment where everyone is seen, heard, and valued. Inclusion encourages contribution, fosters creativity and collaboration, and strengthens workplace bonds. Employees who feel included are more productive, which is better for business.
In a time of worldwide division on fault lines of race, gender, and identity, CEOs have a responsibility to support inclusive work environments. Research also has shown that CEOs should extend that responsibility to shareholders as well.
According to Deloitte, inclusive workplaces are twice as likely to meet or exceed financial targets, six times more likely to be innovative, and eight times more likely to achieve better outcomes.
Inclusive workplaces drive recruiting and retention. Coqual (formerly the Center for Talent Innovation) reports that companies fostering higher rates of belonging had better employee engagement and loyalty and were more likely to be recommended as a good place to work.
Deloitte wrote this straightforward formula: Diversity + inclusion = better business outcomes. “Simply put, diversity without inclusion is worth less than when the two are combined,” the Deloitte authors noted.
Clearly, CEOs are incentivized to assemble diverse enterprises in which employees feel respected, valued, safe, and empowered. Some CEOs, however, might feel uncertain or overwhelmed about being inclusive. Since a strong culture starts at the top, here are some ways CEOS can build more inclusive work environments.
Embed Inclusive Initiatives Into the Company
Many companies have hired Chief Diversity Officers and created leadership councils to administer diversity initiatives in recruiting and hiring. Once onboard, those employees must feel part of a company’s culture — those who don’t often look elsewhere.
According to Weber Shandwick and KRC Research, U.S. companies lost more than $6.7 billion in February 2019 alone because of employee resignations due to dissatisfaction with their company’s diversity and inclusion efforts.
Companies can build more inclusive workplaces by promoting pay equity, defining diversity and inclusion goals, and offering training and resources for employees to address unconscious biases. They can engage with outside organizations (such as LGTBQ+ associations and Historically Black Colleges and Universities) to recruit and develop talent. And they should ensure that the onboarding process makes clear that the company is a welcome space for all.
Another way to foster inclusivity is to acknowledge cultural holidays and celebrations. Many companies have made Juneteenth, which recognizes the emancipation of those formerly enslaved in the U.S., a holiday. Companies also can recognize particular months, such as Pride Month or Disability Employment Awareness Month, through events and encouraging statements.
Further, CEOs can tie parts of their compensation (and that of other executives) to meeting stated diversity and inclusion goals. That turns leadership into stakeholders in building inclusive environments.
Offer a Broader Range of Inclusive Benefits
Health insurance for same-sex couples, extended parental leave, and flexible schedules are helping to promote more inclusive workplaces. Yet employers can do more.
Consider Christmas. It’s a standard holiday that businesses offer to employees, but not every employee celebrates it. As an alternative, consider offering employees floating holidays to celebrate their culture or religious background.
According to Goldman Sachs, people of color are less likely to participate in retirement plans and are more likely to support extended family members financially. For all employees, benefit plans that include automatic enrollment in 401(k) plans, student-loan assistance programs, and access to financial wellness education are helpful benefits.
Paid caregiver leave is another benefit to consider since it recognizes the demands placed on those who care for aging parents and family members. And with the COVID-19 pandemic causing workplace stress to skyrocket, employers should be offering more access to mental health coverage and resources.
Listen, Learn, and Share
As I’ve written before, leaders should welcome employee voices. The Walt Disney Company demonstrated this by establishing a fifth key of operation based on employee (or “cast member”) feedback. Disney added Inclusion to its four keys: Safety, Courtesy, Show, and Efficiency. For example, theme-park employees will have “greater flexibility” regarding gender-inclusive hairstyles, jewelry, and visible tattoos while working in theme parks.
“Inclusion is essential to our culture and leads us forward as we continue to realize our rich legacy of engaging storytelling, exceptional service, and Disney magic,” wrote Josh D’Amaro, chair of Disney Parks, Experiences and Products.
Listening can lead to ideas and action, but some employees might feel isolated and uncertain about sharing their voices. Employee networks and resource groups can help bridge this gap between employees and leadership.
Employees can often guide on improving efficiency and creating innovation, and a network can help lift that collective voice. Meanwhile, resource groups empower employees to share thoughts and concerns about issues in and out of the workplace.
People of color, LGBTQ+ employees, new parents, employees with disabilities, and veterans represent just some of the resource groups available at many companies. But they should be open to all and recognized appropriately by companies to promote allyship and advocacy. And allyship comes in many forms. At MasterCard, for instance, an employee resource group of young professionals (the “YoPros”) is teaching older employees how to use social media.
For all this to work, CEOs must share their goals and progress made toward them. More companies have established marketing and communication efforts to be more transparent about their diversity and inclusion goals. These should include internal reporting channels (an intranet dashboard, for instance) and public-facing measures that reflect how companies are turning words into action.
CEOs have many reasons to cultivate more inclusive workplaces and many measures to employ. This is a mission all leaders should compel themselves to take.
“If you feel like you belong, you’re more likely to feel engaged at work and want to stay at your company,” said Pooja Jain-Link, a researcher of Coqual’s ‘The Power of Belonging’ project. “If you have a lower sense of belonging, you’re more likely to feel stalled in your career. If you and your colleagues feel you all belong, work is better and more enjoyable. You’re ready to get up in the morning and connect with your colleagues, not just punch the clock and sit in the corner rolling your eyes at company leaders.”