Diversity and Inclusion: What Separates the Best from the Rest

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In brief

Some companies invest in diversity and inclusion (D&I) but fail to gain traction with it. Others invest in D&I and make it an integral part of their culture. What makes the difference? To learn more, we recently explored what distinguishes organizations that have successfully capitalized on their D&I efforts from others. We found that organizations with advanced D&I strategies have more structure and accountability than those with less developed efforts. We also found that leaders at advanced organizations are nearly twice as likely to understand the crucial difference between simply hiring diverse talent and creating an inclusive environment to develop and retain that talent.

Elements from each stage—namely, a focus on compliance and talent—are essential to success, yet the most advanced organizations manage to move beyond any single end goal and make diversity and inclusion an ongoing enterprise-wide mission. They tackle D&I from all angles, investing in inclusive leaders and cultures as well as diverse talent and equitable policies and practices.

In this paper, we highlight:

MethodologyRussell Reynolds Associates recently asked nearly 850 executives around the world about their perceptions and experiences of diversity and inclusion at work through its 2019 D&I Pulse survey. As part of the survey, we asked executives to classify their organization’s efforts into one of the three maturity categories:

Approximately 21 percent considered their firms early stage, 30 percent chose intermediate and 15 percent considered themselves advanced. Another 30 percent said their firms had no D&I strategy, and about 4 percent were not sure if their organization had one or not.

INTERMEDIATED&I is treated as a talent issue and focuses on diverse employees

EARLY STAGED&I is treated primarily as a compliance issue and D&I strategy is largely reactive

ADVANCEDD&I is treated as a business and organizational issue and engages all employees

The payoff of ge�ing D&I right and the risks of

ge�ing it wrong

The specific D&I investments and

approaches that separate advanced companies

from average ones

What companies at any point in their D&I journey can do today to advance

A key reason to study these organizations: Executives at organizations with advanced D&I strategies are about 30 percent more likely than others to feel highly loyal, innovative and set up for top performance.

Another reason to study them: Our research shows that taking a reactive, check-the-box approach to D&I leads to worse outcomes than doing nothing at all.

The benefits of getting D&I right—and the risks of getting it wrong

What defines the best when it comes to D&I? The answer goes beyond simple measures. Companies advanced in their D&I journeys may have more years of experience with D&I than others and invest more time and resources, but these factors alone are not enough. Instead, being the best means getting the most out of all talent, including diverse employees, via a holistic approach that resounds in every facet of the business.

Specifically, advanced companies are better at hiring, retaining and developing diverse talent and creating inclusive leaders and cultures, as well as implementing unbiased talent management processes. Beyond that, they also see better business outcomes on a broad range of metrics.

Our research shows that taking a reactive, check-the-box approach to D&I can be worse than doing nothing at all. Executives at organizations with early stage D&I strategies report more negative workplace sentiment than those at organizations with no clear D&I strategy in every key category except one.

In our conversations with clients, we find that counterproductive D&I strategies are often the result of leaders rushing to solve a particular problem, such as high turnover rates among diverse talent, without fully probing its root causes. Taking the one-size-fits-all approach risks further disenfranchising employees. Instead, the best companies gather information about employee sentiment before building a strategy to address it.

CRITICAL ELEMENTS OF AN INCLUSIVE ORGANIZATION

Hiring, retaining and developing diverse talent

Fostering inclusive cultures

Creating unbiased talent management processes

Developing inclusive leaders

ADVANCED D&I ORGANIZATIONS EXPERIENCE BETTER BUSINESS OUTCOMES THAN OTHER ORGANIZATIONS

Difference in business outcomes for advanced D&I organizations vs. the average organization

Employeeloyalty

Innovation Performance Customer insight

Sense of belonging

+35% +30% +33%+30% +19%

ORGANIZATIONS THAT TAKE A REACTIVE APPROACH TO D&I OFTEN DO MORE HARM THAN THOSE TAKING NO ACTION

+8% -22% -19%-11% -12%

Difference in business outcomes for organizations with no D&I strategy vs. those that take a reactive approach to D&I

Employeeloyalty

Innovation Performance Customer insight

Sense of belonging

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What advanced D&I organizations do differently

Improving diversity and inclusion is not a frictionless endeavor. All companies, regardless of the stage of their D&I journey, reported similar challenges in our 2019 D&I Pulse survey of nearly 850 global executives, with cultural constraints and leadership accountability leading the way.

Organizations with advanced D&I strategies know where to focus effortsWhile these barriers affect all organizations, advanced companies are far more likely than others to prioritize the thorniest areas of culture and leadership behaviors. Specifically, they differentiate themselves in five key categories:

Organizational culture is resistant to change

No leadership accountability

Business strategy does not emphasize

D&I

No chief diversity and inclusion officer

Lack of leadership commitment to D&I

TOP FIVE BARRIERS TO D&I STRATEGY FOR ALL ORGANIZATIONS1 2 3 4 5

2 INCLUSIVE CULTURE

+73%

+95%

Advanced D&I organizations are more likely to set diversity goals and hold leaders accountable for reaching them.

My organization holds itself accountable to...

Diversity goals for employee base

Diversity goals for senior leadership

ADVANCED VS.

AVERAGE

1 DIVERSITY

+76%

+79%

Advanced organizations are more likely to quantify their level of inclusion and hold leaders accountable for fostering it.

My organization uses surveys to measure inclusive culture

Leaders understand the difference between diversity and inclusion

ADVANCED VS.

AVERAGE

+111%Leaders are held accountable for fostering an inclusive culture

49% 85%

42% 82%

38% 67%

47% 84%

38% 80%

AVERAGE ADVANCED

5

5 BUSINESS-DRIVEN STRATEGY

+157%

+161%

Advanced organizations are more likely to invest in the right governance structures to support their D&I mandate.

My organization...

Has a chief diversity and inclusion officer

Has a diversity commi�ee or council

ADVANCED VS.

AVERAGE

4 EQUITABLE PRACTICES AND PROCESSES

+122%

+94%

Advanced organizations are more likely to invest in D&I as a means to be�er business performance rather than as an end in itself or a compliance-only exercise. Why does your organization commit to D&I?

Higher innovation

Be�er able to compete globally

ADVANCED VS.

AVERAGE

+89%Stronger financial performance

14% 36%

18% 47%

27% 60%

32% 62%

19% 36%

AVERAGE ADVANCED

+85%Deeper understanding of customers 27% 50%

-5%To avoid legal repercussions 19%18%

3 INCLUSIVE LEADERS

+41%

+55%

Advanced organizations are more likely to hire and develop leaders who exhibit inclusive behaviors.

Leaders in my organization...

Ensure an environment in which others can safely voice different opinions

Create collaborative opportunities and leverage different perspectives

ADVANCED VS.

AVERAGE

56% 79%

49% 76%

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Lessons from best-in-class D&I organizations

As many leaders have discovered, simply hiring diverse talent does not ensure lasting diversity. Instead, many other elements— namely, an inclusive culture—are essential to building a resilient organization that reaps the benefits of diverse talent. There are several steps leaders can take to build a more diverse and inclusive organization.

HIRE, RETAIN AND DEVELOP DIVERSE TALENT 01Regardless of where an organization is in its journey, leaders can make extra efforts to be intentional about diversity. They should make a visible commitment to D&I and create authentic partnerships with diversity-focused organizations to have access to the broadest pools of talent. Once they hire diverse talent, they should actively sponsor them and ensure that the needed visibility and stretch opportunities to advance are present within the organization.

Commi ed leaders have a pulse on the culture of their organization—in fact, leaders in advanced organizations are almost twice as likely to feel that their organization is effective at fostering an inclusive culture. They know which populations feel less included and why (i.e., the root cause) and not just the symptom (e.g., women are leaving the organization). They tackle, head-on, the #1 barrier to effective D&I strategy—an organizational culture that is resistant to change—and actively build a more inclusive culture by holding people accountable to changing organizational norms and values. They understand the data behind their workforce sentiment and are clear on what needs to be fixed in the short term and in the long term.

BUILD INCLUSIVE CULTURES 02

Leaders who build inclusive organizations understand that individual and team behaviors are critical—in fact, a lack of leadership accountability and commitment to D&I is one of the top barriers to an effective D&I strategy. These leaders set an example by leading inclusively themselves. They create opportunities for collaboration, leverage diverse perspectives and ensure an environment where employees can safely voice their opinions. They also develop inclusive leaders and hold others accountable for leading in an inclusive and courageous manner by emphasizing D&I as a business issue.

DEVELOP INCLUSIVE LEADERS 03

Leaders in inclusive organizations take a rigorous, data-driven approach to their talent management processes and understand the specific D&I pain points in their talent recruiting, promotion, compensation, and retention. They can pinpoint the leaks in their talent pipeline and have a plan in place to reduce or eliminate bias and make the necessary changes to their D&I strategy and broader talent efforts.

CREATE UNBIASED TALENT MANAGEMENT PROCESSES 04

Finally, commi ed leaders understand that a self-sustaining inclusive organization needs the right D&I operating model in the form of governance, structure, accountability and resourcing to achieve and sustain its D&I objectives. They realize the importance of taking a long-term holistic approach while simultaneously focusing on short-term metrics and incentives to ensure leaders are meeting key milestones along the way. Accordingly, they make the right investments to support their culture, leaders and talent—be it hiring a chief diversity officer, se ing up a D&I council or commi ing to regular employee engagement surveys.

CREATE A SUSTAINABLE D&I OPERATING MODEL 05

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Looking ahead

Ultimately, leading D&I organizations realize that diversity and inclusion efforts are part of a larger goal of being a preferred employer, serving clients better and outperforming financially. While maintaining a holistic and business-focused approach, they also remain open to continuous improvement, recognizing that D&I is an ongoing journey. By taking this approach, more organizations stand to see greater results from their D&I efforts.

AUTHORSALESSANDRA ABATE co-leads Russell Reynolds Associates’ Diversity & Inclusion practice in Europe, the Middle East and Africa and leads the Global Biotech and Pharmaceuticals practice. She is based in Amsterdam.

DEE FITZGERALD co-leads Russell Reynolds Associates’ Diversity & Inclusion practice across Asia Pacific and is a member of the firm’s Leadership and Succession practice. She is based in Sydney.

RYOKO KOMATSUZAKI co-leads Russell Reynolds Associates’ Diversity & Inclusion practice across Asia Pacific and is a member of the firm’s Consumer sector. She is based in Tokyo.

HARSONAL SACHAR leads Knowledge for Russell Reynolds Associates’ Diversity & Inclusion practice and is responsible for thought leadership and insight development along with internal strategy and operations. She is based in Toronto.

ALIX STUART is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in Boston.

ULRIKE WIEDUWILT co-leads Russell Reynolds Associates’ Diversity & Inclusion practice in Europe, the Middle East and Africa and is a member of its Consumer sector. She is based in Hamburg.

CISSY YOUNG leads Russell Reynolds Associates’ Diversity & Inclusion practice in North America and is a senior member of its Global Biotech & Pharmaceuticals practice. She is based in Boston.

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Russell Reynolds Associates is a global leadership advisory and search firm. Our 470+ consultants in 46 offices work with public, private and nonprofit organizations across all industries and regions. We help our clients build teams of transformational leaders who can meet today’s challenges and anticipate the digital, economic and political trends that are reshaping the global business environment. From helping boards with their structure, culture and effectiveness to identifying, assessing and defining the best leadership for organizations, our teams bring their decades of expertise to help clients address their most complex leadership issues. We exist to improve the way the world is led. www.russellreynolds.com.

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