Did You Remember to Include Profit in Your Diversity + Inclusion Program?
What if I told you that you could increase profitability while doing the right thing?
Diversity, Equity, and Inclusion (DEI) is the hot topic in corporate America, and that’s good. There’s a new initiative announced every day. But there’s a problem. Making DEI a special initiative may create a silo. Without intentional action that aligns with corporate goals, it has the potential to become nothing more than window dressing. “We appointed a diversity officer, what more do you want?”
The focus is on the wrong place.
If you’re running a business, the focus should be on the bottom line. Aim to improve the results, not just correct the symptoms.
Look at it this way. If you have an infection and are running a fever, you have two choices: treat the symptom (lower the fever) or treat the cause (cure the infection).
Which do you think will be better for your health?
Treating the symptoms feels good in the moment but only masks the real problem. So how do get there?
Key Factors for Profit
Profit is the language of business. How do we get to more profit? Research shows that inclusion is a key factor. And how do we get to inclusion? Through more socially responsible recruiting.
Socially Responsible Recruiting
Socially Responsible Recruiting is more than a nicety in the workplace, it is a path toward revenue generation. By bringing in different points of view and unique life experiences, you are more likely to generate sparks when these people learn from and encourage each other. And sparks are good for any organization seeking innovation.
Recent research has proven that a more diverse and inclusive workforce is a more innovative and profitable workforce. (And by inclusion, I mean not just color or gender or sexual identity. Take into account age, thought and life experience. People that don’t think or look like you do.)
McKinsey & Company found that companies with the most ethnically/culturally diverse executive teams are 33% more likely to experience increased profits.1 It really is that simple.
Findings across the board show linkage between true inclusion and financial growth. Companies in the top quartile of:
- Gender diversity were 15% more likely to have financial returns above that of their national industry median.
- Racial/ethnic diversity were 35% more likely to have financial returns above their national industry median.
- Conversely, companies in the bottom quartile for both gender and ethnicity/race were substantially less likely to achieve above-average returns than the average companies in the dataset (they weren’t just not leading, they were lagging.)
- Companies with 10% higher gender and ethnic/racial diversity on management teams and boards in the U.S. had an EBIT that was 1.1% higher.
Yet only 0.8% of Fortune 500 CEOs are Black, according to data from the Center for Talent Innovation2, and only 7% are women. Look around and you’ll find the C-suite and board room can be very lonely places for many people.
It’s time to examine the value of Socially Responsible Recruiting across the organization, starting from the board of directors on down. As Paul Polman, former CEO of Procter & Gamble puts it, “I have a hard time even understanding how you can be successful as a business if you cannot mirror the society that you serve in the first place.”
This isn’t about morals or window dressing, but about accessing a new lever to generate more ROI from every employee. It’s about finding a competitive advantage where others only see an obligation. So, how can businesses achieve a more diverse, inclusive, Socially Responsible workforce that will drive innovation and profit?
It starts by changing the recruitment process. How many times have we heard the phrase “culture fit” when recruiting for new executives, employees and board members? “Culture fit” is just code for “more of what we have now.” That is the path to mediocrity, homogenization and decline. Instead, the recruitment process must be blind to everything but ability.
Set a clear metric for the skills your organization needs. Standardize the interview process to eliminate hiring manager bias. Better yet, engage an outside firm to manage the process for you — truly removing the inherent predisposition to hire “people like me.” Create blind and inclusive candidate slates. And start at the top by taking a cold, hard look at your executive team and board.
Remember, the route to better innovation and profitability runs directly through a more inclusive workforce.
Greater Des Moines (DSM) welcomes diverse talent to the region. As one of the fastest growing business communities, inclusion and attracting diverse talent in the workplace is a key strategy of the Greater Des Moines Partnership. Learn more here.
Find these tips useful? Learn more tricks on how to maximize the potential of your business through The Partnership’s Small Business Resources Hub.
1 McKinsey & Company Diversity and Financial Performance 2017 Study Update
Desmund Adams is the founder and CEO of Focus & Find, a Des Moines-based talent recruitment firm. He’s also the author of “D&I Has Died – How the Birth of Socially Responsible Recruitment Erases Bias & Drives Profit.”