Company Culture

How to Leverage Diversity & Inclusion as a Competitive Advantage

By Sarah AlexanderOctober 26, 2017

According to Ted Colbert, Boeing’s Chief Information Officer, “The best workforce is a diverse workforce.” Countless studies support this statement, directly linking organizational Diversity and Inclusion (D&I) to higher profits. However, while profit is obviously a driving force for companies to integrate a particular effort into their core strategies, the more important question here is why this connection exists. Therein lies the true source of competitive advantage for organizations.

Diversity of experience and opinion has been tied to innovation and creativity of thought time and again. One Forbes Study identified workforce diversity and inclusion as a key driver of innovation. A Harvard Business School study also found that multicultural networks encourage creativity of thought. As the Harvard Business Review points out, this kind of creativity is not only necessary in order to create a long-term competitive advantage but is also something that firms often struggle to achieve. Many other sources agree that innovation and creativity of thought are linked to competitive advantage as evidenced by increased profit, market share and sales.   

As discussed in a previous Everwise post, diversity of experience can also help companies develop more relevant products for the increasingly global economy. The success of a product lies in its development team’s ability to understand and respond to the needs of customers, and when the makeup of that development team doesn’t reflect that of the customer base, organizations are more likely to face customer dissatisfaction and, as a result, lose revenue. This is reflected by the statistics as well: companies reporting the highest levels of racial diversity bring in nearly 15 times more sales revenue on average versus those with the lowest levels of racial diversity. The New York Times also points out that companies with more women are more likely to introduce radical new innovations, as exemplified by Rent the Runway and Stitch Fix.

However, while diversity can clearly have a powerful impact on an organization’s performance, it is only half of the term “D&I.” The other equally important component is inclusion. As Rolddy Leyva, VP of Global Diversity at Sodexo, remarked, D&I is “more than a strategy or initiative, it is an organizational mindset that must be reinforced every single day.”

Just how important is inclusion? According to a piece published by Harvard Business Review, it has inspired a completely new metric to track organizational D&I efforts. The term – “DIBs” – stands for “the combination of Diversity and Inclusion through Belonging.” As the HBR piece notes, human brains are hardwired to motivate us toward connection and belonging. Research in neuroscience has indicated that social needs are managed by the same neural networks as survival needs (e.g., food and water). This means that belonging and attachment to a group of coworkers can provide more motivation for some employees than money.

Research from Stanford University also shows that mitigating threats to a sense of belonging helps significantly reduce stress levels in minority groups, consequently improving their physical health, emotional well-being, and performance. Given the powerful perspective that these groups can bring to the table when they feel comfortable, creating a widespread sense of belonging is key to leveraging diversity as a competitive advantage.

This same research found that the sense of not belonging is unfortunately quite widespread. However, few people openly express that feeling, assuming that they are the only ones who feel that way despite the fact that it can be so common. Here are a couple recommendations to bolster inclusion efforts in your organization:

Focus on day-to-day behaviors

Focusing on micro-behaviors can be much more effective in addressing exclusionary cultures versus simply trying to check the D&I box. After all, culture is all about collective behaviors. With this mind, instead of simply hiring minorities for the sake of improving diversity numbers, consider starting where you are diversity-wise and focusing on changing how employees treat each other as they go about their daily business. These day-to-day behaviors will add up to an overarching culture that embraces everyone’s differences.

Companies that are truly inclusive and empowering in this way create welcoming environments where everyone feels like they belong. And when everyone feels like they belong, they will be open to contributing. When they contribute their perspective, then and only then can an organization benefit from their diversity of experience. As Phyllis Stewart Pires, SAP’s Global Head of Diversity, observes, “The real value comes when team members use their varying experiences to put a different idea or perspective forward for consideration.”

Reframe D&I in the organization

Shift D&I into the center of the enterprise’s decision-making structure. Creating a company focus at the CEO/COO/CHRO level and assigning a top executive the responsibility for leading and sponsoring the D&I strategy will send the message of organizational commitment to every employee. Stephanie Lampkin, founder and CEO of Blendoor, observes in an interview with Forbes, “I only see evidence of diversity efforts working where there is true buy-in and prioritization from the C-Suite. Without that buy-in, middle management will stifle any real opportunities for improvement if they aren’t properly incentivized.”

D&I can be a powerful competitive advantage for your organization. In order to leverage this, it is critical to remember that doing this requires much more than checking a box. Pat Wadors, former head of talent at LinkedIn, put it well in an interview with the Harvard Business Review: “Diversity and inclusion matter, but it’s how we help each other feel that we belong on the team – in our community and in the organization – that matters most.”

Sarah Alexander

Sarah Alexander

Author & Contributor

About the Author

Sarah is an elite triathlete and independent strategy consultant with an MBA from Chicago Booth. She is passionate about empowering others to achieve excellence.

Related Articles

Free Ebook: Learning for the Modern Workforce

Learning and development is ready for disruption.

Download

Get career tips and workforce insights

Subscribe for the Everwise inside scoop delivered straight to your inbox.