Two years ago, Harvard Business Review published a study that the three most popular diversity-focused interventions being employed by corporate America for decades were making firms less, not more diverse.

Why was that? HBR found that mandatory diversity training, job tests, and grievance reporting systems were trying to coerce employees, including managers, into making diversity a priority. This “strong-arming” resulted in resistance, meaning that managers who were supposed to be implementing these policies did not, and the initiatives amounted to no actual positive change.

It is obvious, then, that it's not optimal for an organization to make diversity a forced or obligatory goal that merely fulfills compliance requirements or making representation look good on paper.  True change – that runs through the firm’s DNA, is embraced by everyone in the organization, and ultimately achieves broader business goals – only comes about if the organization also focuses on building an inclusive culture from within. 

Diversity is about demographics, which, while incredibly important, would run hollow without the philosophy of inclusion. According to a September 2018 Gallup report, inclusion means a “feeling of belonging” and everyone at the organization being appreciated for who they are. “It [Inclusion] can be assessed as the extent to which employees are valued, respected, accepted and encouraged to fully participate in the organization,” the report said.

Too many sectors and industries have been unable to solve the diversity and inclusion conundrum, have not moved beyond tokenism, or are struggling to incorporate these principles through the breadth and hierarchy of the organization. This ultimately means that change either does not start or stalls at a certain stage.  As just one example, a recent Goldman Sachs report found that, in the US, women need to work four years longer than men to overcome the gender wage gap. And while women make up about 40% of employees at S&P 1500 firms, they account for only 6% of CEO positions – a very clear example of the proverbial glass ceiling.

According to a San Francisco Bay Area-focused report by the pan-Asian leadership organization Ascend, Asian, Hispanic, and Black women continue to be among the least likely demographic groups to be promoted to an executive-level position. The promotion of ethnically diverse men also continues to lag below parity.

Why be diverse?

Numerous studies show that increasing diversity in an organization improves financial performance, delivers better returns, leads to higher stock growth, and increases overall productivity and profitability. According to Brad Jakeman, an advisor to PepsiCo, diversity needs to be a business imperative for companies, not a special imperative. “…Silicon Valley is heavily dominated by men,” Jakeman said in an interview to nonprofit Catalyst. “And some would tell me, ‘Look at Silicon Valley. You don’t have to be gender diverse to drive innovation.’ I would say in response, ‘How do you know how much money you’re leaving on the table?’”

As Millennials and Generation Z increasingly take over the workplace, diverse corporations have become an expectation; a given, not an option. The employee of the future expects a workplace with a purpose, where ideas are the currency - not what their fellow employee looks like, identifies as, or believes in.  Millennials and Generation Z are also a much more demographically diverse cohort than their generational predecessor – which means that building an inclusive culture will be paramount for organizations to get the most out of their employees. 

To be diverse or not is not the right question to ask anymore. Instead, the puzzle that needs cracking centers on the how.

Inclusion will lead to diversity

But if traditional diversity interventions are failing, how does this problem get solved? According to leaders who have successful forays in achieving both diverse hiring and inclusive culture goals, there are three layers of responsibility for any organization:

  1. Leaders set the example
    Managers must let their own behaviors reflect the company’s inclusive ethos via every personal interaction. This includes treating all employees with the same kind of respect and creating a safe and transparent space. Inclusive leaders really listen to what is being said and always ask questions: How did it feel to first join the firm? How are your day-to-day experiences? What do you think is stopping your professional growth? What can the organization be doing better?
  2. Building tools and processes
    This could include creating a program to coach people on what inclusive leadership looks like in the moment they need it the most. For instance, middle management leaders need to be particularly sensitive to inherent biases during promotions and review processes. An organized and formal sponsorship program is another important tool to encourage the spirit of inclusion. A good sponsor is an advocate, unlocking internal pathways and opening external networks.
  3. Creating accountability
    This could include setting systems in place to ensure all employees have equitable opportunities for promotion, making promotion processes as well as timeframes more transparent, supporting people in their aspirations for career development, and having leaders set measurable goals toward helping the firm achieve these outcomes. 

It is not uncommon for organizations to find, for instance, that if there are embedded culture issues, trying to make a process change that seems very logical from a diversity standpoint can cause a big reaction. Organizations must understand what is driving that reaction: whether the proposed change is fundamentally challenging a part of the culture that people perceive has made the firm successful, or if it’s bringing up elements of self-awareness that are uncomfortable for employees.Often, organizations miss the most critical ingredient in the mix, which is to look inward at existing frameworks and find potential pitfalls and troubling trends. There might be barriers within the environment that might stop an organization from achieving diversity and inclusion goals.

At the same time, leaders who are tasked with creating and implementing goals around diversity need to understand that things always move slower than one expects them to. Making cultures inclusive is a marathon, not a sprint. As former JPMorgan Chase executive Amber Baldet says: “Inclusion, like health and happiness, is not something that you arrive at one day and say, 'We’re done!' It’s something that you work at every day, a process."