A panel shares the real business advantages of diversity and inclusion.
By Bill Hatton
Like many high-minded concepts, diversity and inclusion can be window-dressing, a panel of four diversity experts explained at the 2014 COMMIT!Forum in New York. But beyond window-dressing, there are real business benefits to strong diversity programs.
Amber Johnson, chief communications officer, Center for Values-Driven Leadership, at Benedictine University, said a 2012 Credit Suisse released the results of a six-year longitudinal study of 2,300 companies.
“They did an apples-to-apples comparison and found that in companies that had at least one woman on their boards – they performed between 17 percent and 26 percent better over that period than companies that had no women in that position,” said Johnson. “And the difference was more pronounced as economic conditions fell. Diversity was a stabilizing factor. It mitigated risk and it increased growth.”
Of the Fortune 500 officer positions, about 14 percent are held by women. “And that number has stagnated,” said Johnson. “I think if we took a poll of those in this room and of executives outside of this room, most executives would agree that there is a great value of diversity and inclusion, so that leaves us with one burning question: Why doesn’t the composition of our corporate leadership actually reflect that?”
Given studies showing the connection between diversity/ inclusion and profit, she says executives need to understand the “profit we’re missing out by not making a point of diversity and inclusion in our companies.”
Here are three examples of how diversity and inclusion impacted business from the panelists:
Gamification and Crowd-Sourcing
Kathy Hannan, national managing partner, diversity and corporate responsibility, KPMG, LLP, said global markets and rapid change mean getting many voices is essential: “Homogeneity is a buzzkill. If you look at the world that we’re operating in today -highly competitive, highly globally oriented, shifting and disruptive technology -all of which have just accelerated the pace of change [then] status quo is not good enough anymore. We need to be constantly changing and challenging ourselves. We work with a number of companies across the globe, and not just from an auditing perspective, but also from a growth and innovation standpoint. It’s critical that companies today that their leadership reflects their ultimate customers and buyers in the marketplace.”
As an example of how diversity drives innovation, she cited the 2011 protein-folding crowd-sourcing case. University of Washington researchers were stymied with a complex protein-folding task – essentially, trying to fold proteins in a way that they’d match what was seen on an x-ray. They crowd-sourced the task to gamers on a site called FoldIt and asked them to use the site’s 3-D technology to complete the protein-folding tasks: They made it a competition. In one day, they had their answer.
“They opened this up to non-academics, non-doctors, and scientists and engineers and these are gamers, people sitting in their living rooms or bedrooms playing these games, they were able, and maybe not even a college degree, and they were able to help solve these problems that really benefit that particular space,” explained Hannan.
One Design Doesn’t Fit All
Greg Hinton, principal, The Gregory Advisory Group, and former chief diversity officer, Democratic National Committee, added, “At one point in my career, I worked for a hospital organization in the Midwest. I was sitting in my office one day when the head of the hospital came in and said, ‘I don’t understand it, Greg. We have an emergency room and it’s always crowded. But when I look at the register, it says there are only five or six people who are seeking medical care.’
Hinton said the hospital’s architectural design had been based on a successful model, but based on a suburban model. “What we didn’t do is take in mind that we were building this particular hospital in [an area] with largely a Hispanic population.” In the inner cities, sometimes five, seven, even nine people accompany someone to the ER, whereas it’s usually two or three in the suburbs. Bottom line: You need a bigger ER in some communities, and diversity and inclusion means knowing where those are.
“If the engineers had understood their role in diversity, which is to look at it a little bit different and say, perhaps we’re not designing these emergency rooms large enough in the inner cities, then they would have said, we’ll build a bigger emergency room, we’ll bring in more dollars, we’ll make the hospital more profitable, and we’ll all win – the community will win, the hospital will win, and the individuals will win.”
They get the ‘what’ of diversity and inclusion, but they need to know “what is my role?” says Hinton. People need to what it means to them, what is their role in diversity and inclusion. “Until they get that, you won’t optimize your profits and your organization won’t grow for a changing marketplace.”
Phyllis A. James, executive vice president, special counsel for litigation and chief diversity officer MGM Resorts International, sees how diversity and inclusion opened up new markets.
“It has really helped us to open up to new customer segments that our company had not traditionally courted, the emerging multicultural segments – Hispanics, African-Americans, Asian-Americans, they were not previously courted as distinct market segments the way that we do now.”
An example: James said MGM’s leadership in promoting diversity and inclusion helped win a ballot measure that authorized gaming in Prince George’s County, MD, that the local populace wanted. “The reason we were able to defeat the ‘no’s,’ which were backed by another gaming company, was because we had the competitive advantage of a compelling diversity and inclusion initiative. We are going to do the same in Springfield, MA; we’re in an electoral race on that.
“In today’s competitive and global economy, diversity is a leadership imperative. If you are not conversant with, comfortable with, and in fact embracing diversity as something that can fuel the advance of your company long-term then you are not going to be successful…. Organizations mimic what their leaders do. Top leadership has to continuously advocate for diversity and inclusion. There should never come a day where the leader says, ‘Well, we’re done with this.'”
Diversity and inclusion yields real business benefits, and prevents lost opportunities.
Editor’s note: The COMMIT!Forum is hosted by SharedXpertise, publishers of HRO Today magazine.