Empower the workforce of the future by proactively building a diverse leadership pipeline.
By Marta Chmielowicz
In today’s competitive and fast-moving business world, innovation is key -and there’s no shortage of advice about how companies can innovate. From adopting AI-enabled technologies to embracing an agile mindset, HR leaders are working hard to stay ahead. But there’s another proven driver of progress and change that organizations can add to their list of strategies: building a diverse leadership team.
According to a recent study by BCG, increasing the diversity of company leadership is correlated with better financial performance and greater innovation. In fact, results suggest that companies with above-average diversity scores reported 19 percent higher innovation revenue than their competitors with below-average diversity scores (45 percent versus 26 percent, respectively).
Furthermore, McKinsey’s Delivering Through Diversity report indicates that companies in the top quartile for ethnic diversity at the executive level are 33 percent more likely to have above-average profitability than companies in the bottom quartile, and those in the top quartile for gender diversity are 21 percent more likely to have better profitability than their less diverse counterparts.
“Simply put, diverse teams achieve stronger results,” says Molly Brennan, founding partner of Koya Leadership Partners. “Research shows that diverse teams are more creative, come up with better solutions, and have stronger financial performance. Diversity also plays a critical role in employee engagement and organizational culture, particularly when it comes to recruiting the next generation of leaders.”
But in spite of these benefits, research reports little progress in advancing diversity on executive leadership teams. In early 2019, only 24 Fortune 500 CEOs were women and only three were African American.
To help combat this, Andrés Tapia, senior client partner and global diversity and inclusion (D&I) strategist at Korn Ferry, suggests that organizations dedicate 80 percent of their energy to building a sustainable, diverse leadership pipeline.
“Demonstrate in the organization a sense of why diversity is important and role model it in terms of declaring its value,” he says. “Don’t only bring in diverse talent from a recruiting perspective at all levels, but make sure that talent feels valued, that the talent is being seen for what it has to offer, and that your high potential and other talent management processes are equitable and free of unconscious bias so you can truly have diverse slates of internal candidates for the next promotion.”
Overcoming Obstacles to Diversity
There are a number of internal and external obstacles that need to be overcome in order for HR leaders to build a diverse leadership pipeline and an inclusive workplace culture.
TD Bank has taken many steps to become an organization that leverages diversity and inclusion to secure a strategic advantage. “Our commitment to inclusion is grounded in a belief that our future success depends on the quality and engagement of our colleagues to achieve our shared purpose,” says Girish Ganesan, head of talent at TD Bank. “To build our capacity for innovation and drive results, we need to engage all backgrounds, skillsets, and mindsets to create value in a unique and inclusive environment. Diverse leadership is key to cultivating a barrier-free culture that attracts, invests in, and promotes all talent.”
The company has implemented various strategies to overcome two barriers to success for diverse employees.
Obstacle #1: Unconscious bias.
Unconscious biases are social stereotypes about certain groups of people that individuals form outside of their own conscious awareness. While natural, these judgments are often inaccurate and can lead to unfair characterizations. This can often have unintended consequences in the workplace, Brennan says, putting minorities at a disadvantage when seeking out opportunities. In fact, according to BCG’s diversity report, half of all minority employees stated that they see bias as part of their day-to-day experience at work.
“If you look at succession planning or high potential identification or hiring criteria, the interpretations of what required competencies and behaviors should look like could inadvertently be influenced by bias,” agrees Tapia.
Solution: Create an actionable plan that addresses built-in structural inequity.
With BCG reporting that half of diverse employees say they don’t believe that their companies have the right mechanisms in place to ensure that major employment decisions are free from bias, it is up to HR professionals to identify and eliminate points of bias in their talent management processes by implementing two best practices:
- Offer unconscious bias training. According to Audra Jenkins, chief diversity and inclusion officer at Randstad North America, organizations should combat the influence of unconscious bias on hiring decisions by offering training about the impact of bias, ways to recognize biased behaviors, and best practices to reduce the influence of stereotypes on decision-making.
This is a strategy that TD Bank leverages for its entire management team across the organization. “In 2018, we launched a new unconscious bias training program for all people managers in our organization,” says Ganesan. “This full day, in-person training engages participants in talking about bias that they may have personally experienced or have perpetuated on others. Participants learn ways to identify and dispel their personal biases.”
- Create a structured talent planning process. Companies like TD Bank will benefit from a formalized, systematic approach to hiring, succession planning, and development in order to reduce bias.
“TD Bank has multiple programs ensuring the deliberate development of pipeline talent through integrated approaches focused on applying high investment development tactics to address individual development needs and key organizational capability gaps critical at each level,” says Ganesan. The organization closely monitors its future talent needs and the representation of its existing talent pipeline, working actively to identify diverse candidates for upcoming opportunities and increase their visibility to company leaders.
Brennan recommends that HR leaders keep a close eye on recruitment and promotion processes throughout the organization, evaluating trends, patterns, and employee experience data to glean insights and develop specific interventions. Begin by conducting a survey or audit of the organization to get a comprehensive understanding of the current state of D&I as well as employee perspectives.
This data can help drive results. Tapia says to start with a quantitative analysis, looking at talent flow, promotion rates, attrition, and stagnation across groups. Qualitative tools like focus groups, executive interviews, and HR process reviews can supplement the hard data and get a better understanding of inequities in succession management and high potential identification. The synthesis of this information will identify problems that can be targeted using specific programs and interventions.
- Hold leaders accountable. Once HR leaders have a specific plan in hand to improve diversity in the leadership pipeline, it’s critical to get the C-suite on board. “To ensure that its diversity and inclusion program is effective, TD Bank embeds it into the decision-making process for senior leaders who are held accountable in a way that is measurable. Receiving buy-in from the C-suite is a key component for organizational change. TD Bank has an engaged and motivated leadership team that sets the right tone from the top through commitment and measurable action,” says Ganesan.
And this doesn’t just apply to the executive team. Jenkins suggests that HR professionals give managers throughout the company clear guidelines in order to promote inclusion within their teams. This may include observing how different teams interact with one another or fostering diversity discussions that give employees the opportunity to express concerns and develop ideas.
Obstacle #2: Insufficient representation.
A diverse leadership pipeline can’t be achieved without a sense of belonging in the organization. But when different groups are not represented on the leadership team, Jenkins says employees may feel dissuaded from advancing to these positions in the future.
“Work environments that are not inclusive can be challenging places to work,” says Brennan. “Being ‘the only’ person of color on a team or department can create a significant mental toll that can make it more challenging to strategically advance a career.”
Solution: Provide mentorship and community.
The answer? Mentorship and employee resource groups (ERGs) can be valuable tools for diverse employees striving to grow their careers.
TD Bank offers both of these resources to its employees, supporting an active network of more than 50 ERGs that deliver employee engagement, career development, mentoring, and networking opportunities. In fact, Ganesan says that the company’s regional diversity councils each have their own “Minorities in Leadership” resource groups that organize lunches and networking opportunities for members to engage with senior leaders. The organization also works closely with various business resource groups that advocate for minorities, women, people with disabilities, members of the LGBTQ2+ community, and veterans.
Mentorship is another essential part of TD Bank’s D&I strategy. “We leverage mentoring programs such as ‘Each One Teach One’, which is a three-tier mentoring program that engages emerging talent, senior talent, and executive talent,” explains Ganesan. “The program is designed in a one hand up, one hand down approach with the emerging talent being mentored by a senior manager who is mentored by an executive mentor. The senior-level mentor is both a mentor to an emerging leader and mentee to a senior leader.”
Providing Support Through the Entire Employee Lifecycle
While lack of representation and ingrained structural biases are major headwinds that prevent diverse employees from advancing, there are also internal forces at work. According to Korn Ferry’s Tapia, underrepresented employees often get pigeonholed by society into thinking that they can only aspire to certain roles or professions. Often, they internalize these negative messages and their confidence suffers as a result.
HR leaders can help by creating a culture that makes employees feel valued, clearly communicating the path to advancement, and providing support along the way. One way to empower diverse employees to grow in an organization is by offering career mapping that demonstrates how they can advance beyond the job that they currently hold. Leaders should outline the performance expectations for each position and make employees aware of any development opportunities that can help them meet those standards.
“It’s important to host employee trainings on what it takes to reach the leadership level within the company or respective industry. It’s hard for more diverse employees to actively be thinking about leadership positions when their own company has never broached the subject with them. Make upward mobility an active conversation within your company that is inclusive of all employees,” Jenkins explains.
And be sure to monitor employees’ progress and experience. HR should consistently communicate with all employees to ensure that they are satisfied with their work experience and on the right track to success.
“While representation numbers are a guide, we know that numbers alone do not define success,” says Ganesan. “We monitor our colleagues’ experience of inclusion at TD Bank through regular surveys, focus groups, and ongoing feedback to and from diversity and inclusion committees within each business. As many colleagues relate to more than one diverse group, we are taking an increasingly holistic approach to inclusion. Our initiatives are interconnected: they focus on our colleagues, our customers, and the communities we serve.”