Here's Why D&I Is Now a Business Best Practice

Fostering diversity and inclusivity is more than just the right ethical choice — it’s one of the best people decisions that a business can make.

Fostering diversity and inclusivity is more than just the right ethical choice — it’s one of the best people decisions that a business can make.

Diversity & inclusion has become a banner topic in business, and you can hardly go a day without hearing about a major company has added a D&I strategy to its agenda. While most leadership teams are in agreement that they should foster a more diverse work environment – as well as root out unconscious bias, the most pernicious barrier to inclusion – there’s little consensus as to how to achieve this, precisely.

The reality is that, while D&I seems like an obvious moral initiative to take, many HR teams have a hard time evaluating the potential business benefits of such a program, including how it would operate in practice. The anticipated ROI, how the programme would tangibly contribute to diversity and the metrics used by HR to track progress are difficult to lay out. Rather than make a vague case for the potential benefits of D&I to leadership, many HR professionals opt instead to continue with operations as usual.

However, there’s little doubt that D&I actually is the right business decision for hiring teams. Recent studies show that diverse and inclusive companies are not only more valuable, productive and have larger market shares, but are also more attractive to today’s most forward-thinking recruits. Simply put, companies that have yet to take action are overthinking the problem. D&I programs often seem risky because they break new ground for an organisation, but they are becoming increasingly trackable, profitable and mainstream.

D&I Matters for Business

Recent data proves that the companies who put time and energy into creating a robust diversity scheme recoup significant benefits as a result. 85% of CEOs who have formally implemented such programs believe that they have both directly benefited their bottom lines and enhanced business performance, according to PwC research. Moreover, 90% attest that it’s helped them attract top talent more effectively, making it a crucial asset in an increasingly competitive hiring market.

In fact, time and time again, highly diverse organisations outperform D&I laggards. McKinsey reports that organisations in the top quartile for ethnic and racial diversity are 35% more likely to beat financial averages for the industry and 15% more so for gender diversity. Conversely, relatively homogenous organisations tend to perform poorly relative to industry averages. At this point, a lack of inclusion has become a statistical hindrance.

Of course, highly diverse companies are more likely to dedicate resources towards developing their workforces in general. But it’s not just that; they’re also carving out new business opportunities. According to the Center for Talent Innovation, organisations with diverse leadership are 70% more likely to have captured a new market in the past year, and 45% more likely to have improved their existing market share.

What’s more, for every 10% bump in gender diversity, companies can expect a 3.5% boost in revenue, according to HR Director. It’s simple: surround yourself with a broad range of ideas and talents and you’re bound to come up with better solutions.

Of course, it can be thorny to come up with exact definitions of diversity and inclusivity — but the consensus is that organisations are rewarded handsomely for doing exactly that. Unfortunately, the conscious and unconscious biases that preclude these benefits still very much exist, making it difficult to reap the many measurable benefits of solid D&I in the workplace. However, new technologies are presenting recruiters with a significant opportunity to make an immediate and positive impact.

Business Needs to Catch Up: Bias Is Still Here

It can be hard to hear, but it bears repeating: issues of exclusion are still quite real and well-documented in today’s workplace. Race, gender and class-related issues present significant barriers to millions of workers, and the onus doesn’t rest on them to rectify the situation. However, acknowledging that your company has a problem with bias is the first step in actively combating it.

Race is still a huge factor in hiring; a 2014 study by the University of Wisconsin showed that black candidates face significant disadvantages when applying to jobs. Sending out 9,000 fake, nearly identical resumes — the only difference being the name attached — the research team found that those with traditionally black-sounding names received 14% fewer interview requests and 28% fewer responses.

Likewise, gender inequality persists. In the UK, women receive roughly 24% lower salaries than men each year, which compounds to a £300,000 deficit over their entire working lives, according to the Guardian. Globally, the World Economic Forum found that men earn close to double the salaries of women. Businesses need to remember that the gender pay gap doesn’t just look bad — it can stifle some of your most productive talent.

Finally, the class divide remains a difficult obstacle for young recruits. The Social Mobility and Poverty Commission found that 70% of the nation’s 45,000 top jobs are offered to a relatively select handful of graduates – namely those from a small pool of highly selective institutions. There’s no evidence to suggest that students from other universities are any less capable, and yet they only receive about 11% of the UK’s job offers each year.

This isn’t meant to sound like an admonishment. The truth is that race, gender and class divisions cut a two-way street: not only are qualified applicants barred from right-fit jobs, but companies miss out on the exceptional talent that comes with a broadened applicant pool. Of course, most employers already know this, but the most difficult step in implementing a D&I strategy is uncovering which areas in the process are actually susceptible to bias.

The Trick Isn’t Acknowledging Bias — It’s Locating It

Even with the measurable business argument for D&I in mind, it’s not easy to spot your own biases. The reality is that it’s rarely as blatant as overt racism or sexism, operating on a much subtler level. Unconscious bias is actually a natural feature of the human brain, and left unchecked, it can create long-term issues that go by unnoticed. For this same reason, bias is an inherent part of every organisation.

Here’s how it works: unconscious biases kick-in a full 250 milliseconds before we form conscious thoughts, says the CIPD, which means that every decision is, on some level, subjective. Unfortunately, this can be bad for business. Biases can lead us to attribute good work to people who don’t deserve it (or doubt truly exceptional work, especially from women, according to Harvard). Similarly, it can make us favour unwieldy ideas from people we happen to like, or reject good ideas just because they challenge our personal beliefs.

These subjective mistakes have names like performance bias, affinity bias and conformity bias, and they’re uniformly bad for business. But, paradoxically, talking about bias can even exacerbate its effects, as employees are less likely to make themselves vulnerable to rebuke, according to the American NIH.

It should come as no surprise that unconscious bias plays most heavily in the hiring process, where making snap judgements about a person is actually required. And, as it happens, recruitment is precisely the place where companies need to begin to root out D&I weaknesses. Unfortunately, recruiters’ opinions are hardly objective.

In fact, the CIPD found that the relative bias of interviewers more or less depends on the day; mental fatigue, cognitive load or high-stress periods can significantly influence tendencies and perceptions, thus skewing objectivity and clouding judgement.

Of course, it’s impossible to dispense with face-to-face interviews, which are necessary in order to get a comprehensive picture of candidate. This means that bias will always play at least a small role in decision-making. However, there’s a simple and powerful way for HR teams to introduce objectivity into the hiring process, largely removing subjective opinion from the discussion table.

Data Is the Great Equaliser

Given recent advancements in hiring technology, HR teams can now use data-driven insight – rather than gut intuition – to make recruitment decisions. The idea is to first create a clear, objective and measurable framework for what a successful candidate should look like, and then use technology to implement it across the whole recruitment process.

Google recently made a similar, data-driven process famous, but other organisations have struggled to adopt these types of practices at scale, according to Wired.

Today, the integration of performance analytics, video interviewing and data-sharing platforms have enabled recruiters to integrate facts-based insight into the hiring process. When each recruiter can score candidates based on an objective rubric, even over great distances, HR can ensure that each hiring decision is made with a company’s business interests in mind.

Moreover, sophisticated algorithms can point to the metrics that matter most, decreasing the chance that recruiting rubrics themselves are products of unconscious bias. No wonder that 78% of large HR departments view the incorporation of talent analytics as an urgent issue, as Deloitte reports.

While D&I is being questioned less and less as a valuable business benefit in and of itself, questions remain as to how best to adopt these practices. For many businesses, this is an opportunity to not only implement an actionable D&I scheme, but to chart its progress with testable metrics.

As international conversations around D&I continue to bloom, insight-based hiring strategies will increasingly become the norm. And just as data has allowed us to identify the places where diversity gaps still exist, it will likely be the great equaliser in helping to close them.

To learn more about the business argument for D&I in the workplace, read our white paper: The Measurable Value of Diversity and Inclusion.