What lessons can you learn from high-performing organizations about creating inclusive work environments?
In order for organizations to improve performance via diversity, they must move away from engineering a diversely representative workforce and toward addressing inclusion. The question is how to do this in a way that ensures such improvement. A 2010 study by human capital research and corporate networking firm the Institute for Corporate Productivity (i4cp), titled “Inclusion Measurement,” found that 69 percent of high market performing organizations used inclusion as a diversity or talent management strategy. Meanwhile, 58.5 percent of low market performing organizations did so. If everyone is in agreement that inclusion is important, what, then, separates high performers from the rest?
The i4cp study was sponsored by a group of i4cp member companies, including Amway; The Federal Reserve Board; FedEx Ground; Pelco, a division of Schneider Electric; Pfizer; YMCA; Yum Brands and others. The goal of the study was to determine how high-performing organizations are approaching inclusion and how they are measuring success. Thousands were solicited for the survey, which received 396 unique responses from organizations across all industries, including government. Thirty-nine percent of respondents were from companies with 10,000 or more employees; 28 percent from companies with 1,000 to 9,999 employees; 20 percent from companies with 100 to 999 employees; and 13 percent from companies with fewer than 100 employees. Just fewer than half of respondents were director level or above; 30 percent were manager or above; and the rest were supervisors, individual contributors or other. The majority (72 percent) of respondents work in HR or training.
Defining Performance and Inclusion
High market performance is defined by i4cp as organizations that have sustained high performance over the past five years in four areas:
- Market share.
- Customer satisfaction.
In the study, respondents were surveyed about these variables and divided up into three categories: high market performers, midrange performers and low market performers. Thirty-nine percent of survey respondents were high market performers; 42 percent midrange performers; and 19 percent low-market performers.
In the study, organizations were provided four definitions of inclusion. Six percent of respondents selected the definition from Insight, a nonprofit promoting independence for those with vision loss, which stated: “An inclusive work environment takes steps to avoid tokenism, focuses on abilities, [and] provides reasonable accommodations and access to development opportunities.” Eighteen percent selected the definition provided by The Society for Human Resource Management, which stated: “The purpose of workplace inclusion is to ensure that employees from diverse backgrounds are able to contribute, are retained and flourish in the organization.” Another 18 percent selected Wikipedia’s definition of inclusion as “the practice of ensuring that employees believe they belong, are engaged and are connected through their work to the goals and objectives of the organization.” Three percent selected all of the above or other.
More than half of respondents (55 percent) choose the definition based on the book The Inclusion Breakthrough by authors Frederick A. Miller and Judith H. Katz: “Inclusion is about creating an environment in which employees share a sense of belonging, mutual respect, being valued for who they are and supportive energy and commitment from others so they can do their best work.”
While this is a laudable definition, it does not lend itself easily to measurement, nor does it prescribe behaviors or action. Thus the research here suggests organizations seeking to define inclusion should review their current understanding and ensure it describes the desired cultural effect on the organization as a whole, as well as the employee behaviors expected to achieve the desired results. What organizations should avoid is a definition that may sound uplifting but has no quantifiable business objectives. Trying to measure fuzzy concepts like “a sense of belonging” and “feeling respected” will not help when it comes time to justify the ROI for inclusion efforts.
Survey participants were provided a list of drivers for adopting an inclusion strategy and asked to rate the extent to which these drivers applied to their organization. The top three reasons included:
- It supports talent acquisition and retention efforts.
- It supports the brand and public image of the organization.
- It conveys that all employees are part of the diversity strategy, including the majority.
Interestingly, low market performing organizations included these same three drivers most often. On the other hand, high market performing organizations’ third driver, at 71.6 percent, was “It increases the productivity and engagement of current employees.”
Thus, the research suggests organizations understand their drivers and focus on desired organization-wide outcomes such as increased employee engagement, improved employee retention and enhanced organization image. By articulating outcomes, organizations can define measures to assess the impact of their inclusion strategy.
In an interview with i4cp, Linda Jimenez, chief diversity officer for WellPoint Inc., described how the health plan company supports its brand and public image via inclusion. “Certainly the marketplace, just like the workforce, is very diverse,” Jimenez said. “It’s not only about how we include our employees, but also our providers, hospitals, doctors and the nurses that we engage with — making sure that each of them understand the shared responsibility of our commitment to diversity.”
They Must Be Doing Something Right
The i4cp study found that what sets high market performing organizations apart is ongoing focus on inclusion through communication and measurement practices. While referring to a diversity department as specifically active in “inclusion” and having an executive sponsor are important, these do not seem to be key differentiators.
Sixty-two percent of high market performing organizations specifically promote inclusion on their corporate website and other branded communications, versus 54 percent of low market performing organizations. At 30 percent, almost a third of high market performing organizations reported their organizations attempt to a high or very high degree to quantify the effects of their inclusion strategies and initiatives. No low-performing organizations reported attempting to quantify the effects of inclusion to a very high degree, and only 16 percent reported doing so to a high degree.
At 32.6 percent, a third of high-performing organizations reported using the specific label of “inclusion” for departments or positions — such as an “office of diversity and inclusion” — while 36 percent of low-performing organizations reported using such a label. Sixty-nine percent of high-performing organizations reported having an internal champion at the executive level for inclusion initiatives, compared to 72 percent of low-performing organizations.
A Lack of Inclusion ROI
Overall, organizations are not measuring the effect of inclusion. The i4cp survey found that the most commonly reported method, at 41 percent, was analysis of employee engagement or other surveys, followed by analysis of new-hire, employee movement and termination data.
While 62 percent of organizations reported that one driver of inclusion was to increase productivity and engagement, only 15 percent reported using productivity data to assess the success of inclusion efforts. Another surprise is that while 31 percent of organizations identified appearing on third-party employer-of-choice lists as a driver for inclusion efforts, only 20 percent use these results as a measurement of success.
The research suggests that organizations should start with the end goal of inclusion in mind. The challenge for most organizations is that the link between the inclusion activity and the organizational end state is not a direct one, nor is it a causal relationship. Starting with the desired organizational impact and working backward, organizations need to build proof points or identify circumstantial evidence to measure success objectively.
High market performing organizations understand that inclusion strategies and processes must be business relevant. Low market performing organizations treat inclusion as merely a means to a diversity end. With a clear end state or impact in mind, high market performing organizations are able to construct a meaningful definition of inclusion for their organization, which guides behavior and is measurable. Low market performing organizations use diversity metrics to serve double duty to measure inclusion success.