If companies are serious about diversity & inclusion, here's how to walk the talk
A new study shows that despite bright spots, diversity has yet to be hardwired into most company cultures.
It’s an old, old story by now: Even though the business case for diversity and inclusion has been proven over and over and leaders in organizations say they’re serious about spearheading initiatives for diverse hires and teams, progress continues to be slow. Employees have taken notice, too—a recent study on company culture highlighted 70% of respondents saying their employers were focused on increasing diversity and inclusion in their companies, but only 50% reported seeing diversity in leadership roles. The same study noted a majority of respondents (41%) saying racial diversity was lacking most at their organizations, while 15% felt gender diversity was lacking.
So, how to move things along? A new report from management consulting company Mercer, which surveyed more than 1,150 companies in 54 countries, sheds some light on actions organizations can take to generate real results on diversity.
First, some general numbers: According to the report, 40% of the global workforce is female. That’s up from 38% in 2016, when Mercer ran its last report. Female representation in executive and senior management levels went up by 3%, and 33 companies on the Fortune 500 are run by women.
The research also discovered that as career levels rise, representation of people of color decreases. Black/African American employees make up 12% of support staff positions, but only 2% of positions at the executive level. However, Asian/Pacific Islander and Black/African American women have higher representation at the executive levels (8% and 6% respectively) than other groups of color. In fact, representation of Black/African American women is higher than men at every career level, with the exception of the executive level. Organizations in the United States reported attracting people of color as the biggest challenge (46%).
There’s no plan
While the majority of organizations in the report (81%) said they were focused on improving D&I, only 42% reported having a multi-year, documented strategy to make it happen. Only 50% of reporting organizations set D&I goals, such as representation and pay equity. Additionally, only 33% of organizations said they had a chief diversity or inclusion officer, and 23% of U.S. organizations have high-potential programs for people of color. Many regions put D&I squarely in the HR box instead, since HR plays the biggest role in attracting and retaining talent. The study also found that most organizations don’t connect D&I with other areas that motivate business decisions, and so the values associated with diversity aren’t fully owned in the organization.
Looking beyond parity
Although female representation is indeed modestly up from the last report in 2016, Mercer says doing what’s already been done isn’t going to achieve gender parity, which is a commonly stated goal by most of the organizations in the study. “The math indicates that reaching gender parity anytime soon will require a systematic over-indexing of women over men in hiring, advancement and retention,” the report states. “This is likely not a palatable or realistic game plan for the vast majority of organizations.”
The report recommends that an organization aligns all its policies, practices and programs to ensure not only equal representation but equality of opportunity, experience, and pay at every level. If an organization does wish to try a bold move like over-indexing, transparency is key.
The pressure is coming from INSIDE THE HOUSE!
Several elements have come into play when it comes to pressuring organizations towards progress. The rise in environmental, social and corporate governance (ESG) has empowered stakeholders to put the spotlight on diversity. In fact, shareholder activism in general has led to support for inclusion initiatives. The report cites Arjuna Capital challenging several top banks and technology giants to reveal their median gender pay gap in January 2019 as an example.
The pressure for progress in general is felt mostly by an organization’s employees, according to 65% of surveyed companies. However, the millennial and Gen X populations have probably been the most critical in moving the diversity needle, as they have been the most vocal about their inclusion expectations. One study cited by the report shows that three out of four millennials would take a pay cut to work for a responsible organization.
Managers can make the difference. So can men.
While leaders are involving themselves in D&I efforts more than they have in the past, Mercer finds that engaging middle and frontline managers can enable those initiatives to spread faster through an organization. Participation in D&I efforts for middle and frontline managers is up (53% and 46% respectively), but they’re still less involved than senior executives. The report calls it ” a major barrier (and missed opportunity) to achieving progress.”
Another essential ingredient for effective gender parity? Men. “ Necessary actions range from listening to men’s perspectives to engaging men as change agents, managers and partners in developing and embedding solutions,” says the report. Although D&I conferences are mostly made up of women, 48% of global organizations say men are actively involved in diversity programs and initiatives—up from 38% in the 2016 report.
Pay equity and promotion opportunities
Mercer reports a global increase in pay equity being included in organizations’ compensation strategies (74%, up from 60% in 2016). Ensuring fair pay relative to contributions has been the primary focus of analyzing pay equity for 85% of surveyed organizations, while 68% have made attracting or retaining the best talent their main objective. However, only 44% of these organizations have a formalized process for remediating pay inequities.
The report also revealed a shortage of mentorship and sponsorship programs, along with a lack of data collection around understanding the root causes of a lack of female career advancement. Only 52% say women are equally represented in manager roles.
“The intersection of business change and societal change will be critical to meeting the challenges we still face. This year’s report makes clear that we still have much work to do,” the report declared. ”If business leaders want to achieve equal representation of women in the workforce, with equal participation in the economy, at equal pay, they will need to lead the way.”
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