Sector News

Diversity: A must-have, in good times and bad

April 7, 2020
Diversity & Inclusion

A successful workplace must feature a diverse set of people empowered to solve their sector’s most challenging problems. More than a “nice-to-have,” diversity is a “must-have” for all sectors and industries committed to progress.

This holds true in both good times and bad. In fact, when an unexpected crisis hits, diverse and effective teams are invaluable to the necessary problem-solving process.

But, because we’re tribal people by nature, we’re often most comfortable surrounded by people like us – those who share the same experiences and have the same background. When it comes to hiring, we’re also naturally risk-averse: we often perceive the act of hiring people like us, or those who come recommended from other people like us, to be less risky.

This often leads to executive teams and boards made up of people who look and sound the same. There is the frequent back-slapping and high-fiving that naturally accompanies commonality and agreement. And, while those meetings are often more pleasant – it feels good to agree with people – they certainly aren’t more productive.

Indeed, while risk-averse hiring may feel convenient, it doesn’t work. The reality is – and, the data bears this out – diverse hiring leads to better results:

• Ethnically diverse organizations are 35 percent more likely to outperform their peers[1];

• Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians[2];

• In the U.S., for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest & taxes (EBIT) rise 0.8 percent[3].

The bottom line: While each incremental hire of a person who looks like you might feel less risky, the reality is that – when taken in aggregate – you can’t afford the risk of hiring a team of people who all look and sound the same. Fortunately, there are steps businesses can take to foster diversity.

The first and most important step is to insist on a slate of diverse, qualified, candidates when hiring. Too many teams skip right over this step, but it’s simple and it’s powerful.

When I was at HP, we led a process in which my senior team and I would spend time regularly looking at all of the open positions above a certain level in the company. I insisted that there be a diversified and qualified set of candidates for every job – and then we selected the best person from there. By the end of my tenure, half of my direct reports were women.

But there’s another side to this story: invested leadership. Less than a year after I was fired, 60 percent of those women were gone.

My personal experience spotlights gender inclusion, but this same hiring practice applies to diversity of all kinds. The NFL instituted the Rooney Rule in 2003 to ensure that at least one minority candidate was interviewed for head coaching positions where an in-house successor was not pre-determined. As a result, 10 minority candidates were selected as first-time head coaches over the next decade; in the previous decade, there had been one.[4]

But these systems can atrophy, too, without proper attention and care. In January of 2020, five of eight head coaches of color were fired, with only one taking a new top job somewhere else.[5] This failure can be attributed to a lack of genuine buy-in at the top. Senior leaders must first mandate that diversity and inclusion are integral to the hiring process, then personally manage these high expectations.

But, be ready for a natural resistance to this process: “I can’t find a slate of qualified, diverse candidates.” This is an inherent part of challenging the status quo. The simple retort: “Go back and try again.” A slate of diverse, qualified candidates is attainable. It may take a little longer and a little more work to find them, you may have to go outside of your traditional hiring networks if you’re specifically looking for people different from you, and you may have to try something new.

As I tell many of the senior leaders I advise, hiring a qualified, diverse team is by no means easy, but it is possible, at every level. If you believe that diversity across your company is a “must-have,” and you support that premise with implementable policies, the result is an organization filled with productive, effective teams who can drive superior results for your business. And, these teams will be as prepared as possible for the next crisis.

By Carly Fiorina

Source: Chief Executive

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