DI Why? - Diversity, Inclusion & Why it’s a risk worth taking.

In previous blogs, I have discussed how organisations can build a positive and sustainable culture through structural and behavioural changes. However there is a key piece of the corporate culture puzzle - diversity and inclusion – that assists this process.

Diversity and inclusion is not even ‘middle of mind’ for many leaders. For others, starting a conversation about ‘D&I’ is a mood killer and smacks of ‘political correctness’. Hopefully, once you have read the rest of this article, you might see the personal and organisational value of opening the door to other voices and views.

So let’s start with some working definitions of diversity and inclusion:

• Diversity and inclusion is not is about ‘pigeon-holing’ or identifying non-dominant groups for the purpose of lumping them all together so we can do something about those people..

• Diversity is the mix. Inclusion is making the mix work.

• Diversity can be mandated. Inclusion stems from voluntary actions.

• Diversity is a noun describing a state and inclusion is a verb or action noun - to include is to take action.

• Inclusion is about creating an environment in which everyone has the opportunity to reach their full potential.

Ok, that doesn’t sound too frightening does it? Further, what is wrong with being in a workplace that ascribes to these values or behaviours? It sounds like a ‘psychologically safe’ working environment to me.

But what about the business case for diversity I hear someone say?

Here are a few examples[1]:

• The 2021-22 Diversity Council Australia Inclusion@Work Index[2] showed that workers in inclusive teams are 4 times less likely to leave their job in the next 12 months compared to workers who don’t have inclusive teams; 10 times more likely to be very satisfied; and 4 times less likely to feel work has a negative or very negative impact on their mental health.

• A study by Accounting Professors Larry Abbott, Susan Parker and Theresa Presley found that US companies that lacked gender diversity on their boards were more likely to issue financial restatements of the company due to error or fraud.

• A London Business School 2007 study of 100 gender diverse teams (850 people) across 17 countries found that a Male/Female team ratio of around 50/50 was optimal, as all team members performed better, felt more confident and more innovative with gender balance. If either gender was significantly in the minority, they were likely to experience negative outcomes (lower life satisfaction, higher negative mood and lower commitment).

• A University of Maryland 1999 meta-analysis of 150 studies over 34 years (1964-97) on whether there were gender differences in risk taking showed that while males and females do assess risk differently, there was only a very small variation (6%) at best, and often no difference. The most significant differences arose in relation to hypothetical risk – men were slightly more likely than women to say they would take on more risk.

• A behavioural study of 2,000+ simulated stock market trades by 180 traders in 30 market simulations (worldwide) found that diverse markets traded 58% better than homogeneous markets, homogeneous markets had more price bubbles and crashed more severely and if someone made a mistake in a homogeneous market, others were more likely to copy it than in a diverse market.[3]

• A 2015 study by Professors Sunstein and Hastie (2015) found that: '…well functioning groups need to take advantage of cognitively peripheral people. These people are especially significant. But in most groups, cognitively central people have a disproportionate influence in discussion and participate more in group deliberations. By contrast, cognitively peripheral people end up having little influence and participate less, often to the group's detriment.'

Ok, so there are some examples of how diversity can add value. What about the counterfactual? Where is the business case justifying the benefits of organisations being dominated by people of a particular gender/colour/ethnicity? Just wondering…

Conversely, I have a few examples of the opposite effect. Irving Janis coined the term ‘groupthink’ for when thinking gets too narrow/self circular, being ‘a mode of thinking that people engage in when they are deeply involved in a cohesive in-group; when members’ striving for unanimity overrides their motivation to realistically appraise alternative courses of action’. Pick any number of overseas (Enron etc) or local corporate collapses, bad corporate behaviour (Royal Commission into the Financial Services Industry) or even government programs (Royal Commission into the Home Insulation Program) for further examples of similarly narrow thinking.

So why are D&I dirty words and not more widely adopted? Put simply, because actively including others is confronting to our sense of self, our comfort levels and our power.

Firstly, our biases don’t make it easy. Biases pull people and organisations towards the status quo - towards similarity of gender, race, social grouping, functional role perspective etc. These social and information biases are usually unconscious, driving choices people are not even aware they are making. Related to this, often diversity and inclusion programs are poorly framed as ‘compliance’ and/or ‘tick-a-box’ – provoking defensive reactions from workers about ‘being told what to think’ or that ‘their view of the world is wrong’.

Secondly, diversity involves difference. Of opinion, worldview, life experience and status, to name a few. To enable difference is to invite conflict/dissent into your world, which needs to be facilitated in a way that is respectful and appropriate. Neuroscientific research shows our brains are wired for conformity, so that when we make a decision contrary to our group ‘…that deviation from the group opinion is regarded by the brain as punishment’.

Thirdly, diversity and inclusion are about sharing power. It is not enough for give the underrepresented a voice, or a seat at the table, they have to be a provided with an ongoing capacity to influence the decisions that matter. For many people with power, that is a no-go area, defended with any number of ‘rational’ reasons..

Dealing with such ingrained cultural issues is not easy and requires sensitive and thoughtful responses at two levels: the personal (micro level) and the organisational (macro level).

The personal level requires introspection. There is no way around it. You have to regularly spend some time internally interrogating why you think the way you do. It’s not about beating yourself up either. Simon Western[4] highlights the necessity of ‘decriminalising bias’, as biases are hidden and an intrinsic part of effective cognitive function.

For example, too many leaders are stuck in a ‘command and control’ loop for a number of reasons – hierarchical workplace, expectations of how ‘leaders should behave’ etc. But stop and question whether a dictatorial approach is really necessary or whether you, your team and your project would be far better served with actively listening to and sharing responsibility with others.

Being inclusive also relates to the way you communicate with others, allow them a safe space to challenge your assumptions or offer alternative points of view, allow others to lead/chair a meeting etc, or in the way you manage the inevitable conflict between different opinions/values and turn them into learning moments.

Organisational culture similarly needs to be put under the microscope – the question is how and who? The Corporate area is one starting point. What do current policies say in relation to diversity and inclusion, work from home, WHS, recruitment and training? Do they set appropriate standards that are readily accessible and understood? Assuming such policies exist, how do staff instinctively respond to such policies (nanny police or good idea). Are there open celebrations of diversity beyond one day a year? Is there a diversity committee?

And critically of course, there is organisational leadership. They need to actively sponsor a deeper dive into diversity and inclusion and consider their roles in helping or hindering it. What are their motivators and assumptions about inclusion? Does the leadership team reflect diversity (of people or views)? Are they willing to go a bit slower with decision making (with more conflict) to get more considered and innovative decisions? Are they willing to cede some of the power many of them fought so hard to get?

Conclusion

So if you and your organisation want more engaged teams, better decision making processes and better decisions, an inclusive culture is a vital step in the right direction.

As Clearfield and Tilcsik noted in Meltdown:

Diversity is like a speed bump, taking us out of our comfort zone, making it hard to race ahead without thinking.

Isn’t that a risk worth taking?