The belief in D&I targets is almost as strong as the resistance they often create. Based on new large-scale, international research, experts now confirm that a consistent, business-based sense-making will create the ‘acceptance’ required to make targets a success.
What does it take to turn diversity into business benefits? This question has become increasingly important for D&I practitioners for a number of reasons:
- Examples and some research shows that diversity can lead to performance decrease (in specific situations)
- Organisations and their stakeholders continue to expect (more) progress on obvious metrics (while the reality is flat or volatile)
- International organisations struggle with differences across entities, cultures and contexts (standardised vs. de-centralised)
- Copying and pasting blue print solutions does not create traction (and trial-and-error is also expensive)
New research suggests that preparing the organisational culture in regards to D&I is required before targets or structural support can have positive impact.
The myth of quota and targets (reprise)
In a business setting, the mantra of ‘what gets measured, gets done’ is so prevalent that it does not even get questioned in regards to D&I. After years of experience with more or less rigid state-ordered, self-imposed or other targets, it has become clear that simply setting numeric expectations does not drive the desired changes of mind-sets nor behaviours. In fact, it often triggers damaging actions. New international research helps to understand the dynamics by drawing an important distinction between ‘normative acceptance’ and ‘regulatory support’. Data analyses show that, while the two are related, it is the normative acceptance that actually leads to (gender) diversity becoming a success story. The findings show that neither legal quota nor supportive policies or infrastructure (child care, leave policy, flex work) alone mediate diversity to add business value, while pro-diversity mind-sets do.
The critical component of values, mind-set and shared beliefs
When the value-chain model for D&I, called the propelling performance principle, was first introduced in 2005, it highlighted the need to create open mind-sets on the individual level, in teams and in larger cultural contexts (organisational or societal cultures) first. Open-mindedness is hence described as the prerequisite to leverage Diversity through Inclusion. Since then, research has continued to confirm the model.
Latest data – from 1,000+ firms in 35 countries – show that the shared values and beliefs, e.g. gender role attitudes, must imply an intrinsic value for D&I so that business benefits can be created. The study explicitly states that it is not enough to “see gender inclusion as an obligation”. Companies accordingly refer to a business case for D&I, but the related strategies and messages often focus on expectations, numbers or ethics. “The biggest opportunity for most corporate D&I strategies lies in re-engineering them: business-focused sense-making and corporate cultural change must become central”, Michael Stuber, The D&I Engineer, confirms by referring to leading practice. This insight, however, also has another dimension.
The need to analyse your individual situation(s) and tailor solutions
Each corporate culture is unique, based on individual heritage and industry-specific, geographical and other impacts. Therefore, it must be specifically diagnosed from a D&I perspective and change programmes must be tailored accordingly. Blue-print solutions cannot be expected to work in such a context (as briefly explained in this video).
Additional new findings
- Almost like an added value, the new research found – due to its longitudinal methodology – that diversity was actually the driver of company success and not – as critics sometimes argue – a result of good firm performance.
- Results are supporting previous studies, showing the need for open team cultures so that diverse teams may be able to reap the benefits of their diversity, e.g. regarding the creation of best solutions.
- The new finding extends past research that showed that investors value strategies, including D&I, which are commonly accepted as best practice – another element that relates back to normative acceptance of D&I in a society (or the lack thereof).
Summary: Key learnings from the latest international research
To summarise, the new research sends a strong message to companies that want to take their D&I work to the next level. However, they need to transpose the finding: „The more gender diversity has been normatively accepted in a country or industry, the more it benefits a firm’s market valuation and revenue. These findings demonstrate the importance of the broader social contexts in shaping the consequences of gender diversity.”
Converted into business practice recommendations, the results imply three learnings which may not be appreciated by those following the current D&I mainstream practices:
- The situation is too complex for simple or blue-print solutions (‘3 things you have to do…’ or just copy & paste programmes from the peer group)
- Quota or quantitative targets are not effective to overcome resistance and drive change (particularly not if they are the main mechanism or the headline of your D&I programme)
- The individual and collective mind-set must be the centre of your attention (please note that training and communication must stimulate reflection and dialogue in order to instigate cultural change)
As a powerful starting point, Stuber recommends to review and revamp D&I storylines to reposition the topic as a direct contribution to business priorities and use metrics as indicators for success rather than goals.
A D&I World on its own: Management and Leadership Culture
Different and similar: The implementation of D&I across Europe
Zhang, Letian: An Institutional Approach to GenderDiversity and Firm Performance. Forthcoming in Organization Science