Episode Transcript
Speaker 1 00:00:10 Hi everyone today in the throes of the Roe V Wade decision, I wanna talk about diversity, equity and inclusion, believe it or not. And what I call the long thread of this topic. And we've learned a lot about it. I've been doing research on this for 25 years. Talked to hundreds of companies met with many, many heads of diversity and heads of HR and business people on the topic. And it is a very, very important part of the business community. I wanna talk about why that is and what you should think about as you implement your DEI strategies. First of course, idea that I wanna make clear is that diversity does not create inclusion. Inclusion creates diversity. So you can't look at diversity in a company is something you push. You have to look at it as a strategy, as a business strategy, not an HR strategy.
Speaker 1 00:01:00 And here's why several reasons, first of all, all businesses sell products and services to diverse populations of customers. So if you're a retailer, you probably do business in African American communities, Asian communities, multiple languages, different needs and interests of different segments of your community. If you're a financial services company or a bank, of course you wanna meet the needs of black Americans or Asians or young people or old people or transgender people. So in some sense, being inclusive is part of being in business, unless you only wanna sell products and services to a very, very narrow, defined market. And most companies, even investment banks who sell to very senior people, uh, find out that if they're not diverse, their population of customers shrinks. So there's a reason to be inclusive and diverse as a company because it affects your business. Telecommunications companies, healthcare companies know that the health of their services can only be measured through their diversity.
Speaker 1 00:02:06 We had the C H O of Cedar Sinai at our conference a couple weeks ago. And he made the point that in Southern California, only a third of the population who come into Cedar Sinai are white people. And not only do they have to meet the needs of a very diverse population, but they actually have a chief health equity officer that measures the health outcomes by population group to make sure that they're delivering healthcare services in a fair and equitable way, which by the way, I think banks should do. And I think retailers should do and other companies should do so that's number one is, is it's good business. And so the sign of a mature DEI strategy is that the inclusion officer or the diversity officer is not even in HR cause on the phone with Avita Williams from Dow. And I've talked to the head of HR at target and many other companies.
Speaker 1 00:02:53 And these are very forward thinking companies where they, their head of diversity and inclusion is a business executive. And they look at supply chain. They look at customers, they look at products and they look at HR and talent and hiring and promotions and pay equity and all that too. But that's not the only thing to do. The second reason that this is a business relevant topic is that companies are both a reflection of society and they are societies. And you all know this, that when you hire people, if you are not known as an inclusive employer, that treats people fairly, you're going to miss out on a lot of great candidates. They're just not gonna wanna work for you. And that includes things like environmentalism, ESG, income, inequality, black lives matter. All of those topics affect all of us as citizens. And if we get a sense that our employer is not paying attention to these, even though companies don't have to be activists, they won't wanna work for you.
Speaker 1 00:03:50 So you'll get a smaller pool of candidates and it'll affect your ability to hire second inside of your company. You are a society, you know, I've learned over the years that every single company, no matter how big is a little society, it has its own culture. It has its own values. It has its own behaviors and norms. It often started with the CEO, but as you grow, it changes. And if you're a really giant company, it's changed many, many times. And so you have to be deliberate about what your society is like. Is your society a society of fairness, or is your society a culture of rugged individualism? Is your society a dog eat dog society is your society very political. You may not really be aware of how your company operates, but your, your employees know this and turns out that the companies that succeed over a long period of time, as I write about in my book are the most inclusive companies because they tend to drive more innovation.
Speaker 1 00:04:52 They tend to come up with new ideas. People are more adaptable and willing to change. And so inclusion is part of your internal society, your internal culture. And you have to be convinced that it's a good thing. If you're not convinced, it's a good thing. You know, I'm not gonna convince you, but there's a lot of research there's research that shows that diverse boards tend to make better decisions. There's research that shows that diverse management teams make better decisions. The one that I always think is the best was the research that Deloitte did called waiter is that inclusion in my soup. I love the title of that. It was done by Deloitte Australia and they studied the financial and business performance of a lot of consulting teams. And they asked these consulting teams, how productive are you? How well are you delivering value to clients?
Speaker 1 00:05:39 How innovative and creative are you and how diverse are you as a team? And you can read the report it's online. And you'll see that the teams that self-describe themselves as being highly inclusive were by far four to six times better performing teams. Now that's not causation, but it's pretty clear that that relationship bears out. And if you've ever been in an organization or a team where you didn't feel included, you know exactly how much that affects your performance and how it can hold you back as an individual and your willingness to lean into the problems and solve them and work with other people. So there's all sorts of good reasons for this. And then the, the third really other reason to do it is because of your brand. There are a lot of companies over the years, in fact, many, many large companies that end up getting sued.
Speaker 1 00:06:27 They have class action lawsuits. Now it's all about pay equity. There's lots of work going on 20 to 25% of companies are doing pay equity analysis because a whole bunch of people find out they're underpaid based on race or age or gender. They can Sue you and you can end up being liable for a lot just last week, Google settled 120 million, roughly lawsuit for pay equity issues. They didn't admit culpability, but they did pay it. And you don't want that to happen. You don't want what happened to Coca-Cola a class action lawsuit based on African Americans. That's bad stuff. And you wanna stay outta those kinds of problems too. So there's all sorts of reasons for this. Now, what does this all mean for HR? Well, one of the unfortunate issues in DEI is that in many companies, the HR leader owns the initiative. And I think that's a mistake if you're a C H R O or a DEI leader, and you've been told that you own the program.
Speaker 1 00:07:23 I think you have every right to push back and say, no, I don't. I will drive it. I will architect it. I will train people. I will educate you. I will do the analytics. I will show you what's going on in the public sphere and the social issues that we need to be careful of. But this has to be a business strategy at Dow. For example, the company is an old company and they do business all over the world. They've learned a lot about this. They have employee resource groups and half the company participates in the employee resource groups. It's part of the management culture. Every leader, every one of the 3000 leaders at Dow is required to be part of or lead in employee resource group. So this can't be something that you kind of delegate to this person in HR, and you hire this DEI guru, and this person comes in and tries to create this whole program that doesn't work it's bad for your company.
Speaker 1 00:08:14 It's bad for them. We talk to many, many DEI leaders who get thrown into that situation. And it's very frustrating for them. Usually they don't succeed at it. Sometimes they do, unless they get aligned with the CEO and the business executives, and they can build a business case for it. So if you happen to be in that situation, and you're the HR person responsible for this, give us a call. We'll help you make the business case to the senior executives that this isn't an HR topic. Now, a lot of the implementation of DEI is in HR, the training, the hiring, the pay equity management develop a lot of that falls into HR, but it won't stick and it won't work unless the business counterparts understand why it's important. And sometimes you have to force behavior change to create belief and understanding. I'll tell you a funny story that I, I remember vividly from one of our meetings.
Speaker 1 00:09:05 One of the companies we worked with is a, is a large spinoff from Hertz. They're a rental agency of all sorts of cars and all, all over the country and small locations, mostly men work in the organization, lots of operational managers and supervisors, and the head of HR there told me that diversity was a very important topic for hiring and for employee experience and for customer experience. And he said, he had this funny conversation with a hiring supervising manager and he, one of the things they do there by the way is they create diverse slates of candidates. So they don't give you all white males per candidates. If you're look hiring, they make sure that you talk to women and African Americans and, and different age groups. And they just force that into the recruiting process. And he said, yes, hiring manager said to him, how come I keep have to having to interview all these girls?
Speaker 1 00:09:53 I don't wanna interview a bunch of girls. I wanna interview men. And he, he sort of scratched his head and laughed. And he said, well, you know, you just have to do it, just get used to it. And the, the point he was making is I'm not gonna go through a year of education of this person and teach him about the history of female versus male rights and talk about political history. And, you know, he's not gonna pay attention to that. He said, we're just gonna teach him that women are just as capable as men. And we're gonna force him to observe that. And that actually does work. You find in a lot of highly diverse company, that it is part of the culture and it's just natural. And when you visit those companies or work in those companies, you learn a lot about human behavior that you may not have learned in another company.
Speaker 1 00:10:39 And that comes up a lot. Chevron, for example, Chevron is a very diverse company and very, very well run company, very high human capital metrics, very high retention. I know oil companies are demonized a lot, but they're actually not. They're actually really well run companies Chevron many years ago, long before I started talking to them, came to the conclusion that in order to be a good energy company, they had to do business in countries and cities and populations around the world that were highly diverse. And they needed a highly diverse workforce to operate in those organizations. They needed to recruit in those countries. They needed to deal with political leaders of different backgrounds and so forth. And they created a lot of diversity programs. They have diversity committees. They have in a sense what, what one of the DEI leaders called it sort of a safety program around diversity to protect themselves from getting into bad situations.
Speaker 1 00:11:31 And I've met a lot of people that worked at Chevron, the very highly diverse people that work at Chevron that love it there. And it's just natural to them. Whereas you go to a, another company, I won't mention any names. It's mostly white males and yes, it's odd for them to hire an African American. They're not used to it. It doesn't feel right, but over time it does. And so sometimes you do have to force the process and it then changes the culture. Now, let me give you a couple of examples. One of the things that we learned in our research called elevating equity, it's available for our research members is first of all, there's no single definition of DEI that works. In fact, even if you go to contests, these lists that various media companies do with the most diverse employers, you find different companies on different lists because there is no single definition of what a highly diverse company looks like.
Speaker 1 00:12:21 The S E C has asked companies to start reporting this kind of information, but people don't report it in a consistent way, but you can tell when you're diverse because certain things happen. So let me give you some examples. One of the companies we had at our conference was L'Oreal L'Oreal sells beauty products and hair care products. And the head of HR there, Toon basically was talking about how their diversity program works. He said, well, first of all, our products are used by a very diverse population of consumers. So we have to build hair care products for people with different kind of hair and African American people have more curly hair and Asian people's hair is different from Caucasian people and so forth. I don't know the details of this, but he said, so we, we already kind of live this in our products. And he said, so what we did to reinforce diversity in the workforce is we said, we're gonna have diversity and inclusion councils at all levels.
Speaker 1 00:13:14 You're a very highly distributed global company with lots of small teams all over the world, sales, marketing, engineering products, et cetera. And those individual managers in those small teams all have diversity roles. And they have ERGs at every management level. And all managers are therefore trained and educated and sensitized to the need to be diverse in hiring recruiting, pay rewards, recognition, everything, development, growth, et cetera. That's one example. Another example is the Lego group. We had Lauren Schuster, the C of the Lego group at our conference. And he's a wonderful, really interesting guy and done all sorts of creative things. The Lego group, which is a private company, very, very successful is entire mission is focused on encouraging and developing play among children. And that's what Lego's all about. It's not about selling blocks. So they study play and they literally study how children play and what it means to create a playful experience and therefore what they can foster with their Lego block and other technologies, by the way, you know, the Lego blocks are in themselves, actually a technological Marvel, the way they fit together.
Speaker 1 00:14:30 I won't get into that, but there's quite an interesting technology story behind it, but he said so, so we actually created leadership playgrounds as part of our leadership development. So all of our leaders get a chance to experience, play and understand what heterogeneous and diverse play is like. That's part of their diversity strategy. I talked about Cedar Sinai healthcare companies are often the most diverse of any industry we looked at as our pharmaceutical companies, by the way. And the reason for that is a they're hiring. They have very challenging hiring problems and they have to hire nurses and healthcare professionals at all levels in very difficult jobs. And they need to be very inclusive there. But of course the population of patients is very diverse. And so you have to have a population of, of workers who feel comfortable with that. So they really understand this issue extremely well and have lots of standards for pay and recruiting and general practices to facilitate this.
Speaker 1 00:15:33 Let me make another point. By the way, one of the things that comes out of in our research is that most companies do wanna do this. And something like 65 or 70% of companies told us in our big study that they believe they are inclusive and diversity is core to their business strategy, but what you get into what they actually do, it's much, much less, only about 20% of the companies we surveyed or less hold leaders accountable for diversity metrics, which is obviously a part of a diversity strategy and only 15% or less train HR people and recruiters on what diversity means to them and their job and their role, and how to deal with diverse candidates and different needs of different populations. So there's a lot of work to do in HR. In fact, when we look at the global capability model that we put together a couple years ago, that a lot of you have taken more than seven or seven, 8,000 people have taken it.
Speaker 1 00:16:32 The lowest self-rated capability in HR is DEI. And that's an indication of the fact that this is an intimidating topic and that many of us don't teach ourselves enough about it. And I think there is a tendency to make it a very academic topic. Let's talk about the history of slavery and why black lives matter as an issue, and what happened with the Supreme court. That isn't as important as you think those are important sensitivities that we have to deal with. But a lot of this is nuts and bolts on how we're gonna run the company and the decisions we're gonna make and what we're gonna measure and how we're gonna hold people accountable. And one of the things that happens in diversity is a lot of learning. So let me kind of close on that in the conversation we had last week with Dow, what we talked about with Avita is the behavior change that has to happen and what they did at Dow.
Speaker 1 00:17:26 And they've been doing this for a long time. This is a company that's been working on this for many, many years. She said, one of the things we wanna, um, talk about in this particular cycle is microaggressions and conversations and comments and things that people make in inadvertently not even knowing that may maybe not very sensitive and teach people how to have those conversations. People teach people how to deal with confrontations from people that feel disaffected, teach people to deal with difference opinions that come up in meetings. So what they did is they used an avatar based education program run by this company called mersion. And she said it was exceptionally successful. She said, this was one of the most, highly regarded, 85 to 90% of the managers who went through this. And it was really a simulation where you really had to experience microaggressions and issues.
Speaker 1 00:18:16 First hand, 90% or more of the managers who went through, it said it was really valuable and they wanna do it more. So once you get under the covers of the DEI experience in your company, there's a lot of interesting things you can do for education and training. So, final thing I'll just say is the reason I decided to put this little podcast together is I was so shocked with the Supreme court decision over the weekend. And I'm not gonna make any comment on the politics of it, but I don't think any of us work in companies where our employees are not sensitive to women's rights, African American, Asian, other nationalities, gender diversity, transgender gay, and lesbian, L G B T issues. And even cognitive diversity. We live in a very diverse world. Human beings by nature are diverse animals. And what I was telling Alveda and, and others in our conferences in many ways, this is an issue of respecting the potential and capabilities of every individual human being in your company.
Speaker 1 00:19:27 So when you get into diversity, you will learn a lot about yourself. You will find biases that you have, that you grew up with because of your family or where you grew up. And those are things that you have to learn to deal with. And that's why it's a sensitive topic. But I think in the context of building an irresistible company and creating a great organization during this tumultuous period of the economy, this is a very, very important topic. And you're gonna have a lot of employees who are gonna want to talk about these political issues. And if you have a great program and you have employee resource groups and you have managers sensitized to it, you'll be able to have those conversations and help people feel like they belong in your company. And that's the, one of the most valuable resources you have is the sense of belonging, a sense that people enjoy and feel a part of the culture and the citizenship of your company. That is a really important part of this. So anyway, take a look at our research called elevating equity. We have a big reset group that works on this. If you're a DEI leader, or just reach out to us, if you'd like to talk, we have an assessment and all sorts of tools that can help you with this. Plus we know most of the tools and vendors that are out in the market in this domain. Thank you.
