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Seven Success Factors for Managing Diversity

By Anna Munn - Egon Zehnder International, Carolyn Neck - Egon


Zehnder International, Jane Allen - Principal - Egon Zehnder
International

"A diverse organisation will out-think and out-perform a


homogeneous organisation every single time". A. Lafley, CEO –
Procter & Gamble

Today many CEO's recognise that effectively managing diversity is


imperative for longer-term success. It is a strategy for remaining
competitive in the face of changing demographics and a narrowing
talent pool, rapid globalisation and unparalleled demand for
constant and rapid change. Despite this, a close look at
organisations globally reveals that diversity programs are taking a
long-time to have an impact. There are still very few women in the
managerial ranks and there tends to be a bias towards youth
cultures within leading organisations. Few companies have
integrated disabled people into the workforce and management
teams and boards do not reflect ethnic diversity. There are,
however, companies that are managing some aspects of diversity
well, and are starting to make inroads in this area. We recently
reviewed some of their practices and found seven key success
factors for managing diversity effectively.

1. A clear articulation of the business case for diversity

A distinguishing feature of companies that have been effective in


implementing diversity programs, is that they are able to articulate
the clear benefits associated with having a diverse and inclusive
culture. Beyond having a vague notion that it is the right thing to do,
they understand that diversity can drive enhanced competitiveness
through better understanding of, and access to, diverse markets.
They understand the benefits of increased productivity flowing from
increased morale, job satisfaction and decreased turnover, and the
fact that these things are not just driven by pay and conditions but
that an inclusive culture can be a key motivator for staff. They value
the benefit of enhanced creativity, innovation and problem-solving
that comes from diverse perspectives. They also value access to a
wider talent-pool and the benefits of retention across a broad array
of skills and knowledge. In addition, they see the value of a diverse
culture in enhancing a company's adaptiveness and change-
readiness. They seek an enhanced ability to build global, or at a
minimum, regional relationships. In addition, they see the obvious
benefits of a reduction in vulnerability to potential lawsuits. Having
clarity on the business impacts of diversity is important in order to
engage time-poor management. It also enables the identification of
targets and measurable impacts, all key to building support and
momentum for a diversity program.

2. A clear understanding about the current situation

Companies who are strong in managing diversity are prepared to


hold a mirror to themselves and to understand fully the current
situation, not just in terms of data and statistics but also in terms of
mindsets and behaviours. Having decided to embark on a diversity
program, Eastman Kodak set-up an external diversity panel to
conduct an outsider review of the current situation. They wanted to
understand not only how hiring policies could redress imbalances,
but also the cultural impediments to retaining and developing a
diverse workforce. Indeed, many companies “don't know what they
don't know”, when it comes to creating an inclusive environment.
This means that they can potentially invest too much energy and
time into initiatives that are likely to offer lower unstainable returns
on their investment.

3. Diversity is championed from the top

It is no surprise that successful diversity programs depend upon


visible support from the Chief Executive and Senior Leadership
Team. Almost ten years ago Lou Gerstner identified diversity as a
key initiative for IBM globally. He publicly spoke about the
importance of amplifying differences to seize business opportunities.
He established eight task forces representing various minority
groups, allocating executive sponsors from his own team and
insisting on clear deliverables within specified timeframes for each
of the task forces and then personally reviewing progress on these
deliverables. A number of companies have set-up Diversity Councils,
which typically include the CEO and other senior leaders. Indeed,
successfully managing diversity requires fundamental change in
most organisations, which can only be achieved through
stewardship by the leadership team.

4. Diversity leadership is a stand-alone function at a senior level

Companies who are committed to managing diversity effectively


support this by putting in place a senior level executive responsible
for the function. This person will often report through to the senior
HR professional and will be responsible for managing a sizeable
team and budget. Larger global organisations like HP and IBM have
had this role for some time. Increasingly Australian-based
companies such as Coles Myer Limited, National Australia Bank
Limited and Australia & New Zealand Bank Limited are appointing
people to these positions. Effective diversity leaders possess a
breadth of skills that include an ability to articulate bottom-line
impact to the satisfaction of the CFO, while also being able to talk
about multicultural marketing opportunities to the Marketing
Director. They are strong in influencing skills with an ability to
implement pilot programs and to build momentum and support for
these.

5. Programs are focused on cultural change rather than just


redressing imbalances

Managing diversity is not just about hiring to quotas and costly


“touchy feely” programs. Recruiting a diverse workforce is only the
first step in the process. Companies that are effective in managing
diversity work to ensure that minorities can be successful in the
organisation. This requires that diversity programs are not seen as
ancillary to the business but rather integral to it. It also requires a
change in mindset and behaviours throughout the organisation.

6. Management processes, measurable goals and incentive systems


underpin the change

A number of companies have tied diversity objectives to


performance pay. For example, the Hyatt Hotel Group ties
approximately 15% of the bonus potential to diversity goals.
Companies that have been successful in managing diversity have
translated it into a core competency used to assess the performance
of management.

7. Wide employee engagement and involvement is achieved

Diversity programs that only address the most senior levels within
an organisation result in short lived and superficial improvements. In
order to create a sustainable change, diversity programs needs to
cascade down through the organisation. This requires broad
employee engagement and involvement. At IBM, in addition to
establishing minority specific task forces, the wider population was
asked for their ideas and input in relation to what would make the
company a more inclusive culture. These ideas were then
channelled to each of the relevant task forces for actioning. It is not
sufficient to test the effectiveness of diversity programs just at the
board and senior executive level, rather it is at the “grass roots”
level where a good deal of the challenge and the potential upside
resides.

The seven success factors for managing diversity are not complex
concepts, nevertheless, they are difficult to implement and require a
concerted and focused effort. It would appear that leading
organisations globally and within Australia are beginning to take on
this challenge but there is a long way to go.

http://www.diversityworking.com/employerZone/diversityManageme
nt/?id=10

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