Diversity is listed at the bottom of priorities for human resources professionals in large firms yet many mangers still feel threatened by diversity policies.shutterstock
By Jennifer Whelan, Melbourne Business School
Many large organizations are now on their second or third wave of diversity and inclusion programs.
A good number of them are still struggling to identify obvious improvements in the metrics they hoped to see changes in. Yet, ironically, increasing numbers of people are beginning to express “diversity fatigue”.
The statistics on corporate diversity in Australia still paint a frustratingly dismal picture.
The newest report from the Workplace Gender Equality Agency (WGEA) finds women comprise 39.8% of “other managers”, but their representation falls to 26.1% of key management personnel and just 17.3% of CEOs. At a board level, women hold only 23.7% of directorships and just 12% of chairs.
In the non-ASX-listed and medium-sized company landscape, diversity and inclusion fare even worse. In these companies, diversity hardly rates a mention on the agenda of many chief executives.
Despite this lack of success, there is a growing notion that men will become an endangered species in the ranks of leadership. How is it that on one hand organizations are struggling to make substantial progress, while on the other it is perceived that the pendulum has swung too far in favor of women and minority groups?
Men are expressing fears that decision-making is no longer merit-based and that the women they manage increasingly expect a “free pass” to leadership. They also feel they are forced to promote under-qualified women because of the company’s diversity targets.
Diversity fatigue can most readily be heard on the part of committed practitioners and advocates. Many have become literally exhausted at the constant battle to get diversity and inclusion on the agenda, and then get it funded well enough to achieve tangible gains. Not surprisingly, a 2012 McKinsey report revealed that diversity sits very close to the bottom of the agenda for the majority of human resources professionals in large firms.
Another type of diversity fatigue can be seen in the training rooms of the corporate world. Over-stretched, mostly male senior executives are hauled in to workshops on unconscious bias and exhorted to add yet another aspiration to a crowded list of key performance indicators.
At the same time, many of these men believe women’s gains will be at their expense. It is increasingly common to hear male executives worry they will have to compete harder for promotion with more qualified senior women. The concern is this undermines women’s merit-based promotions.
Where does “diversity fatigue” stem from?
One of the most fundamental causes of diversity fatigue is that neither academics nor practitioners have yet identified a comprehensive, programmatic solution to increasing diversity across organizations. As a result, many initiatives are introduced that fail to yield tangible outcomes.
Without being part of a broader strategy, they are then promptly forgotten. This undoubtedly contributes to the misconception that, given the amount of “diversity talk”, men may soon be in danger of disappearing from leadership. The rhetoric of diversity has outpaced the action and people have become tired of hearing about it, despite the lack of substantial progress.
The WGEA report shows around half of employers have policies on the known enablers of gender equality, but few are developing strategies in these areas. Nearly half (47.7%) of employers have policies on flexible working but only 13.6% have a strategy for flexible working. Similarly, 45.2% have a policy for supporting employees with family and caring responsibilities but only 13.2% have a strategy in this area.
The 2012 McKinsey report also highlights some of the more general challenges to human resources functions in large organizations. These challenges present significant obstacles to achieving diversity and inclusion.
First, the “support function” mindset of many human resources professionals means a strategic approach and a budget sufficient to enable execution are often lacking. Many organizations still see diversity policies as a special interest issue, rather than a business performance imperative.
Second, many organizations struggle to articulate a compelling relationship between diversity and return on investment. As a result, diversity is underfunded and seen as a “non-core” activity. This attitude persists despite a fast-growing body of research cataloging the financial performance advantages of diversity.
Third, even large organizations often do not have particularly high levels of capability when it comes to diversity and inclusion. Many human resources professionals combine this accountability with other roles.
Even where there are dedicated diversity resources, such as diversity officers or councils, the depth of expertise is often lacking, their authorities and level of accountability is unclear, and the role is often a detour from a career path headed elsewhere.
Why does diversity within organizations matter?
Perhaps in response to diversity fatigue, many practitioners are starting to broaden the perspective on why diversity should matter to organizations. It is now quite common to hear about the performance advantages of “diversity of thinking” and the business performance benefits bestowed by a workforce of diverse, flexible, adaptive thinkers.
An increasing body of research supports the notion that socio-demographically diverse people who think and problem-solve in diverse ways, tend to outperform groups of homogeneous experts.
We now know that demographic diversity through culture, gender and age can trigger these performance-enhancing effects. They signal the need to consider a broad range of perspectives and promote more rigorous development and communication of ideas.
Taken this way, diversity is positioned as a means to a commercial end. The goal is to maximise the value of collective intellectual capital. It is this end-game that provides a more compelling business case for diversity to many senior leaders.
Recent research provides a wealth of evidence illustrating the broad range of tangible benefits of diverse, inclusive organizational cultures. These include: higher returns on equity and investment, better financial performance, improved corporate governance and increased innovation, creativity and competitiveness. Other well-known benefits include higher retention, engagement and well-being of employees.
This “intellectual capital” approach provides a rationale for positioning diversity within the core organizational agenda. It makes the argument for funding this goal well enough to enable dedicated specialist roles to drive a strategic program of work with a greater likelihood of real, sustainable outcomes.
Importantly, the broader business performance outcomes of the intellectual capital approach appeal much more to the hip-pocket concerns of executive teams.
Cynics may say this approach short-changes those who are committed to diversity on the grounds of values and social justice. However, any way that diversity and inclusion become an integral part of corporate Australia should be embraced.
Jennifer Whelan, Research Fellow, Asia Pacific Social Impact Leadership Centre at Melbourne Business School, is the Managing Director of Psynapse Pty Ltd, a diversity and inclusion consultancy.