On Martin Luther King Day 2020, almost 52 years after his assassination, the issues of equal treatment and diversity and inclusion for all still trouble many companies. But here’s another way to look at the issue: The cultures that empower innovative and adaptive organizations — which most CEOs want — are the same cultural traits that engender diversity and inclusion.
Let’s first look at the state of the US workforce and then consider the best ways to drive diversity and inclusion for all and the adaptive and innovative work cultures that attract and retain the best workers and drives profitable growth. If you want to skip these US workforce statistics and get to the characteristics of highly inclusive, diverse, and innovative culture, go to the paragraph below beginning with the words, “so, what are the characteristics of work cultures….”
The United States has achieved, according to the US Department of Labor, the lowest unemployment rate (3.5 percent as of December 2019) in more than 50 years, and the steady US economy has raised all boats. When we look at America’s traditional diversity, we find that women and people of color are also benefiting. Consider the following:
- African American unemployment is at an all-time low at 5.9 percent, and Hispanic unemployment is at 4.2 percent, and both groups are enjoying their highest employment participation rates.
- Asian unemployment rate is 2.5 percent, lower than white unemployment rate of 3.2 percent.
- Women now have a slightly higher labor force participation rate than men, and their unemployment rate is only one-tenth of a percent point above men, 3.2 percent for women compared to 3.1 percent for men.
Women and minorities have also closed the wage gap, but big differences remain that are not fully explained by differences in education, work experience, the choice of lower paying careers, and parental duties. According to the US Department of Labor for 2017, men make 18 percent more than women in the US economy. Whites make 23 percent more than blacks and 26 percent more than Hispanics. Asians make 19 percent more than whites. While more women have broken through the glass ceiling (generally not true for blacks), there are still big differences between women and men and minorities and whites in top management roles.
Having a diverse workforce drives higher employee productivity and revenue. The empirical research for this is becoming overwhelming. Consider the following.
MIT and George Washington Economists looked at eight years of revenue data and employee surveys that measured satisfaction, cooperation, morale, and attitudes toward diversity. That included data from teams and offices that were entirely male or female as well as mixed-gender teams. Revenue figures showed that employees on more diverse teams were more productive and better performing, although individual employees reported higher levels of job satisfaction on teams that were mainly staffed by employees from their own gender. Moreover, other studies have found similar results[i]
So what are the characteristics of work cultures that enable diversity and inclusion and also drive innovation? InnovationOne has identified through multiple empirical research studies the traits of highly innovative companies. Our research on innovation has continued with The Conference Board. In addition, I am relying on current surveys of the work cultures and employer preferences of today’s diverse workforce, as reported in my book Hack Recruiting. With all these resources, I have identified the top cultural characteristics of the drivers of diversity and inclusion and innovation. They are:
- The executives and managers of these companies promote transparency on many levels:
- From the top: The executives of these companies share information about the competitive landscape, the threats and opportunities for the company and information on new technologies and customer trends. Transparency in this regard is a critical cultural element for innovation.
- By using openness and inclusion: The inclusion they emphasize is to ensure every employee knows their questions and suggestions are heard, and that they feel included in the vital work of their teams. Inclusion and an invitation to participate in solving the company’s problems is a key ingredient for innovation and inclusion. This can be emphasized in open forums, team meetings and on collaboration platforms such as Slack.
- By onboarding effectively: These companies invest in active employee onboarding programs, which accelerates a new hire’s sense of belonging and time to full productivity by as much as 64%. They often assign new employees mentors and coaches, so they quickly learn how work gets done, decisions are made, and the company’s culture. They encourage new hires to develop relationships with coworkers and those who are dependent on their work.
- Training and Learning. These companies invest in strong employee skill training for the job: coaching, digital training, and classroom training. They eagerly invest in training programs for new enterprise software and other job skill development. These are not sink-or-swim cultures. Skill training is what diverse and young workforces want, and such training improves productivity and innovation. Training on how employees of diverse cultures and different genders communicate and collaborate successfully, also improves productivity and inclusion.
- Organizational Learning. That is, the companies openly share recognition for great work achieved by teams and individuals, they also share failures — including the learning of prototype, experimentation, and innovation gone wrong. These types of failures are not seen as incompetence or poor performance. In highly innovative cultures, these types of failure are seen as a learning opportunity and not as a career-limiting error.
- Empowering and empathetic leaders. Companies that are good at both workforce diversity and inclusion and innovation, have leaders who inspire their teams, establish clear and challenging goals, use well-understood operating norms, delegate work, measure progress, provide ongoing development and performance feedback, offer clarity on decision- making rules — and, most importantly, build trust. Without team members being sensitive to each other’s needs and trusting each other, team members cannot feel included, or be innovative. Without trust, employees will not propose new ideas, won’t collaborate with each other, or build upon each other’s ideas.
Many executives shudder at the discussion of diversity and inclusion programs because the track record for the last 40 years hasn’t been overwhelmingly successful, and in many cases has been too divisive in the workforce. But now we can see that improved productivity, innovation, and financial performance from more diverse and inclusive teams offer opportunities that are too valuable to ignore.
The good news is that if you want to improve the collaboration, agility, and innovation of your workforce, you will need a diverse and inclusive workforce. (And more importantly, employees who have cognitive diversity.) Putting in place the elements to have a culture of innovation and following the four characteristics above will improve your diversity and inclusion—and your innovation and financial success.
Attracting a diverse workforce is further improved by using non-biased selection methods such as validated assessments, structured interviews, AI search platforms, measures to track your progress, and by identifying diverse university students early in their academic careers.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and managing partner of InnovationOne. He works with companies to improve their recruiting, HR operations, and develop extraordinary leaders, teams, and cultures of innovation. His new book is Hack Recruiting: the Best of Empirical Research, Method and Process, and Digitization. Subscribe to his weekly blogs at www.VictorHrConsultant.com.
[i] I recommend you read the following: Rachel Emma Silverman (December 15, 2014) “Men and Women at Work: Unhappy, But Productive,” The Wall Street Journal. Found at: http://blogs.wsj.com/atwork/2014/12/15/men-and-women-at-work-unhappy-but-productive/?mod=WSJ_Management_At_Work&mod=wsj_valettop. And Pierpaolo Parrotta, Dario Pozzoli, and Mariola Pytlikova, (2010) “Does Labor Diversity Affect Firm Productivity?” Department of Economics, Aarhus School of Business, University of Aarhus. ISBN 9788778824615 (online).And Andrea Garnero, Francois Rycs (2013) “The heterogeneous effects of workforce diversity on productivity, wages and profits.” Found at https://www.iza.org/conference_files/SUMS_2013/garnero_a8067.pdf. And Thomas Barta, Markus Kleiner and Tilo Neumann (April 2012) “Is there a payoff from top-team diversity? Between 2008 and 2010, companies with more diverse top team were also top financial performers. That is probably no coincidence.” Insights and Publications. McKinsey Quarterly, McKinsey and Company. Found at http://www.mckinsey.com/insights/organization/is_there_a_payoff_from_top-team_diversity. And Valentina Zarya (Feb. 8, 2016, 4:52 PM EST) “New Proof That More Female Bosses Equals Higher Profits,” Fortune, Found at http://fortune.com/2016/02/08/women-leadership-profits/?iid=sr-link9.