Adversity makes change happen.Between 1991 and 1993, IBM reported $16 billion in losses. Its internal structure was complex, deeply siloed, and resistant to change. The IT market was evolving rapidly, and CEO Lou Gerstner saw a culture that was out of touch with customers. What happened next is well known. Business units were cut. Tens of thousands of employees were laid off. Old conservative cultural rules, from dress code to employee bonus calculations, were thrown out, and the company turned around under a solutions and customer-driven market focus.
Less well known is the fact that Gerstner made diversity a priority as part of that cultural turnaround.
In 1994, Gerstner kicked off an initiative that would reinvent diversity for a company that historically fought discrimination by simply ignoring differences within its workforce. He established diversity task forces to understand different parts of the workforce. He pushed the issue as a leader, making it part of conversations with other executives, touching on everything from flexibility for working mothers to succession planning, and he approached diversity as a business imperative, linking it to performance in market sectors.
The strategy worked. By 2003, the company had significantly expanded its client base among women-owned businesses, as well as markets for Hispanic, Native American, Asian, and black people. Harvard Business Review reported that revenue for small and medium-sized businesses grew from “$10 million in 1998 to hundreds of millions of dollars in 2003.”
As IBM found, the motivation for improving diversity does not have to be regulatory compliance. And while everyone agrees that D&I is a vision for good, a moral imperative is not always enough to make it a priority. At its root, moving the needle on D&I requires a change in the status quo, and it requires a force to make it a business imperative. Gerstner saw a future that embraced diversity in employees and diversity in markets. It was part of a larger turnaround for IBM, and the result was a bottom-line impact that was part of a business transformation.
While companies do not need to be facing major adversity to re-think D&I, building a diverse workforce and inclusive culture requires real change and implementation of proven best practices. So, what does it take for a D&I effort that achieves impact? The answer is common to all successful initiatives: executive commitment, a clear position on D&I, and metrics for success.
Talent and HR leaders can create D&I programs, but without executive support, lasting change will not happen. Through the commitment of C-suite leadership, organizations can give HR and talent organizations the backing to ensure D&I initiatives rise to the level of priority needed to affect change. Leadership must move the effort forward in three crucial areas: framing the story, raising the volume, and transforming expectations:
Because a D&I commitment requires communication and change management, a clearly defined position is essential. Standalone diversity committees and task forces are widely used to move the D&I vision forward. These groups represent all facets of the organization, not just senior leadership, and they are frequently granted authority to develop the diversity statement.
A D&I mission statement is the centerpiece for promoting diversity both internally among employees and externally in the marketplace. The vision sets the tone for how the company wants to improve. At the same time, the vision must be honest as it reflects both the company’s accomplishments and the work yet to be done. Most importantly, the vision must be championed by executive leadership.
The cliché is true, “What gets measured, gets done.” When it comes to D&I programs, relevant metrics are the key to ensuring accountability, sustaining and improving activity, and driving impact. But what exactly can an organization measure? The answer goes well beyond the traditional hiring quotas of the past.
While diversity can be measured through headcount, inclusion requires more focused attention. The good news is there is a wealth of data to be tracked, and much of that data can help companies pinpoint and address issues related to employee experience. A holistic look at metrics, and the data that can be collected across the employee lifecycle, can provide an accurate picture of where the issues lie.
The types of data being collected will ultimately determine the direction of the D&I strategy. For example, tracking the proportion of different nationalities in a given market and location and comparing it to the company’s employee mix can reveal gaps. This approach can be carried to all levels and types of diversity, including ethnicity, age, nationality, gender, veteran status, or disability. Input from legal counsel is important when collecting data, as laws vary greatly around the world. Armed with a strategy that captures D&I data and compares it to relevant thresholds in key areas of recruiting and employee experience, organizations can set goals that can be measured.
Together, the influence of executive support, a clear D&I position, and metrics for success can make the difference between a nice-to-have activity and a D&I effort that raises the bar on talent acquisition effectiveness and employee experience. With these pieces in place, companies can focus their efforts on applying best practices for building a diverse workforce and inclusive employee culture that is attractive to talent from all backgrounds.
Companies with mature D&I programs realize a 35 percent competitive advantage, nearly twice the innovation output, and 67 percent improvement in candidate attraction. Want to join them? Download our report, “Talent, Business, and Competition: A New World of Diversity and Inclusion.”