“Diversity is being invited to the party. Inclusion is being asked to dance.”
Verna Myers | Author, Consultant and Cultural Innovator
As soon as a candidate says “yes” to an offer, the employee experience begins.
That experience can start with the new employee wondering if her compensation is fair because she was not inclined to ask for more. It can start with silent stares from people in the office or warm outreach and greetings. It can start with confidence that this job is an opportunity to advance a career or merely a simple hope that the job works out. The experience grows every day. The culture of the company will either make the diverse employee feel included as a part of the organization, or it will make the employee feel separated from social interaction and advancement opportunity.
This is the inclusion part of the diversity and inclusion (D&I) landscape. Inclusion falls into the post-hire world of talent management, but the subject cannot be ignored by talent acquisition or business leadership. If inclusion does not work, the employee will eventually leave (creating a talent acquisition burden), or that employee will contribute less value to the organization (a core business performance problem).
At the same time, inclusion goes a long way toward shaping an organization’s employer brand and its ability to attract the talent it needs. Decades of diverse hiring and affirmative action quotas in the United States have yielded hard lessons about the relationship between employers and the diverse employees they hire. The most important lesson is simple: without being asked to dance, the guest is likely to leave the party early. Without inclusion, diversity does not matter.
With that in mind, companies are taking notice of the inclusion issues that can impact talent acquisition. These issues encompass three essential areas of the employee experience: compensation, employee engagement, and career advancement opportunity.
According to the Pew Research Center, women in 2015 earned approximately 83 percent of the pay of their male counterparts. Another report by Pew found that “black men earned the same 73% share of white men’s hourly earnings in 1980 as they did in 2015, and Hispanic men earned 69% of white men’s earnings in 2015 compared with 71% in 1980.” Likewise, a 2016 study of law firm partner compensation found that compensation for male partners was 44 percent higher than for female partners. The pay gap is one of the most visible D&I challenges companies face today, with gender equality issues gaining much attention in the media. While many organizations are acknowledging discrepancies in compensation, fixing the issue is not easy.
For example, in 2015, global customer relationship management (CRM) software provider Salesforce audited its compensation for male and female employees and found a $3 million gap. The company announced it would invest $3 million to fix the gap. Two years later, the company repeated the audit, finding that the same gap had reappeared. Once again, the company spent $3 million to address its pay gap. Salesforce generated goodwill based on its transparency and commitment to address the gap, but the story shows that a lasting improvement in pay equality demands a focus on both the culture behind the pay disparity and continuous monitoring of the pay disparity itself.
Raising the bar on compensation fairness begins with a look at the causes. These causes may vary for different groups, but using the gender gap as an example, one finds that some pay discrepancies stem from a combination of bias in role expectations and inconsistent approaches to compensation discussions and negotiations.
Gender bias in performance management, job expectations, and promotion dramatically influences the advancement opportunity for women in the workforce. Female employees may receive overly critical reviews from male managers. They may face assumptions by male managers about their ability to handle a new advanced role, and they may be overlooked for the work being done in current roles. In this way, the issues of career advancement and fairness in compensation are often intertwined.
Unrecognized work in a role may lead to “scope creep” of workload — with the female employee, for example, doing the work of a higher-paid, director-level role while being paid at a lower level manager role. All of these issues require a program of periodic audits that link job roles, requirements, and compensation for consistency across the organization.
Another factor in the pay disparity issue is a reticence on the part of diverse employees when talking about compensation. According to one research study, men were nine times more likely than women to ask for more money. Another study found less of a gap in asking for money, but when it came to salary negotiations, four percent of women succeeded in obtaining more money while 15 percent of men succeeded.
In either case — whether a diverse employee does not ask for higher pay or an employer refuses to raise a salary — the end result is that the pay gap expands. Over time, given the confidentiality of salary discussions and negotiations, the gap can be unwittingly allowed to increase unchecked and unnoticed. This problem has led some organizations, such as online social content forum Reddit, to eliminate salary negotiations altogether. Others, including a variety of smaller tech companies, are making worker pay
transparent across the organization. In these cases, all employees know how much other employees earn. Transparency alone will not solve pay disparity issues, but it will point them out and create urgency on the part of leadership to address them.
Employee engagement makes business sense. According to a Gallup study, employees who are engaged with their work are 17 percent more productive than those who are less engaged. Improved engagement can reduce turnover rates by up to 59 percent. Profitability in highly engaged businesses averages 21 percent higher, and absenteeism is 41 percent lower than in companies with less engaged workers.
Employee engagement boosts productivity and accelerates innovation. It creates a culture that can strengthen a company’s employer brand and improve candidate attraction. And, in the case of diverse employees, inclusiveness is a key contributor to engagement. Today, talent and business planners benefit from the availability of expertise and proven best practices that can help them create a workplace that is highly inclusive. Examples of engagement strategies span all aspects of talent management, from communication and training to the establishment of employee resource groups and mentorship programs.
In shaping an inclusive culture, a consistent and steady stream of communications demonstrating and celebrating aspects of diversity in the company can play a vital role. For example, information and media highlighting what life is like in other parts of a geographically diverse organization can help cross-cultural and cross-border stakeholders become familiar with other cultures within an organization.
Generally, these types of communications are focused on the people rather than the business. They may be standalone articles or videos, or they can be included as part of internal newsletters or other communications. Complementing the outward communications pieces, companies may also want to establish dedicated diversity Intranet pages where employees can stay up-to-date on community events and news. Together, the dedicated site and internal communications help connect workers with others they may not know within the organization. The key to success in this area is patience. People read and retain a fraction of the news presented to them, so it is important to stay persistent, and consistent, in developing diversity-related communications.
Education, in the form of presentations, special speakers, or other events, can be helpful for building awareness and fighting bias among all employees, but beware of mandatory training. In a study of more than 800 U.S. companies, Harvard research found that after five years of compulsory diversity training for managers, organizations saw declines in the numbers of some demographic groups, including black women and Asian-American men and women, with no improvement among white women or other minorities.
A more effective approach is to provide less formal training in the form of “lunch-and-learn” sessions or workshops, focusing on different aspects of D&I. In some cases, these sessions may be conducted by HR or other corporate experts, but they can also feature speakers from diverse groups, leadership, or the community. These types of sessions break the training mold and instead highlight diversity as a positive experience rather than an obligation.
Also known as affinity groups, employee networks, or business resource groups, ERGs are devoted to bringing together workers of common backgrounds, along with supporting allies outside of their group, to share and address challenges, raise awareness, and contribute to the business. ERGs can help refine how an organization reaches out to talent. They can also help new hires adjust quickly and become engaged as part of the organization.
Related to ERGs are employee councils. These groups may be smaller than ERGs and focus more on being the voice of the diverse group to the executive team. Both ERGs and employee councils can identify issues, contribute to strategy, and act as watchdogs for identifying issues and improving inclusiveness. ERGs may also conduct community outreach that helps to strengthen the organization’s employer and customer brand.
Keys to an effective ERG include an executive sponsor, a charter with established goals, regularly scheduled meetings with senior management, and measurement and tracking of members in areas such as promotion and engagement. The executive sponsor helps to raise the voice of the ERG, but that sponsor is not the leader of the group. Leadership should come from within the group and foster grassroots connections with the employee population.
Also, ERGs do not have to be limited to people from the groups they represent. Allowing universal access can be beneficial. This approach is important in a culture where allies of the needs of a certain group are also engaged. For example, support of the LGBT community by non-LGBT people is becoming increasingly common, particularly among the growing population of Millennials and Gen Z workers. Likewise, it is now also common to see white men and women in multicultural ERGs.
Through mentoring programs, companies have significantly expanded the portion of historically underrepresented minorities in their workforces. Industry statistics vary, but studies have found improvements ranging from nine to 24 percent. In industries such as chemicals and electronics, where many college-educated non-managers are eligible to move up, mentoring programs also increase the ranks of white women and black men by 10 percent or more.
The success of mentoring programs can be supported by several best practices. Start small, using a pilot program aimed at specific groups. Ask prospective mentors and mentees to provide information or answer questions, and then have the mentorship leader assign the pairings. Finally, track employee performance after the mentorship is complete. What is the level of engagement and retention? What about advancement? Be creative. Do cross-cultural mentor-mentee relationships perform better, or do relationships among those with similar backgrounds help more? By asking the right questions and making adjustments over time, companies can boost participation in their mentorship programs and improve their effectiveness.
Companies depend on workers to perform well in pursuit of new opportunities — to advance into new roles, to receive a raise, and to take on new challenges. And for diverse workers, bias often stands in the way of opportunity. Diverse workers may find themselves working for bosses who are less forgiving of weaknesses and less appreciative of their strengths compared to non-diverse employees. They may also find themselves shut out of the conversations that can put them on track for promotion. Once again, unconscious bias is a major culprit in limiting career advancement for diverse employees. Often, bias is hidden in situations or practices that are generally accepted by employers and employees alike.
For example, companies are beginning to recognize bias in the high-potential (Hi-Po) concept that determines succession planning. The Hi-Po label can be subjective, and it often leans toward people that leaders already know. If diverse employees are not already in the leadership fold, they are not likely to have the opportunity to be in the succession planning discussion. Organizations can mitigate Hi-Po bias by evaluating all employees against an objective set of criteria, from hard skills and aptitude to problem-solving and communications. Likewise, measuring and tracking targeted diverse groups and their inclusion in succession planning can reveal where opportunities are being limited. This approach can help to improve access to leadership opportunities for diverse workers, and it can boost compensation potential and diversity at C-suite levels.
Not surprisingly, cultural pressures also play a large role in advancement and opportunity. For example, research shows that women are still nearly twice as likely to take time off and more than three times as likely to quit their jobs for family reasons. While these are conscious decisions on the part of the female worker, the employer can mitigate the pressures that cause women to quit or postpone their careers.
The key to adjusting to family pressures and retaining great employees is flexibility on the part of the employer. Does a job role or culture require the employee to attend every meeting and every event? Is the requirement to work onsite, nine-to-five, and Monday through Friday set in stone? The same issues that push candidates away from excessive job requirements also drive employees away before allowing them to advance. Adjusting to keep the talent from leaving is not just a nice gesture. The cost of losing talent is very real. Estimates of turnover costs range from 30 to 40 percent of salary for most employees and up to 400 percent of salary for leadership roles.
Fair compensation, employee engagement, and career opportunity: each of these results is an important ingredient in an inclusive company culture that delivers a positive employee experience. Each aspect takes time to build and requires continuous effort to maintain and improve. Together, they add up to a talent advantage in terms of worker productivity, retention, and talent attraction. Learn more by downloading our report, “Talent, Business, and Competition: A New World of Diversity & Inclusion.”