Transcript Slide 1

The Business Case for Diversity & Inclusion:
Why Diversity is Good for Business
Eric Peterson
Manager, Diversity & Inclusion
Society for Human Resource Management
The Evolution of the Field
Over the last twenty years, the field has evolved considerably …
Compliance Case
“Diversity is something
we’re forced to do … by law.”
Values Case
Business
Case
“Diversity is the smart
thing to do … for
our business.”
“Diversity is the right thing
to do … for our people.”
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The Compliance Case for Diversity
Diversity in the US began as a legal mandate, and that tradition continues …
1970
1960
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2,3
4
1980
5
1990
6
7
2000
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1961: Creation of the Equal Employment Opportunity Commission (EEOC)
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1964: Passage of the Civil Rights Act (incl. Title VII)
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1965: Creation of the Office of Federal Contract Compliance
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1967: Passage of the Age Discrimination in Employment Act
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1973: Passage of the Rehabilitation Act of 1973
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1983: Expansion of Title VII of the Civil Rights Act of 1964
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1990: Passage of the Americans with Disabilities Act
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1996, 2007: Failed attempts to pass the Employment Non-Discrimination Act
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The Values Case “vs.” The Business Case
• There are many reasons why an organization
might/should focus on Diversity.
• Usually, these fall under two broad themes: the
Values Case and the Business Case.
Values Case
“It’s the right thing to do, and will
make our people happier.”
Business Case
“It’s a smart thing to do for business ,
and will improve our bottom line.”
• Both the Values Case and the Business Case are
important and necessary; they do not contradict
each other, but rather complement each other.
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Why is a Business Case Important?
After all, why isn’t “doing the right thing” enough?
• Strategic Diversity Management Plans depend on the
commitment of many people in the organization, not the least
of which are your CEO or equivalent, and Senior Leadership
Team.
• These leaders are naturally focused on the financial health
and well-being of the organization.
• A strong business case for diversity will clearly show that
creating a diverse and inclusive workplace will benefit
everyone in the organization, by making the organization
stronger, more resilient, and more competitive.
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The Business Case for Diversity
When managed well, diversity is one of the
most important assets an organization has in
order to achieve and maintain a competitive
advantage.
Effective diversity management = competitive advantage
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Workplace Diversity Defined
Visible
Diversity
Traits
Skin color
Gender
Physical Abilities/Qualities
Invisible
Diversity
Traits
Age
Body Type/Size
Behaviors
Religion
Sexual Orientation
Ethnicity
Level in Organization
Military Experience
Personality
Work Background
Culture
Values
Geographic Location
Beliefs
Thinking Styles Marital Status
Functional Specialty Smoker/Non smoker
Communication Style
Education
Parental Status
Native born/non native
Socio-economic Status
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Two Definitions of “Inclusion”
Inclusion is the achievement of a work environment in which all
individuals are treated fairly and respectfully; have equal access
to opportunities and resources; and can contribute fully toward
an organization’s success.
Inclusion is the capacity to leverage difference.
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Key Challenges a More Diverse
Workforce Brings
Accommodations
Potential for
Conflict
Communication &
Language Issues
Expectations
(salaries, benefits)
Generational
Differences
More Training
Increased
Turnover
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Opportunities a more Diverse
Workplace Brings
Greater
capacity for
Risk
Cultural
Competence
Increased
Language
Skills
Technological
Competence
Fresh, new
ideas
Global
Focus
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The Business Case for Diversity (cont’d)
Diversity & Inclusion helps the business’s bottom line in the following ways:
1.
Greater adaptability and flexibility in a rapidly changing
marketplace
2.
Attracting and retaining the best talent
3.
Reducing costs associated with turnover, absenteeism and low
productivity
4.
Return on investment from various initiatives, policies and
practices
5.
Gaining and keeping greater/new market share (locally and
globally) with an expanded diverse customer base
6.
Increased sales and profits
7.
Mitigate and minimize legal risks
Source: Lockwood, N., June 2005, “Workplace Diversity: Leveraging the Power of Difference for Competitive Advantage”,
Research Quarterly. Society for Human Resource Management: www.shrm.org/hrresources
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1. Greater flexibility and adaptability
Flexibility &
Adaptability
Customer Service
The Changing Workforce
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2. Attracting & Retaining the Best Talent
•
Which do you believe?
1.
2.
•
•
Talent exists independently of variables such as race, gender,
sexual orientation, ability, religion, marital/parental status, or
socio-economic background, or
Talent is tied to variables such as race, gender, sexual
orientation, ability, religion, marital/parental status, or socioeconomic background.
If #1, how much talent does your organization currently
have access to?
We are facing a global shortage of talent – are you
prepared?
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2. Attracting & Retaining the Best Talent
(cont’d)
Finding talent is seen as the most important management
challenge facing business executives in the next 5 years
Increasing number
of markets served
Increasing size
of company
Greater competitive
intensity
Finding talent
Source: McKinsey & Company
11%
19%
22%
31%
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2. Attracting & Retaining the Best Talent
(cont’d)
• Building leadership capability starts with creating a culture that
makes employees want to stay
• Ensuring that all employees have full and equal access to
opportunities
• Implementing leading-edge talent management programs such as:
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Mentoring
Cross-functional development assignments
Job rotations
Special assignments
Career pathing
Skills inventories
Succession planning (55% of employers are already doing succession
planning)
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3. Turnover, Absenteeism, Low
Productivity
In diverse & inclusive work environments, employees are:
• More likely to stay with that company
• More likely to recommend their company to
others
• Less likely to have experienced discrimination
• Less likely to have missed days at work
• More engaged in their work
Source: Gallup Organization, “Civil Rights in the Workplace Survey,” 2005
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3. Turnover, Absenteeism, Low
Productivity (cont’d)
• Each year, more than 2 million people voluntarily leave
organizations due to perceived unfairness (cumulative
comments/jokes, unfair policies, perceived invisibility)
• This trend costs U.S. corporation $64 billion each year
• This figure is nearly equivalent to the combined revenues of
Google, Goldman Sachs, Starbucks, and Amazon.com, and does
not include costs associated with litigation or loss of reputation
Source: Level Playing Field Institute, “The Corporate Leavers Survey,” 2007, LPFI.org
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4. Return on Investment
=
HR Outcomes
Business Outcomes
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5. Greater/New Market Share
Buying Power by Race
$1,400
$1,200
$1,000
Black
Hispanic/Latino
Native American
Asian
Multiracial
Billions
$800
$600
$400
$200
$0
2000
2007
2012
Source: Jeffrey M. Humphreys, The Multicultural Economy 2007, www.selig.uga.edu
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6. Increased Sales and Profits
Over a 10-year period, the index of publicly traded
companies in DiversityInc’s Top 50 Companies for
Diversity list outperformed the:
• NASDAQ by 28%
• Standard & Poor’s 500 by 25%
• Dow Jones Industrial Average by 22%
Source: – DeGroat, TJ, No Way to Measure Diversity's Value? Mainstream Article Ignores the Hard Facts, DiversityInc.com
http://www.diversityinc.com/public/19452.cfm
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7. Mitigate and Minimize Legal Risk
• Over the past 10 years, major race and gender discrimination
lawsuits cost U.S. corporations $2.3 billion in settlements alone.
• In FY 2007, there were 17,734 disability discrimination charge
filings.
• In the same year, there were 2,880 religion-based discrimination
charge filings
Source: U.S. Equal Employment Opportunity Commission; http://www.eeoc.gov/
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Questions/Comments
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