The message has been heard, loud and clear. The business case for diversity and inclusion has grown more robust as an essential means for fostering innovation and unleashing value.
A McKinsey study, the third of a three-year series, suggests that a diverse executive leadership team correlates to greater profitability. The 2019 results indicate that “companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile.”
But who within the executive team should lead an organization on its diversity and inclusion mission?
Executives in every industry and at every age are speaking out. In an Adweek profile, Ryan Robertson, then innovation director and head of multicultural marketing for beverage company Diegeo, suggested that companies, “Insist on diversity as a valued principle. Set distinct specific and measurable targets for people of color at every level. And do it swiftly.”
While a dedicated diversity and inclusion officer (D&IO) may seem like a no brainer choice, making a choice has become multifaceted. The COVID-19 pandemic is forcing many organizations to shift budgets and operational priorities. For diversity, the impact may mean choosing an executive to manage the responsibilities temporarily. Moreover, companies face unprecedented interactions for social bias as a result of data and technology. Companies' reliance on data and programming may require a leader who can blend technological awareness with solutions.
Definitions for diversity and inclusion
To get to the heart of a decision, definitions for diversity and inclusion must be clear. Diversity is an appreciation of traits that make a group of people unique. Inclusion means embracing the behaviors and norms in a way that makes people from varied groups feel welcome to participate in an organization.
The advantages and tradeoffs for placing diversity under a chief innovation officer, a chief marketing officer, or a diversity and inclusion officer depend on role alignment in the organization, as well as the nature of public diversity issues.
A chief innovation officer may be able to better identify the unique diversity challenges that arise from machine learning initiatives and DataOps within each business unit. Consumer trends among demographic audiences can be critical to brand messaging, especially for a B2C, which suggests that having a CMO create inclusion programs among marketing and sales departments would yield the best benefits. A D&IO would likely have an overall view of behaviors and norms throughout an organization, being able to blend the best viewpoints of a CMO and chief innovation officer where needed.
Visibility of progress
The risk for an organization lies in the visibility of its progress. Many decisions on workplace representation and algorithm fairness happen away from public view. A chief innovation officer for a B2B firm, for example, may not realize whether a firm’s diversity strategy is acceptable until it is publicly known. Ongoing negative treatment made public can create insurmountable ill-will.
The aforementioned efforts of a B2C CMO would certainly be visible among customers, but tepid gestures can be judged as tokenization, harming the brand image.
A D&IO has a clearer role than a CMO or CIO, but business units that do not report to this executive may offer only cursory support that can ultimately diminish results.
Thus, the choice of executive can impact diversity and inclusion progress. Metrics can track representation, retention, identity, and recruitment. But they can often be diagnostic, revealing that a change occurred but not the cause behind that change. The right executive will connect the underlying narrative behind business unit activity to the metrics being used.
The right executive also will appreciate how complexities of discrimination will play among their employees and business activities. Systematic racism, for example, can be difficult to discuss and act upon because most people perceive racial issues as signs of an individual failure limited to singular personal experiences. Instead, systematic racism occurs as ongoing choices that leave specific groups at a disadvantage. An organization’s answer to systematic racism will depend on how the right leader directs resources to correct questionable methodical behaviors and processes.
There are in-depth studies of demographic shifts, diversity initiatives studies, and additional research on algorithm fairness that will do more than quantify the reality of inclusion. The information can offer hints to craft the best activities, be it to retain talent or demonstrate brand commitment to ethics-conscious customers.
That same information also can minimize mentorship burnout. Educating others on discrimination should not depend solely on individual efforts, especially when programmatic processes are involved. Executives can signal what department units can do to foster good teamwork activities that bolster inclusion.
A short reporting structure to the CEO is essential for meaningful accountability for any diversity and inclusion executive. A link to the C-suite will enable immediate response to requests for resources, demonstrating that an organization’s commitment to diversity is more than window dressing.
It also can be demonstrative as a quick response to a fast-emerging social crisis, such as Microsoft’s acknowledgement of the current civil rights unrest. Immediately after protest over the death of George Floyd began, Microsoft announced a $150 million increase in its diversity and inclusion investment.
No matter which executive is chosen, organizations should recognize that investing in diversity requires ongoing accountability. There will be some debate for what metrics reflect diversity and inclusion improvements. But no organization can wait for that data to get better; competitors are rapidly stepping up their efforts. Wells Fargo, for example, announced it would link executive pay to raising diversity in their respective business units. Meanwhile, Microsoft’s civil rights investment will go toward the company's goal to double the number of Black senior leaders in the US by 2025. Uber and other tech companies have announced similar targets.
Diversity and inclusion have become a critical seed for a competitive strategy for the new environment expected in 2021 and beyond. At the end of the day, the person with the right empathy will marshal the right resources. Such leaders will ensure that a critical diversity and inclusion initiative will be the seed that bears fruit for a better organization and better society.
For more on the links between diversity and tech check out these InformationWeek articles.