Many leading practice Australian businesses continue to reap the rewards of diversity and inclusion (D&I) while others in the community want to ignore the benefits, according to Diversity Council Australia.
“The past year or so has been good for Australian businesses working on D&I. There has been an increase in ASX-listed companies of all sizes adopting a diversity policy, and the Workplace Gender Equality Agency reports some improvements in employer action on gender equality plus more organisations are qualifying as employers of choice for women. Many are introducing innovative programs, setting targets and identifying senior leaders to champion change,” said DCA’s CEO, Lisa Annese.
“Unfortunately, this year saw the term ‘political correctness’ make a comeback as an insult pointed at those who were trying to drive positive change. Deriding efforts at D&I by labelling it ‘PC’ flies in the face of all the evidence that it is actually about delivering business benefits,” added Lisa.
The benefits of diverse and inclusive workplaces are well known, and Australian organisations are embracing change. This includes recognising it’s not about being ‘PC’ but simply about workplace respect and dignity and being polite.
“There is a large body of research showing that diverse and inclusive workplaces deliver improved productivity and profitability, greater creativity and innovation, higher employee well-being and engagement and reduced employee turnover, to name just a few. The business sector in Australia has moved way beyond debate about D&I and is getting on with the job,” said Lisa.
Businesses still have work to do in key areas and must maintain focus. Many recognise this and are increasing their efforts while others need to do more.
- Women are still underrepresented when it comes to positions of leadership and the gender pay gap remains stubbornly high with sex discrimination the single largest contributing factor.
- The workforce participation of people with disability is around 30% lower than for other Australians while the gap is 20% for Aboriginal and Torres Strait Islander people.
- People with culturally diverse backgrounds are still significantly underrepresented in leadership in Australian organisations.
- Discrimination and harassment at work is still a problem. During pregnancy, parental leave or on return to work, half of mothers report discrimination, many LGBTIQ people experience widespread bullying, harassment or violence and are unable to be themselves at work, and over a quarter of mature-age people also report discrimination.
A continued commitment to D&I by Australian businesses will make a difference.
“Organisational commitment to D&I should not be derailed by uninformed commentary as the evidence continues to show it is good for business. Robust strategies with measureable objectives and clear accountabilities are still the best way to create more diverse workplaces. But it’s also important to focus on inclusion as this will enable you to harness all of the benefits of that diversity,” concluded Lisa.
D&I challenges for business in 2017:
- Stay the course: Organisations’ commitment to D&I should be maintained and expanded as the evidence continues to show it is good for business.
- Focus on diversity AND inclusion. Diversity refers to the mix of people in your organisation. Inclusion occurs when a diversity of people (i.e. from different ages, gender, cultural background etc.) can contribute their talents, skills and energies to the organisation. Improved performance and wellbeing of organisations, teams and individuals requires both. And inclusive leadership capabilities are critical in this.
- Aim for outcomes, not just activity. Policies and programs are a good start but they have to lead to better outcomes. Measurable objectives work, especially when they are transparent and where they hold individual’s accountable for achieving them.
- Consider intersectionality: People are not one-dimensional and considering all elements of identity can signal that different approaches are sometimes required.
- Look at gender and beyond: Organisations consistently rate gender as a high diversity priority but neglecting other diversity dimensions will mean you will miss out on talents and opportunities.
How D&I benefits business:
Improved returns and performance:
- Having a negative diversity climate is associated with lower return on income and productivity. In contrast, a positive/supportive diversity climate is associated with a higher return on income and productivity.
- ASX 500 companies with women directors on their boards delivered significantly higher Return on Equity (ROE) than those companies without women directors.
- US Fortune 500 companies with the highest representation of women board directors attained significantly higher financial performance, on average, than those with the lowest representations of women board directors.
- McKinsey research found companies with a higher proportion of women in their top management have better financial performance: Return on equity (11.4% vs 10.3% sector average), operating result (EBIT 11.1% vs 5.8%), stock price growth (64% vs 47%).
Increased innovation and creativity:
- Companies that drive innovation by leveraging the ideas and knowledge of their employees meet product revenue targets 46% more often and product launch dates 47% more often than industry peers.
- The higher the proportion of senior leaders who have cultural training, speak an Asian language or have lived and worked in Asia for more than three months, the more likely business performance will exceed expectations. Studies demonstrate strong relationships between people with global experience and multicultural backgrounds and organisational creativity and innovation.
- Teams with inclusive climates have higher levels of innovation and profit. Having a flexible rather than fixed view of one’s own and other’s identities – a key attribute of inclusive leadership – is associated with greater creativity and improved innovation.
Higher retention, engagement & well-being:
- Inclusive leadership is associated with greater team engagement, while individuals working in more inclusive team climates report higher levels of commitment and satisfaction, and demonstrate access to better job opportunities and career advancement.
- Inclusion is associated with a higher sense of employee well-being and psychological safety, as well as employees feeling valued and respected. Exclusion is associated with emotional exhaustion, which in turn affects turnover intentions.
- Inclusion and inclusive leadership are associated with reduced turnover. Indeed, workplaces that encourage employees to voice their opinions and be involved in decision making have on average 33% lower employee turnover.
Reduced legal risk:
- In inclusive climates, individuals from traditionally marginalised groups experience lower levels of harassment and discrimination. More advanced attitudes about social identity – a key attribute of inclusive leadership – are linked to more positive inter-cultural group relations and less cultural bias.