Diversity, equity, and inclusion are no longer enough to sustain a business (DE&I). In the battle for top talent, having an inclusive culture is increasingly becoming a differentiator that separates the winners from the losers. Leadership must establish an environment where employees of different backgrounds may thrive and contribute their entire set of skills to attract and retain the best talent. Companies that fail to comply will have a difficult time competing.

A rising amount of data suggests that the advantages of having a diverse and inclusive workplace extend far beyond simply being able to recruit the best and the brightest. An inclusive culture is a strategic advantage for leaders who want to boost productivity, growth, and creativity. When diverse and inclusive firms attract, retain, and develop high-performing, more inventive employees, it produces a virtuous loop of positive outcomes. In the long run, this enhances their market share by better reflecting their markets and anticipating and meeting evolving client wants. Leaders can't afford to miss out on these compelling benefits in today's turbulent economy.

Creating an inclusive culture requires a company-wide approach that begins with purposeful leadership, followed by creating space for personal change, sustaining broad engagement with the entire workforce, embedding inclusion in systems, processes, policies, and day-to-day operations, and—at the core—building visible representation at all levels and across the business.

Despite the best of intentions, little has been accomplished.

Leaders nowadays are often well-intentioned and committed to promoting DE&I initiatives. However, they say they increasingly emphasize inclusivity when it comes to creating high-performing cultures.

It has been shown that 82% of CEOs from the most prominent firms on Earth have prioritized Culture in the last three years and that enhancing employee engagement is one of the top three goals. For example, "Inclusion is one of the top priorities for culture shaping." Aligning Culture with the Bottom Line: How Companies Can Speed Up Progress has more information on this study.)

The bad news is that many leaders and organizations who've spent a lot of time and money on DE&I efforts haven't noticed much difference. For example, a poll found that only 27% of business leaders believed their company was inclusive in its overall approach to business.

So, what's preventing us from making progress in this area? There has been a tendency to focus on activities like unconscious bias training or leadership programs for minorities and women rather than broader initiatives to create more inclusive workplaces. Our experience reveals that a company-wide approach, driven by leaders, supports the company's goal and mission, is necessary for success. Creating a new, inclusive leadership perspective, behavior, and skill set is the only way to achieve a profound culture shift.

We at Woods Kovalova Group have worked with organizations for 25 years to help them create cultures that help them achieve their goals. As a result, four essential themes have emerged over the past few years: purposeful leadership, personal change, broad participation, and systemic alignment. In addition, our understanding of the relationship between diversity, equality, and inclusion has grown significantly over the past decade and now includes a new concept: representation. This principle is part of our model for creating inclusive workplaces.

Creating a welcoming environment For significant and long-term improvement, there are five guiding concepts.

2. Leadership driven by the business and led by its leaders is known as "purposeful leadership."

The success or failure of an organization's DE&I activities is primarily determined by what its CEOs and other senior leaders do about inclusiveness. However, DE&I is often assigned to HR, and top leaders are not held accountable for DE&I results or visible in their commitment or leadership. On the other hand, people take their signals from their leaders, paying attention to their actions and noting any discrepancies between what they say and what they do. Since leaders are the ones who set the company's DE&I strategy's direction, they must be committed and ready to lead the way in implementing it.

A company's top leaders must be sincere in explaining how a company's mission and values are linked to the importance of diversity in the workplace. Their message must resonate with both believers and skeptics alike, and they must have the ability to do so effectively.

When it came to hiring top female talent, the executive committee of an asset management firm was well aware that they were falling behind their peers in terms of being known as an employer of choice and, consequently, making the best investment decisions for their worldwide portfolio of clients. Accordingly, they agreed to hold a series of interactive meetings to discuss and debate their DE&I goals, strategy, and roadmap. Finally, they defined how much progress they anticipated regarding the number of women in leadership positions each year and how they wished to create a more inclusive workplace culture. Executives as a whole and their leaders then agreed on a set of particular activities. As part of the team's dedication to providing measurable results, the board, employees, investors, and clients were made aware of the company's goals and ambitions.

2. Building inclusive attitudes and actions in oneself are the second step in personal change.

Leaders must often work on their blind spots and mindsets to make the behavioral changes needed to be genuinely inclusive. By fully appreciating their employees' and potential employees' uniqueness, leaders may better connect with them. Individuals' unique life experiences and their potential to contribute to the workplace should be considered. The next stage for leaders is to foster a sense of community within their teams. The ability to lead inclusively is essential. Although it takes time to establish inclusive mindsets and habits, it is often forgotten in the hurry for concrete actions and quantitative results.

The research shows that framing the subject in this way can provoke a backlash and even reinforce the same prejudices it tries to erase, which is why many firms focus on mindsets as part of broader training programs that include themes like unconscious bias.

Because of its negative connotation, it prevents many people from ever considering the idea of inclusion.

In our view, a more effective strategy is to assist leaders in developing the mindsets and behaviors necessary to create inclusive companies by framing personal transformation in a more inspirational, positive tone. We've discovered five inclusive leadership attitudes that influence behavior: self-awareness, curiosity, courage, vulnerability, and empathy. Leaders must have these mindsets to foster an environment where their employees feel appreciated, valued, and empowered to give their all. Further, leaders need to learn and practice these mindsets and be recognized for their achievements in this area in a safe environment.

Furthermore, leading firms today actively include inclusiveness into their leadership development models and evaluation criteria, thus reassessing what it means to be an effective leader.

When the top executives of a major mining company realized they needed to change their leadership style to meet their firm's long-term goals of expanding globally while increasing their level of innovation, they changed their strategy. New modes of working and good management of a multigenerational workforce were expected to be necessary. The executive committee and its top 90 subordinates participated in inclusive leadership training for months. Despite their hectic schedules, it all began with examining the five inclusive attitudes they needed to embrace as leaders to foster a more diverse and inclusive workplace and manage diverse and productive teams. Virtual reality coaching sessions were used to augment their team-based learning and practice inclusive behaviors in a safe and supportive environment. All leadership teams had completed the program with a charter of commitments and actions to hold themselves accountable, including creating a sense of belonging and belonging for their employees. Inclusion communities of practice, co-chaired by the CEO, continue to build on the momentum established by leaders across the organization.

3. Engaging a large number of people: making everyone feel like they belong and knowing how to bring them along for the ride

Businesses can only prosper if their employees do as well. Everyone has a sense of belonging in an inclusive workplace. As a result, they can experience feelings of belonging and connection on a deeper level. One of the benefits is that employees are more enthusiastic about their work and more motivated to do their best. According to studies, firms that foster an inclusive culture are six times more likely to be inventive and agile and eight times more likely to fulfill their objectives when compared to those that don't foster such a culture.

People's feelings of belonging and engagement are critical to leaders; thus, they must gather data to support their claims. Data and insights from diverse employee groups (usually separated by demographic groupings) are needed by leaders better to understand the disparities in the experience of different groups. Identifying issues with diversity and inclusion is the first step toward actively seeking out underrepresented groups of workers. It is possible to add a human element to the data collection process by setting up settings where people may tell their tales or hold open forums to debate and discuss their ideas with others.

Today, many firms seek new and inventive ways to engage their staff and generate more regular feedback loops. For example, some 1,000 people participated in an AI-enabled digital dialogue with a global retail brand to discuss their experiences of inclusion and belonging and the company's efforts to establish a more inclusive culture. The anonymity of the participants ensured that everyone had an equal voice in the discussion, not simply the most senior or loudest members. Voting on how much they agreed or disagreed with the comments of others helped to paint a clear picture of attitudes and priorities. In addition, results were broken down by demographics, allowing retailers to gain insights into the experiences of men, women, minorities, and those from various generations or places.

When a company's management realizes how inclusive it is, they need to include everyone in the process. Everyone can profit from participating in a discussion about DE&I inclusion when the issue has begun to heat up. Unfortunately, the fear of saying or doing the wrong thing may keep many people from openly discussing their thoughts and experiences. Many DE&I programs have unintentionally produced a sense of exclusion among their majority populations by not including them in the debate. Due to the continued emphasis on gender parity, many males have begun to fear their professional futures.

Since leaders are the ones who can have the most impact on the overall performance of their firm, they must convey an inspiring and uplifting message about the benefits of inclusion to the entire workforce. 

After years of working in walled business units, an international professional services organization looked for an inclusive culture as it transitioned to more efficient ones. The company's management, which has operations in the United States, Europe, and the Asia Pacific, realized they wanted to have a discourse about inclusion with their employees that would ring true in these many cultural contexts. To begin, they assembled a video montage featuring perspectives on inclusion from across the organization. These leaders were then divided into eight smaller groups to examine the meaning of inclusiveness within their organizations and their steps toward achieving it. After those discussions, an 18-language digital learning program was launched for 45,000 employees worldwide.

4. Embedding inclusion in procedures, policies, systems, and day-to-day corporate operations

Inclusion must be ingrained throughout an organization's processes, procedures, and policies to be long-lasting. Companies must examine and eliminate any prejudices that may be stifling some employees or resulting in a disparity in systemic outcomes. HR touchpoints, such as recruitment, performance management, evaluation, and reward and recognition, necessitate the involvement of leaders at all levels. For example, they monitored the recruiting pipeline data to ensure that each stage had a proportional representation of different demographic groups. If the percentage of female or underrepresented candidates suddenly reduces at one point in the process, it is clear evidence that the process is biased and likely requires an evidence-based redesign. In addition, employers might gather a diverse group of stakeholders to do an in-depth evaluation of benefits, such as parental and sick leave policies and medical and mental health benefits, to see if they can find ways to be more inclusive.

We witnessed how addressing inclusion improved systemic alignment when a global travel firm thoroughly reviewed its HR rules and processes. With the help of key stakeholders, they organized a vigorous discussion about what good looks like, where they had the most significant room for improvement, and how they could link inclusion to bottom-line financial performance. For example, they looked at retention rates and were able to show that increasing retention rates would influence the bottom line of the company. As a result, the group challenged itself to be more creative and deliberate in growing its underrepresented employees into more senior levels of responsibility.

It's not only about eradicating bias from HR touchpoints and communications; leaders may also challenge the business to examine how more purposeful inclusion can speed up performance in strategic areas like innovation, R&D, customer relationship management, or identifying new growth prospects.

5. Intentionally changing the talent mix to represent today's markets and talent pools.

Employees should be able to imagine themselves in leadership roles to be inclusive. As a result, many organizations still have relatively homogeneous leadership teams, with only one "token" representative of another group. No longer acceptable are practices such as putting a few women or persons from diverse cultural backgrounds in functional leadership roles, such as HR or communications, to represent rising markets. The difficulty is to construct balanced and representative teams across business units, geographical regions, and roles routinely and sustainably. Instead of making a few rapid recruits, executives must build a robust talent pipeline—and these improvements demand constant attention over time.

Externally, leaders need to actively seek out and recruit top talent from an ever-widening range of sources. In contrast, internally, they need to constantly reevaluate their pipelines and succession plans to identify and develop an appropriately diverse group of top internal talent as quickly as possible. Instead of being concerned about lower standards when it comes to hiring more diverse and high-performing employees by diversifying one's workforce, it's essential to go through the process of reevaluating job requirements and eliminating items that aren't directly linked to success in the role (for example, attending a top university or previous employment with an established brand). Relying on evidence-based approaches, such as task-based assessments, instead of cultural preferences and historical precedents is in everyone's best interest.

For one US-based financial services organization, a total overhaul of their talent attraction, recruiting, and retention processes helped expedite their progress toward gender and ethnicity balance. For starters, leaders redesigned their methods for identifying potential employees and widened their conceptions of what it means to be talented and capable. As a first step, they researched to learn more about the labor market and locate diverse candidates with the needed skills. After that, they built more inclusive hiring processes to increase their success in the recruitment process. Next, a more enterprise-wide strategy was adopted by leaders, who sought to understand who was available for all the roles they typically hire for in a given period. Next, they found additional ways to steer more diversity into their organization—for example, requesting regular introductions to potential executives from underrepresented groups to build long-term relationships rather than one-off connections. As a final step, the company's management devised bespoke onboarding and acceleration programs to boost employee engagement and retention and conducted a succession planning and pipeline analysis to guarantee fairness and inclusiveness.

Analyzing the long-term effects

For DE&I insights, many firms still rely on simple engagement surveys, notwithstanding how difficult it is to integrate DE&I across an organization and the numerous ways in which organizations can measure their progress against such efforts. In addition, demographic surveys can provide limited insight into diverse experiences if demographics break down the results. Still, their capacity to assess progress in creating inclusiveness is often outside their designed scope. A better way to track progress in developing an inclusive culture is to compare it to each of the following five principles:

Creating a welcoming environment For significant and long-term improvement, there are five guiding concepts.

While diversity and inclusion are on the minds of nearly every company, and brilliant people are more demanding and sought after than ever before, leaders must consider developing an inclusive culture as a priority with significant commercial consequences. Companies with antiquated cultural practices will have difficulty competing in future marketplaces.

Companies that successfully attract and retain the best employees will reap the rewards of their employees' diverse viewpoints, their willingness to put up the extra effort, and the positive feedback loop created due to their involvement. Moreover, inclusion will catalyze resilience, agility, and new ideas in a period of ever-increasing turbulence and uncertainty.

As a result, corporate leaders must devote their energy and resources to implementing the inclusion principles they've learned about and then holding themselves and their teams accountable for the results.

Overview

Jim Woods is the President and CEO of Woods Kovalova Group's Denver, London, and Kyiv offices and head of the Diversity, Equity & Inclusion Practice. He works with senior executives and leadership teams to create a significant and sustainable impact in DE&I to create the kind of inclusive environment that allows companies to attract, retain, and get the best out of their employees.

Experience

Jim has more than two decades of experience driving change in the banking industry around performance, growth, and innovation. He's designed and led complex transformation initiatives in companies linked to globalization, demographic changes, sustainability, shifting business models, and new technologies.

Earlier in his career, Jim served in the United States Navy, taught fifth-grade math and science, including university human resources and leadership. Also, Jim has taught at Villanova University. He has authored six business books on DE&I, and leadership.

Education

Capella University, MS in Organizational Development and Human Resources