Diversity works – especially when an inclusion strategy is adopted at the same time.
Here are just a few statistics that show this. According to the Centre for Talent Innovation, organisations that have high ratings for diversity and inclusion are 70% more likely than others to have success in new markets and are 45% more likely to improve their market share over less diverse competitors. McKinsey reports that companies in the top quartile for racial and ethnic diversity are 35% more likely to outperform their competitors. Finally, a PwC survey in 2015 found that 85% of CEOs in companies with diversity and inclusion strategies say it had improved their bottom line performance.
So diversity and inclusion is more than just a ‘nice to have’. It is essential for the future success of any business. To really deliver it, it needs those CEOs and others at the top of organisations to be fully committed to its success. There is no point paying lip service to the concept or merely ticking the appropriate boxes. It takes hard work.
A diverse group of individuals by their very nature will take longer to make a final decision, in order to reflect on the different perspectives of the participants. But that decision, when finally agreed, will be a richer and more effective decision than one more quickly reached by a less diverse group of individuals.
How to create a diversity and inclusion strategy
So how should you go about creating a diversity strategy? Quite clearly no two organisations are going to have quite the same strategy, but there are common threads.
Here at LifeSight we’ve now had quite a bit of experience in working to develop and embed our own inclusion and diversity strategy and we’re happy to share what we’ve learned. We’re proud of what we have achieved through recruiting and working with a very diverse trustee board and LifeSight team, and are enjoying the tangible business results which this diversity delivers. It is no coincidence that LifeSight was the first master trust which achieved authorisation from the Pensions Regulator in February 2019. It was also the first in its market to adopt a strong ESG focus to its investment strategy for pension scheme members.
Let’s start with the issue of decision making. As it takes longer, quite simply you need to allow for that and set aside more time to reach those important decisions, and invite people with diverse backgrounds and skills to participate in a meaningful way in that decision-making process. Related to this is the role of the leader in that process. You need an individual willing to accept that they may not have all the answers. They also need to be humble enough to accept that, in surrounding themselves with a more diverse range of colleagues, they will be challenged personally through some very different solutions and answers articulated by colleagues, and that they can, and should, listen, understand and learn from them before reaching an informed outcome.
It’s important to review every part of the HR process. For example, recruitment and talent management both have a major impact on diversity. In terms of recruitment, we have pushed our recruitment partners to widen their net, examine their methods to avoid bias, and look harder to find ways to attract a more diverse talent pool. We look not just at the more visible gender diversity, but we also embrace age, ethnicity, background and skills in our diversity measures. There is an observation that many women tend not to put themselves forward for promotion, or to work on projects that provide important development opportunities, as often as their male peers. This needs to be recognised and addressed to provide equal opportunities for career development. We’ve done so by assessing the potential of each candidate – not just their past performance – and then created tailored development programmes for those with the highest potential – which, interestingly, has resulted in an equal gender split of participants.
Equally, it’s good to re-examine work flexibility. Diverse teams will accommodate a different mix of hours, locations and balances between home and work. To achieve true diversity, one size will never fit everyone equally, and a willingness to allow part-time working at all levels is crucial.
It’s not just about gender
As well as gender, age matters, too. Tapping into those in their tech-savvy 20s has enabled us to create a team which developed our innovative and award-winning AgeOmeter pensions tool. This allows members to understand the age at which they can retire and make informed decisions to improve their personal retirement outcomes. Age and background diversity also enables us to connect with our diverse pension members using relevant multimedia communications techniques. In turn, this has significantly increased the number of members who engage with their pension.
Finally, as we saw in the last article in this series we are also moving towards investment decision-making based on longer-term goals, particularly in regard to the future world in which our pension scheme members will be living. By reflecting the diversity of the membership we can more closely address those cares and more accurately reflect those longer-term objectives.
HR is, of course, central to all of this. It not only plays a key role in the implementation of diversity and inclusion strategies, but also in continuing to challenge the mindsets within organisations, and ensuring that diversity becomes deeply rooted within the organisational culture. HR is critical to ensuring that this vision becomes part of both the strategic thinking of the organisation, and therefore part of its people strategy – both of which are essential to shaping a successful, long-term future.
Diversity is central to that new and exciting future. The alternative will lead to organisations that will become moribund and stagnant. And that’s not really much of an alternative at all.
Fiona Matthews is managing director and Jane Platt is chair at LifeSight