*OpenSense Labs

If Diversity & Inclusion (D&I) is so key to success, why is it not hard-wired into every business’s DNA?

The world is changing. Fast.
Technology is rewriting operating models.
Leaders have a tougher task than ever.

In this short piece I will discuss the importance of D&I in business today, and consider why it proves such a major challenge for leaders in large coporates but also in the rapid growth startup ecosystem.

The Boston Consulting Group (BCG) recently conducted a study involving over 1,500 companies spanning eight developed (e.g. the US) and developing (e.g. Brazil, India) countries. They found that “companies with above-average total diversity, measured as the average of six dimensions of diversity (migration, industry, career path, gender, education, age), had both 19% higher innovation revenues and 9% higher EBIT margins, on average.”

*https://www.bcg.com/publications/2018/how-diverse-leadership-teams-boost-innovation.aspx

Let us consider the ‘FinTech’ sector, which combines two of the least gender diverse industries going. FinTech is often accused of being a sector predominantly founded by men, run by men, making products for men!

That said there are some inspiring, aspiring FinTechs which are gaining great traction in tackling societal issues eg financial inclusion.
For these businesses diversity of thinking underpins how they and traditional incumbents see and understand unmet needs in under-served markets.

Sadly D&I is all too often an irritating box that needs ticking to appease HR!

Frequently tech companies do hire individuals from a diverse background, but they struggle to retain them. Company culture, at all levels, must be inclusive, and embrace the different backgrounds and attitudes of the individuals in the teams. This requires leadership without ego, and zero tolerance for divisive or judgemental attitudes.

Leaders must commit to change… diversity is nothing without inclusion.

According to the Harvard Business Review (HBR)-

“D&I are so often lumped together that they’re assumed to be the same thing. But that’s just not the case. In the context of the workplace, diversity equals representation. Without inclusion, however, the crucial connections that attract diverse talent, encourage their participation, foster innovation, and lead to business growth won’t happen.”

Without inclusion there is a diversity backlash!

As noted diversity advocate Vernā Myers puts it, “Diversity is being invited to the party. Inclusion is being asked to dance.”

So what can investors do to help?
Female founded businesses are massively under-invested — what needs to happen for this to shift?

According to HBR there are 4 levers for inclusion:

1. Inclusive leaders: To build inclusive companies, leaders must demonstrate inclusive leadership behaviours.

2. Authenticity (non-judgemental culture)

3. Networking & visibility (active sponsors)

4. Clear career paths

*https://hbr.org/2017/02/diversity-doesnt-stick-without-inclusion

Much of my career has been spent working with large FTSE 100 companies, who were investing in new technology, integrating an acquired business, or driving a turnaround agenda.
More recently I’ve had the pleasure of working with some hugely innovative, progressive startups and scaleups.

What has struck me is the widely polarised attitudes and approaches to D&I.

On one hand — “D&I is just a nice to have. We need good people, fast, to survive”

And on the other — “D&I is one of our core values. We will hinge all decision making on it”

How many companies hire for ‘fit’? — Preferring to bring in people ‘like us’…?
Human instinct means that difference = potential threat.
Diverse hiring takes effort. It means making decisions that go against instinct. It will be uncomfortable.

This chart was taken from Dr Stephen Jones’ talk on ‘How to Become an Inclusive Leader’

The challenge and the evidence is clear — it takes time for a diverse team to realise the benefits from its diversity. I must point out that the effectiveness gap will only be realised if the team leader provides the right environment for cohesion and psychological safety.

Here are just a few suggestions that could help drive a D&I agenda -

  1. Introduce training to remove unconscious bias for hiring managers (for this to be effective there needs to be reminder training to re-programme behaviours),

2. Always have more than one person on an interview panel,

3. Work with companies who specialise in finding diverse talent,

4. Create inclusive onboarding processes,

5. Focus on culture — “In the face of difference, practice curiosity” — Dr Stephen Jones

What role can new technology play in D&I?

Amazon famously developed and rolled out a CV scanning tool using AI.

https://www.reuters.com/article/us-amazon-com-jobs-automation-insight/amazon-scraps-secret-ai-recruiting-tool-that-showed-bias-against-women-idUSKCN1MK08G

It was found to be biased against women and was scrapped. The algorithms are only as effective as the programmers who build them! If we continue to build tech using historical data — we will end up with the same limiting feedback loops.

Focusing the lens on the recruitment industry — the challenge will be how to streamline processes while humanising what is often criticized as being a commoditized industry.

Businesses face a war for talent, hence talent access will only rise in importance, but onboarding and retention will also be pulled into sharper focus. An effective D&I strategy will become essential for employer branding and healthy talent attraction and retention metrics.

The future..

My hope is that as millenials and Gen-Z ascend into positions of authority — they place increased emphasis on diverse and inclusive cultures in their businesses. Their leadership will need to continue to evolve, as will the attitudes and approaches of their suppliers and providers.

As talent acquisition and access is put more firmly under the spotlight — there is a clear responsibility on the curation of diverse shortlists, and on the ‘critical friend’ nature of the customer/provider relationship — to ensure fair process, and inclusive onboarding and teaming.

As with all disruption — those who adapt the fastest stand to benefit, by turning a threat or a problem into an opportunity — and potentially a competitive advantage.

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Social entrepreneur, passionate about people, disruptive innovation - #techforgood, humanity in business. Edinburgh's Running Mayor & Founder of ReBoot CIC

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Alastair Lechler

Alastair Lechler

Social entrepreneur, passionate about people, disruptive innovation - #techforgood, humanity in business. Edinburgh's Running Mayor & Founder of ReBoot CIC

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