Inclusion & Diversity – It is time for a change in approach.

Diversity and Inclusion Improves Stakeholder outcomes

According to McKinsey, the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time. Inclusive and Diverse cultures are a win that benefit company balance sheets and creates a dignity economy that is more stable and healthy.

Businesses see inclusion and diversity (I&D) as a business imperative. However, data shows traditional efforts have had minimal impact changing bias and have not yielded substantial behavior changes in the workplace. Yet, many HR Leaders continuously lean on objectively proven ineffective tools and methods in the hiring process, the mentoring process, and the culture development process.

Outsourcing Inclusion and Diversity Doesn’t Work

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Paying for External Women's Leadership and Mentorship is Institutionalized Microaggression

In HR’s eagerness to take action on Inclusion and Diversity initiatives, they have consistently failed to differentiate where they should outsource support and what must come from within, fully integrated into every business unit, understood and embraced by the whole organization. And more importantly, who really needs the support. Not every white male who is a baby boomer is a problem. And both men and women, over-represented and under-represented groups, all need mentoring and support to become great leaders.

There is no greater corporate microaggression than to send women to an outside vendor for women leadership mentoring programs run by other women to learn how to be a leader.

Microaggression is defined by “the everyday verbal, nonverbal, and environmental slights, snubs, or insults, whether intentional or unintentional, which communicate hostile, derogatory, or negative messages to target persons based solely upon their marginalized group membership.”

An external mentoring program specifically for women, positions women as lacking necessary leadership skills relative to their male peers. These external Women’s leadership initiatives operate independently from a company’s vision, mission, and business goals and automatically break people into affinity groups of “them versus us.” They do not address the institutionalized and systemic discrimination and function as a corporate-sponsored and funded microaggression. These programs are the ultimate barrier for women being treated as equals. They perpetuate the belief that women are weaker or more problematic than their male peers, who need no leadership intervention.

You cannot outsource an authentically inclusive and diverse culture. It must come from within, and the changes have to come from the C-Suite. The reality is that most men and women who get promoted are mentored, groomed, and promoted to the CEO position and other Senior Management positions by men. The more significant issue is how to bring equity and belonging where more women and other under-represented groups get mentored as part of the team.

The Ripple Effect of external Women Mentorship and Leadership Programs is the negative career branding that comes with sharing these programs on resumes and LinkedIn Profiles. Men don’t put Certificates or Courses up on MALE Leadership. They put up Leadership Training that has both male and female participants. Branding with outside Women Mentorship and Leadership Programs reinforces a negative stereotype that the participant is a “women” who needs special help. It does not infer Leadership pedigree.

The Future of Work is a Chance to Super Charge I&D

The Employer and Employee Work Contract has Changed

The Future of Work isn’t about getting more people to adapt to obsolete norms of leadership and a flattening and shrinking hierarchy. The challenge is to get all managers — and especially current leaders — skilled and ready to lead vastly more-diverse businesses and respond to a radically changed and new type of business model that will only survive with an inclusive and diverse workforce. 

According to the World Economic Forum, “by 2022 – 42% of core skills required to perform existing jobs are expected to change.” Companies are experiencing an increasing skill shortage that will continue to challenge business operations and human capital management.

Inclusion and Diversity initiatives need to be focused on making sure under-represented groups are given the resources they need to qualify for the new jobs. Equally important, as companies continue the trend of outsourcing departments to external “as-a-service” providers and freelancers, I&D has to be addressed in the new normal. Just because employees are now more likely to be leased doesn’t mean companies can outsource I&D initiatives to others.

Whether companies are hiring perm, freelance, or “as a service”, they still have the power — they are the customer. Corporations must choose a diverse and inclusive external workforce to capture the economic benefits it brings and to execute on Environmental, Social, and Governance (ESG) standards demanded by shareholders and customers.

Outsourcing Parts of Hiring Hurts Inclusion and Diversity Initiatives

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Retained Search Firms, Culture Fit, and Personality & Behavior Testing are Company Sponsored Institutionalized Bias

Retained Search

Retained Search Firms got their start by getting business on the Golf Course. The industry continues to be a mostly MBA, White Male Placement Machine for Senior Leadership. For decades they have been the vendor of choice to fill the CEO position and other C-Suite Positions that manage P&L and lead to the CEO position. The trend continues. Retained Search Firm Spencer Stuart shared that they place an executive in a leadership role or boardroom 11 times a day.

Women in the C-Suite declining
Source: Equilar analysis of Russell 3000 companies

According to data shared with the Wall Street Journal, retained Search Firms continue to facilitate the ‘old boys’ network that mostly excludes minorities and women. In fact the data shows the rate of growth in female executives has slowed in recent years. 

In a world where you need transparency and accountability around the hiring process for top level jobs, there is an embedded secrecy tied around the process. Most of the retained search firms require candidates to sign NDAs (Non-disclosure agreements) to not tell anyone about the “secret job.” An outdated idea in a world of transparency and a revolving door in the C-Suite. 

Retained Search is corporate sponsored brand elitism that hampers the ability of under-represented groups to make meaningful inroads to top jobs.

Secret jobs serve as a barrier for women and minorities to get into top postions

Gone are the days of mostly recruiting within. Top spots in companies are just as likely to be filled by an outside candidate. In a secret job world, where the only way a candidate can hear about a Senior Level job is by being contacted by a retained search firm, candidates have to be referred in by other candidates.

The Negative Impact: More white men get referred into these “secret” jobs. According to Payscale, a compensation data and software supplier, referrals benefit white men more than any other demographic group. Women of any race and men of color are much less likely to receive referrals than their white male counterparts: White women are 12 percent less likely, men of color are 26 percent less likely, and women of color are 35 percent less likely to receive a referral.

To help quantify the impact of a mostly referral-based system, you have to review the U.S. Bureau of Labor Statistics Numbers. White men represent only 34 percent of the U.S. labor market. SHRM, points out that the study means that white men are 129 percent more likely to be in a pool of 100 referred employees than what demographics suggest they should be. 

The Greater Negative Impact: Retained search firms are the weapon of choice to continue to use outdated and mostly socioeconomic advantaged pedigree checklists that data shows does not translate to better leaders. The process aggressively ensures a lack of inclusiveness. At best it merely does what is called in marketing, “whitewashing.”

Whitewashing means using misleading information or optics to gloss over bad behavior. In this case, pedigree elitism that also has a very real economic barrier that makes it harder for a more inclusive and diverse group to compete.

Being diverse in skin colllar, religion, and gender with the same background is diverse but not inclusive.

There is a myth that just changing people in the seats with people of different skin colors, gender identities, and religions is the win when it comes to inclusion and diversity. While it is a first step, it is not the final step or the benchmark of a world-class leadership team or company. Yet still, in retained search, there is a preference given to “Ivy League” pedigree and MBAs based on the opinion that they are the best candidates.

The perception that only elite schools produce elite leaders needs to die and be introduced to the data accountability culture. Even under the old rules, which only measured, how well a Chief Executive executed on delivering a return on investments for shareholders, the Ivy league graduates and MBA degree holders were not the top leadersHarvard’s October 2014 report found that only 29 out of the 100 best performers had MBAs. And only half of the 29 MBAs had earned a degree from an Ivy League school.

In 2019, Institutional Investor decided to research whether MBAs made better CEOs. The conclusion, “We [Verdad Research] found no statistically significant alphas — despite testing every possible school with a reasonable sample size. MBA programs simply do not produce CEOs who are better at running companies.” 

The second question Institutional Investor researched was whether a CEO’s early track record predicts later performance? The conclusion, “There is almost no persistence in CEO performance. The observed number of CEOs in each category is indistinguishable from what we would expect if the process were entirely random.” The conclusion should not be surprising considering the speed of change over the past decade that saw legacy companies disrupted, bought or bankrupted.

The Ripple effect of this institutionalized elitism is that it cements and continually reinforces the wall that prevents companies from building an inclusive workforce. And data shows that by not hiring top talent versus elite talent they are in many cases hurting EBITA and Revenue.

Culture Fit and Personality & Behavior Tests

Love her-My Mini Me - True Culture fit

Culture fit hiring has nothing to do with a company’s mission, vision and values statement. It has to do with the actual hiring process.

Hiring Managers have to stop hiring people who look like them, were educated the same way as them, worked for the same mostly non-diverse companies they did. And more importantly, stop hiring for group think on this is how “we” do it and this is what successful people looked like in this position before. Worth repeating: This is not the type of diversity and inclusion that leads to resiliency and a competitive advantage.Being diverse in skin colllar, religion, and gender with the same background is diverse but not inclusive.

A Not Invented Here (NIH) mindset has led many previously successful companies to be dropped from the DOW Industrial Index or be disrupted by an unexpected competitor.

Personality and behavior tests are the ultimate tool for continued biased hiring and stopping the different from getting hired.

In the SHRM article, How Accurate Are Personality Assessments?, it is pointed out that, “men and women may score differently on a broad statistical basis on personality tests, based on the way the questions are written.” And, “If these differences are statistically significant, using the test could violate the EEOC’s regulations on tests and selection procedures.” Psychologists have found sexists results in the majority of the popular tests. And these tests are pseudo-science at best when applied to the hiring process. The research shows there is false attribution given to traits for success in certain jobs. Just like the elite MBA superiority myth, the data around personality and behavior attribution in context of actually doing the job does not show a direct correlation to the top performers after years of research.

The Future of Work is a Chance to Rapidly Advance I&D

A Mindset Change is Needed by HR and Senior Leaders

It is time to burst the groupthink bubble that the Future of Work is going to be some version of the past. Deloitte is calling it the Open Talent Economy and Accenture is calling it the Liquid Workforce. Gartner has declared, “Old ways of predicting skill needs aren’t working. HR leaders need a dynamic skills strategy that enables employees to learn and apply desirable new skills quickly and effectively.” Nobody is calling it business as usual.

Now is the time to embrace a mind shift and retire outdated ideas. 2021 is the perfect time for a Senior Leadership mindset pivot and a chance to reset the corporate Inclusion and Diversity Initiatives relationship with the future of work by thinking and acting differently.

Step 1: Quit funding institutional elitism, microaggression, and bias in the hiring process.

Step 2: Start embracing the data and the trends and plan to have a competitive advantage while accelerating Inclusion and Diversity Initiatives.

It has been predicted that freelancers will make up the majority of the United States’ workforce by 2027.

  • As corporations turn to a just in time workforce, how do they create an ecosystem that supports an Inclusive and Diverse Freelance employee pool that requires continual intentional learning?

The normal hiring process is broken according to Gartner. “Recruiters have long sourced skills from known talent pools based on credentials and background. This strategy misses out on highly skilled candidates, as Gartner research shows that 43% of candidates today are self-taught in one or more of their role’s requirements.”

  • What is the new metric for evaluating experience and learning whether you are hiring perm for the C-Suite or Freelance?
Rashmi Verma, a Financial Technology Senior Leader states, “The digital gap is causing inclusiveness and job retention challenges at the workplace.”
 
  • How is your company addressing digital equity not just with perm employees but your future freelance employees to ensure Inclusion and Diversity and a Dignity Economy? Corporations are the Customers. They make the rules.
The bottom-line Inclusion and Diversity is not about replacing one group with another, but tapping into the brain trust of all groups.

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