U.S. companies spend roughly $8 billion a year on DEI initiatives and have little to show for it. Here’s the bottom line: Your business systems and climate reflect the people you’ve already hired. So if you want to replicate that workforce in the future, keep doing what you’re doing. But if you really want to make progress toward your DEI goals, my reassuring message is that you already know what to do. Just use the same tools as you would to solve any business problem. Begin with the evidence, use metrics to establish baselines and measure progress, and keep at it in a disciplined manner, using an iterative process until you achieve your goals. That’s the new DEI playbook—and it works.
If you had a serious problem with your supply chain, you wouldn’t try to solve it with a heartfelt email. What follows is a six-step protocol for the kind of change that’s needed to actually deliver on your DEI goals, based on our experience and an overwhelming amount of data both old and recent.
Step 1: Give someone the authority and resources they need to solve the problem
I’ve hired a chief diversity officer, I hear you say. That’s a good first step, but there’s a structural problem at most companies: most chief diversity officers (CDOs) don’t own the business systems that need to be changed. At many companies, HR owns performance evaluations and sees the business through an ops lens rather than a strategic lens. At many companies, recruiting is its own department. And in virtually all companies, neither HR nor DEI has authority over who gets access to plum opportunities or how performance is incentivized by line managers.
You can’t engage in effective culture change if you splurge on a head of DEI who has little or no authority to change the business systems that create the culture. So the first step is to give the CDO authority to do an audit of your basic business systems, including hiring, performance evaluation, access to opportunities, and compensation (and perhaps more—this is a minimum). This audit should use evidence-based process metrics to measure whether, and how, bias is creeping into each of these systems. If it is—and if you have a problem with diversity, that’s likely—then the CDO needs influence and the power to have functional business leaders collaborate with them to redesign the business systems that need tweaking. Too often today, CDOs do not have this authority. Yet no one would expect to fix a problem in sales without giving the head of sales the authority to change policies and practices. Influence is not enough. And they can’t just come back to you and report—this will tend to cause others on the executive team to treat them with suspicion. The role’s purpose is not to spy on who is doing what. Set your CDO up to win.
Step 2: Treat diversity as a business goal
If diversity is a core business goal, and it should be, treat it like one: document why DEI is a business goal; use metrics to measure baselines and measure progress; and hold people accountable for achieving DEI goals, just as you would any other business goal. Then, promote the message with the troops, as you do with other initiatives. Explain to people in plain language why DEI is good for everyone, good for the bottom line, and good for shareholders. You can start by saying that your customer base is diverse, the world is shrinking, and the company is missing out on the creativity, resourcefulness, and productivity that diverse teams demonstrate in study after study, on many different metrics.
In any company, the most powerful business case is one that shows—not tells—how lack of diversity is hobbling business effectiveness and that improving inclusion will end up helping everyone without hurting any individual group. Of course, what constitutes the most persuasive business case will depend on the audience. For example, the board might well be interested in financial data, and there’s plenty of it. Once you have your business case, remember Kotter, who notes that organizational change initiatives are often hobbled by “under-communicating the vision by a factor of 10.”
Step 3: Use metrics and accountability
Using metrics is another crucial element to treating diversity like a business problem. If you aren’t using metrics to establish baselines and measure progress, you’re not serious about DEI, full stop.
A Fortune 250 fintech company sharply increased diversity by using metrics and accountability. It kept metrics on the candidates contacted, interviewed and hired, and shared those metrics with the CEO, the hiring manager and the relevant executive committee member. Equally important, achievement of diversity goals was linked to executive bonuses. After just 18 months, 48 percent of newly hired executives at the VP level and above were white women or people of color, including 77 percent of newly hired SVPs.
Too often CEOs hire a CDO but then, when the person tries to develop key metrics, in-house lawyers get worried about legal risk and say no. CEOs need to send a strong message to in-house lawyers that the company is willing to shoulder some risk in order to implement effective DEI measures; a business goal for which you are unwilling to shoulder any risk is by definition not a serious business goal. (For more on keeping diversity metrics while controlling for legal risk, see our working paper.) Or talk to any number of progressive Am Law 100 company-side senior attorneys who have deep experience, to assuage your general counsel that this is not only doable but decreases legal risk overall.
Step 4: Debias HR systems
The next goal is to de-bias workplace systems. This is basically a job for HR, so I will just give one example here. If your initial pool of job candidates lacks diversity, the first step is to reassess referral hiring if you do it. The second step is to do what Erby Foster, the visionary diversity head, did at Clorox: develop a special recruitment program, which researchers Kalev and Dobbin identify as a program of proven effectiveness with particularly strong positive impacts for African Americans, Asian Americans, Hispanics and white women.
Step 5: Change the incentives and capacity of middle management
“What gets rewarded gets done.” This truism underlines another structural problem: no DEI initiative will be successful unless it changes incentives—something few CDOs can do today. That’s why many DEI initiatives flounder when the CEO articulates ambitious goals and middle management ignores them.
At every organization a limited number of people are the key to changing the culture, notes James White, former CEO of Jamba Juice. He cites the example of one retail company where roughly 150 people control the work experience of the remaining one hundred thousand. Effective policies enable inclusion, but these middle managers hold the key to delivering it. When White was at Jamba Juice, he instituted a new incentive system in which up to 20 percent of store managers’ compensation was determined by engagement, climate, and organizational health scores. White used a variant of the Gallup Q survey; the Workplace Experiences Survey is another resource. Which measurement tool you use is less important than ensuring the tool assesses managerial effectiveness and impacts consequent compensation.
Step 6: Restructure access to opportunities
By the time performance evaluations come along, for many people the jig is up. They didn’t get high-quality assignments, so they didn’t develop the competencies, visibility and networks they need to progress. Unless a solution to this central and important problem starts with the CEO, it’s nigh impossible to change the status quo: managers get caught up in the pressures of the day to day, and when projects come up, they have a vested interest in going back to the employee they trust.
Why should CEOs invest time in leading a solution? It’s simple. Lack of opportunity leads to a revolving door for talent. Often we hear from managers that they keep going to the same few people with new work because those are the only people with the skill sets or the networks to get the job done. That’s an admission that those managers are putting your company in a vulnerable position. If only a small circle of people have crucial firm-specific human capital, remember: they could walk out the door tomorrow. So it’s good management to insist that managers develop a broader pool of talent. It may be in their short-term interest to keep going back to the same person, but it is not in the long-term interest of the company.
Achieving DEI goals is leading change
At most companies, achieving DEI goals will entail a traditional change management process. The six-step protocol above accomplishes all eight of the steps outlined in John Kotter’s famous model for leading change. Building the business case creates a sense of urgency, and creates and communicates your vision. Empowering your DEI head helps people act on the vision. Using metrics creates visible short-term wins and ensures accountability. And changing the incentives for top brass and middle management removes obstacles to progress by holding people accountable for DEI goals, just as they are held accountable for other business goals.
Achieving results will not only improve measurable metrics; it will also make your company a much better place to work, and the word will spread. You will leave a legacy—not just that you helped to increase profits during your tenure, but that you helped the company change course and set itself up to create long-term success for all stakeholders.
Reprinted by permission of Harvard Business Review Press. Adapted from Bias Interrupted: Creating Inclusion For Real and For Good by Joan C. Williams. Copyright 2021 Joan Williams. All rights reserved.