The workplace is changing in profound ways. From the ways we communicate, to corporate culture and how we do our jobs on a daily basis; the pace of change can be dizzying. Add to the mix new technologies and the permanent marks of a global pandemic. It’s easy to see why companies must constantly innovate their Diversity, Equity, and Inclusion policies. 

 

“Companies with more inclusive business cultures and policies see a 59% increase in innovation and 37% better assessment of consumer interest and demand.” International Labour Organization

 

This is especially true for talent acquisition and hiring, where the competition for top people is as steep as ever. As is the incentive for building workplaces around diversity, equity, and inclusion. After all, it’s people at the core of innovation and inclusive groups tend to yield better results.

 

Despite the renewed energy around DEI, there remains a noticeable lack of clarity around each of these terms. In some circles, you’ll likely hear one or more of these terms used interchangeably. Elsewhere, you’ll find DEI used as a kind of non-specific catchall, when it might be more productive to hone in on a specific part of this concept for the purposes of identifying improvements and launching initiatives.

So, what exactly is diversity? What do equity and inclusion actually mean? And what is the difference between each term? Before we dig into each one, check out this graphical representation of DEI from Gensler, in which we see that each term has its own definition which, however distinct, is not entirely related from the other two terms:

Diversity

There’s a tendency to refer to people, or a person, as “diverse.” Even with the best intentions, referring to people this way feels a lot like euphemism for “outside the majority,” or “different from the dominant group.” 

This framing of diversity is misleading at best, because it assumes we’re all the same. At worst, it’s a damaging oversimplification that alienates people, rather than include them. It’s a problem we’ve seen echoed among many job seekers, talent acquisition specialists, and HR professionals. 

Blanket treatment of diversity doesn’t work because all perceptions of diversity are the same. In our own experience, we’ve found that some groups, such as millennials, perceive so-called “workplace diversity” as a combination of many different backgrounds. At the same time, older generations tend to view diversity more through the lens of equal and fair representation.  It’s important to remember that diversity is less about what makes people different—their race, socioeconomic status, and so on—and more about understanding, accepting and valuing those differences.

Common types of diversity:

We like to conceptualize diversity as an embodiment of a group’s composition, likely made up of many or all of the diversity types listed above. It’s a composite of the various differences represented—and talking to each other—therein. 

Take the following Staff Diversity Numbers, 2019 from NPR, for instance. While this annual report might look like a simple breakdown of the “percentage of people represented from a given group,” it’s more like a starting point for understanding how those percentages intersect and impact the company’s culture, morale, and objectives. There are insights embedded within this chart, insights that might help inform new diversity initiatives.

Equity

Whereas diversity refers to all the many ways that people differ, equity is about creating fair access, opportunity, and advancement for all those different people. It’s about creating a fair playing field, to use a familiar metaphor. Here’s a useful illustration of equity from the Northwestern Health Unit:

Let’s take the topic of transportation, to use an example so common to corporate environments. Not everyone within an organization will own a car, or even be able to afford public transportation on a daily basis. An organization can create a more equitable environment by accommodating the full spectrum of transportation needs, from policies around start times and working hours to stipends for both automobile and public transportation travel.

Of course, issues of access, opportunity, and advancement extend far beyond how we get ourselves to work. Women, for example, are historically underrepresented, as are various minorities throughout the United States and the rest of the world. It’s a problem that persists even today (as the data we shared above helps to show). 

Successful equity initiatives, then, must build fairness and equal treatment into the very fabric of an organization. This requires a design for creating, maintaining, and protecting equity organization-wide—a framework that supports equitable talent screening, hiring, workplace standards, and so on.

Inclusion

There’s a common misconception that environments in which diversity and equity are priorities naturally beget inclusion. You’ve built equitable practices into your organizational processes, after all, leading to far more diverse, well-represented teams. People have to feel included in a company like this, right? 

Not always, as it turns out.

Inclusion is the extent to which various team members, employees, and other people feel a sense of belonging and value within a given organizational setting. The important distinction here is that even among the most diverse teams, there’s not always a feeling of inclusion. Women might be well represented at the senior management level, but still not feel included due to longstanding gender norms, salary discrepancies, and other factors.

Evaluating an organization’s inclusion starts with empathy. Why? Consider the fact that some 48% of employees believe that respect the most important to creating an inclusive workplace (Quantum Workplace report). That means not only respecting people’s differences but considering the environment more broadly—from their point of view. Namely: 

• Balance of experience for less represented groups.
• Barriers to entry both structural and societal that might be at play.
• Blindspots and assumptions that might be working against a more inclusive environment.

Again, it’s useful to consider these aspects of inclusion from the employee’s point of view. Do they feel a sense of community and connection? Do they feel like they contribute on a daily basis? Do they feel a shared sense of purpose with their coworkers and peers?

Transparency is an essential part of successful DEI initiatives. This is why so many of the world’s leading brands now provide annual DEI reports that are publicly available online. These reports depict useful insights into the state of DEI today, as well as specific measures and programs that companies are implementing to get the needle moving in the right direction. 

The Google 2020 Diversity Annual Report comes to mind. Here we see one of the world’s leading tech companies not only reporting on its diversity in hiring for the year (see the graphic below) but detailing the specific work it is doing to address inequities and obstacles to education in the communities in which Google works.

The Ford Foundation also publishes an annual diversity and inclusion update. The report details high-level diversity metrics across the organization, as well as specific DEI initiatives, such as the development of operationalized “inclusive leadership competencies” and “organizational citizenship behaviors.” 

Finally, here is the Annual Diversity, Equity & Inclusion Report from Stanford Graduate School of Business. As you’ll see, Stanford has put DEI planning into action, including expanded diversity outreach and the formation of a new “DEI council of students, faculty, and staff.”

Many recent studies indicate better results when they prioritize DEI. According to a 2019 global report from the International Labour Organization, companies with more “inclusive business cultures and policies” see a 59% increase in innovation and 37% better “assessment of consumer interest and demand.” This is the kind of idea generation and forward-thinking that companies now need to survive and succeed.

Indeed, the benefits of a mature Diversity, Equity, and Inclusion (DEI) Program extends its reach to financial outcomes, as well. A Kellogg Insight study of 49 gender-diversity announcements by tech companies from 2014 to 2018 revealed that “if two companies released their diversity figures on the same day, the stock price of the company with 40 percent women would increase by one percentage point more than the stock price of a company with 30 percent women.” So we know the shareholders are listening.

This shareholder might also be interested in another study from McKinsey & Company, which found that organizations with gender-diverse executive teams were 25% more likely to outperform on profitability, while those with ethnically and culturally diverse executive teams were 36% more likely to achieve above-average profitability.

The ongoing challenges of inequity and underrepresentation

As clear as the ties between DEI and business success might be, underrepresentation remains a very real problem. The ILO study of companies from 1991 and 2018 (cited above) also showed that women’s representation in management was 36% at its best (in North America) and 10% at its worst (in the Middle East and North Africa).

Clearly, the business world still has a long way to go to fully realize some of the considerable benefits of DEI. In a recent review of the state of workplace diversity today, CNBC cited data from Mercer that indicates that 64% of U.S. entry-level workers are white. That number swells to 85% at the executive level. And the 2020 diversity report from LinkedIn provides another window into the state of play today, in which we see that, despite the company’s best efforts, latinos, black people, and people living with disabilities are still severely outnumbered.

Attracting top talent and supporting DEI go hand in hand

While this small sampling of marketplace diversity trends isn’t all bad,  it’s not all good, either. There’s still a lot of work to do. Beyond securing productivity and financial gains, businesses need to create diverse workplaces if they want any chance of attracting the next generation of talent.

Here’s how one Ideal customer has taken steps toward a more diverse screening and hiring process: 

“Using Ideal’s screening and matching feature, we spend less time sorting resumes and more time talking to the right candidates – which has been a game changer. Ideal’s chatbot helps us engage and qualify candidates much faster, delivering a better candidate experience. Ideal is now an integral part of our HR tech stack!”

Corey S, AVP Talent Acquisition

For many job seekers, diverse work environments are a must-have requirement for prospective employers. According to a report from Glassdoor, “67% of job seekers consider workplace diversity an important factor when considering employment opportunities.”

What successful organizations have in common is formalized DEI framework, built on three core pillars: 

1. Clearly defined and disseminated stance on DEI. In DEI mature companies, diversity, equity, and inclusion permeate the company’s mission, strategies, and practices in ways visible to the entire organization
   
2. Specific plans and programs in support of DEI. Words, of course, only go so far. DEI mature companies have in place, or plans for, things like forward-thinking hiring and onboarding practices,  DEI steering committees, and regular people and culture programs.
3. A means for measuring and reporting on performance. Beyond ideating and launching DEI programs, most mature companies have robust means for measuring and monitoring the performance of these programs, including supporting software and regular reporting.

Indeed, to be successful, diversity, equity, and inclusion have to be comprehensive—a top-to-bottom business strategy, rather than just an HR program. To be clear, the definitions and distinctions we’ve made between diversity, equity, and inclusion will depend on the industry, business needs, and context. However, this kind of closer scrutiny of DEI is necessary for laying the foundations for a robust and sustainable DEI program.