Diversity and Inclusion – a vital tech-enabled HCM agenda item

SUMMARY:

Diversity and Inclusion need to be top of the HCM agenda across organisations in all sectors in 2017.

Greater innovation, better business performance and profitability, more talent working your company…With a benefits list like that, it’s not surprising that diversity and inclusion (D&I) has become a hot topic.

D&I simply makes good business sense, according to John Kostoulas, Human Capital Management (HCM) research director at Gartner:

Organizations need diversity and inclusion to come up with business results. It’s not just because it’s the right thing to do, it’s also because it makes business sense. It’s a win-win.

That means that it’s no longer just an HR initiative, but a boardroom issue, he says:

What we are seeing is a transition from compliance, which has been the traditional objective of diversity and inclusion, towards business value. Instead of just ticking the box, the question is: how do we make diversity and inclusion an essential ingredient of business success?

The research backs the grand claims about diversity. A 2015 McKinsey report, Diversity Matters, found a strong link between diversity and financial performance. The top quartile of companies for ethnic diversity outperformed those in the bottom quarter by 35%, while the difference between was 15% for the most versus least gender diverse companies. Diversity of talent brings innovation and diversity of ideas and experience

D&I is a far wider issue than just ethnicity and gender: it includes social background, as well as cognitive and emotional differences. Kostoulas argues that while we may be early in the journey, it’s not something that can be ignored. For one thing, the fast pace of the digital economy is making it an imperative:

If you see how quickly organizations can grow into billions of capitalization and also how quickly organizations can disappear, then the key learning for organizations is: if they don’t act fast, then they might be the next candidate for extinction.

The recognition that this is a boardroom rather than just HR issue is there, but more is required, as Kostoulas explains:

Awareness is definitely the starting point, and this is something where we see probably the most activity happening, but it’s definitely not sufficient.

The key is to moving beyond awareness is to employ data-driven decision making. This means moving from what neuroscientists have coined System 1 thinking – making decisions based unconsciously and automatically based on e gut-feel or intuition towards more system 2 thinking. This in contrast, is conscious, effortful, logical and rules-based. Organizations and its employees are trained to consistently make decisions using data.

So, in the recruitment process this would mean deciding what data you use to screen and select people for interview and how structured the interviews are. Are there a series of questions that are regularly asked and how do the make sure they are being asked consistently? How do you make sure there is visibility and accountability of the interviewer? How do you reach your decision and how much of a fit is it to the job description?

It’s not good getting this right in pockets of the organization; it has to be a structured process that is consistent across the organization. When you’ve done all that, says Kostoulas:

Then go back through the process and fine-tune it. One important thing about diversity and inclusion interventions is they do not happen as one-offs or right first time. Interventions will start small, then they will change the process based on lessons learned. It’s a very iterative process.

None of this is possible without technology helping to make these processes transparent and making managers accountable. Vendors are making moves to support D&I, but Kostoulas is clear that this will not mean another module added to the HCM cannon:

I don’t’ believe it’s going to be a new module. It’s not going to be a new category. I believe it’s going to be a horizontal dimension across processes for vendors to line up their product roadmap with different features.

He points out that there are already features within existing offerings that have a positive effect on D&I – it’s just that they are rarely marketed or sold in that way:

We’ve seen some steps in the last year from a number of vendors, but this is definitely something we should like to see a lot more happening and more consistently and this is why we create vendor-focused research and why we included D&I for the first year in our hype cycle… D&I technology support is still very fragmented, but I do expect things to accelerate.

My take

Technology is key to help push through diversity, but as ever, it is only an enabler. The faster companies can move beyond the recognition and awareness stage and start putting a clear organization-wide strategy in place to look at diversity, the better.

John Kostoulas will be talking through some of these issues at HR Tech World in Amsterdam, dates and explaining the four step framework Gartner has come up with to help ensure their D&I strategy actually works.

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