Team Fault Lines

Why in­clu­sive­ness is key for ef­fec­tive work­place diver­sity

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Why in­clu­sive­ness is key for ef­fec­tive work­place diver­sity.

Bi­o­log­i­cal law tells us that di­verse sys­tems are the most adap­tive, be­cause com­plex or­gan­isms are more likely to evolve and sur­vive. So how does that play out in the mod­ern work­place, and can HR play a more strate­gic role in nur­tur­ing diver­sity?

Pro­fes­sor Robert Wood, Di­rec­tor of Cen­tre for Eth­i­cal Lead­er­ship, cau­tions that diver­sity in the work­place must go hand in hand with in­clu­sive­ness.

“Diver­sity brings dif­fer­ent per­spec­tives to prob­lems,” he ex­plains. “But with­out in­clu­sive­ness, it is like hav­ing all these as­sets with­out us­ing them prop­erly, and it can cause a fault line within teams.”

Diver­sity is more than the dif­fer­ence of phys­i­cal at­tributes such as gen­der, age or eth­nic­ity. It also re­flects dif­fer­ences in at­ti­tudes, be­hav­iours and ex­pe­ri­ences.

“Or­gan­i­sa­tional cul­tures of­ten get trapped in ho­moge­nous groups, be­cause our un­con­scious affin­ity bi­ases means we are at­tracted to peo­ple like us,” Robert says.

“The ques­tion is, how do we ex­tract value from our ex­pe­ri­ence of diver­sity? Do we learn from it, or do we re­treat into es­tab­lished po­si­tion?” The case for diver­sity Re­search ev­i­dence sug­gests diver­sity cer­tainly has a pos­i­tive im­pact on busi­ness per­for­mance. McKin­sey’s 2015 study, Why Diver­sity Mat­ters, found com­pa­nies in the top quar­tile for racial and eth­nic diver­sity are 35 per cent more likely to have higher fi­nan­cial re­turns, and while this re­search is cor­re­la­tional it re­flects other re­search find­ing di­verse firms are more suc­cess­ful.

Ac­cord­ing to The Bot­tom Line: Cor­po­rate Per­for­mance and Women’s Rep­re­sen­ta­tion on Boards, For­tune 500 com­pa­nies with the high­est rep­re­sen­ta­tion of fe­male board di­rec­tors achieved sig­nif­i­cantly higher fi­nan­cial per­for­mance – out­per­form­ing re­turn on in­vested cap­i­tal by at least 66 per cent.

It’s no won­der many or­gan­i­sa­tions are en­cour­ag­ing more women onto their boards and se­nior lead­er­ship. But it has also has a clear ef­fect on team per­for­mance.

“At a group level, di­verse teams are more ef­fec­tive, more cre­ative and adapt­able, and pro­vide bet­ter as­sess­ment of risk,” says Robert.

They may also re­spond bet­ter in a fast-mov­ing mar­ket – for ex­am­ple, younger em­ploy­ees have fewer es­tab­lished pat­terns of work, mak­ing them more ready for change. Road­blocks to diver­sity So why do some teams push back and de­fend their po­si­tion, in­stead of ab­sorb­ing diver­sity and learn­ing from it?

Robert ex­plains four chal­lenges to watch out for.

First, if your com­pany has a high sta­tus dif­fer­en­tial, for ex­am­ple a man­age­ment dom­i­nated by older men, it may only pay lip ser­vice to diver­sity, be­cause their knowl­edge is too grounded in past be­hav­iours.

Per­for­mance pres­sures will also have an im­pact. “You may have poli­cies for flex­i­bil­ity and job shar­ing, but if the re­al­ity is the 24/7 de­mand of a com­pet­i­tive mar­ket, those poli­cies will be in­ef­fec­tive,” Robert says.

“Thirdly, re­ward struc­tures need to en­cour­age diver­sity, not just hard indi­ca­tors like KPIs, bud­gets and rev­enue,” says Robert. “Oth­er­wise, any­thing seen not contributing di­rectly to that will be re­jected – which is short sighted.”

Fi­nally, a lack of strate­gic imag­i­na­tion can be a hin­drance when you give some­one a chal­leng­ing goal – such as build­ing a more di­verse work­force.

“If they just try what has been done be­fore, it might not work. Then they’ll re­ject the goal – rather than come up with new ways to achieve it.”

He says this ‘ei­ther or’ think­ing has been over­come be­fore with qual­ity and safety goals. “Peo­ple thought qual­ity and pro­duc­tiv­ity were mu­tu­ally exclusive, but of course we now know it has to be part of the cul­ture.” Over­com­ing un­con­scious bias And then there’s the vil­lain in this story: un­con­scious bias. The un­spo­ken stereo­types we bring to ev­ery de­ci­sion. Bi­ases can be short cuts – ways of deal­ing with the world ef­fi­ciently – but they also de­velop mind­sets for sit­u­a­tions that may blind us to the best so­lu­tion.

“A lot of our in­ter­ac­tions play out at un­con­scious level. It’s au­to­matic – we add to our con­scious thoughts with what we’ve al­ready dis­cov­ered.”

Robert says the “mother of all bi­ases” is con­fir­ma­tory bias. “We are more re­cep­tive to in­for­ma­tion that con­firms what we al­ready be­lieve or know.” This val­i­da­tion ex­plains why our nat­u­ral in­stinct is to form ho­moge­nous groups.

Can you stop your un­con­scious think­ing? The short an­swer is, no. “So, when we con­sult with firms, we ex­plain the need to look for bias hotspots – times where it might be an is­sue.”

Ex­am­ples in­clude team meet­ings, se­lec­tion pan­els and per­for­mance ap­praisals. When you op­er­ate in these ‘bias hotspots’, you need ‘bias re­minders’ to make the process more con­scious. This may openly ask­ing ques­tions such as “Is there ev­i­dence for the other point of view?”

Or­gan­i­sa­tions are au­dit­ing their sys­tems and pro­cesses to re­move the risk of bias when look­ing at data. For ex­am­ple, a de-iden­ti­fied se­lec­tion process, with no name or gen­der on a CV, min­imises the ac­ti­va­tion of stereo­types in re­cruit­ment. De­vel­op­ing in­clu­sive lead­er­ship For diver­sity and in­clu­sive­ness to be ef­fec­tive, peo­ple need to feel their unique­ness is re­spected, so they can share ideas with­out fear­ing ridicule. But you also need to fos­ter a sense of be­long­ing.

The prob­lem is, many peo­ple in HR fo­cus solely on cre­at­ing a sense of be­long­ing. And that makes the group more ho­moge­nous, rather than ex­tract­ing the value of its diver­sity.

“At its ex­treme, be­long­ing be­comes like a ‘group think’,” says Robert.

So to en­sure team mem­bers feel unique and be­long­ing, in­clu­sive lead­ers need to build a sense of psy­cho­log­i­cal safety (‘I can be who I am and I don’t feel like I’ll be judged for it’) and a sense of team ef­fi­cacy (‘we can get things done to­gether’). To­gether, these two things will make teams more cre­ative and pro­duc­tive. HR needs to take the strate­gic lead Robert sug­gests HR can sup­port diver­sity in five ways: 1. Set a strate­gic frame­work Diver­sity and in­clu­sion need to be in­te­grated into the op­er­a­tional model, not as a bolt-on. “Look at how we in­te­grated safety as part of lead­er­ship and man­age­ment cul­ture,” says Robert. “You need to keep the strat­egy dis­cus­sion alive at a se­nior lead­er­ship level.” 2. Put the pol­icy frame­work in place This cre­ates the con­di­tions to en­able diver­sity. For ex­am­ple, flex­i­bil­ity gives peo­ple more free­dom to be adap­tive, re­turn to work poli­cies make sure they feel a sense of fit­ting in. 3. Fos­ter in­clu­sive skills Lead­ers and man­agers need the skills to fos­ter in­clu­sive­ness. They also need to un­der­stand how to ef­fec­tively im­ple­ment those poli­cies, and how to de­velop strate­gic imag­i­na­tion to meet diver­sity goals. 4. Struc­ture re­wards En­sure pay, in­cen­tive and pro­mo­tion poli­cies re­ward and re­in­force diver­sity and in­clu­sion. 5. Eval­u­ate Look be­yond im­ple­men­ta­tion to eval­u­ate and con­stantly evolve your strat­egy and poli­cies.

Robert be­lieves that this com­bi­na­tion of skills, poli­cies and strat­egy will be es­sen­tial in the fu­ture work­place.

“Be­ing an in­clu­sive leader in a work­place that is more like a dis­trib­uted net­work of peo­ple is more chal­leng­ing. It re­quires new skills, such as trust and tech­no­log­i­cal savvy, and you need to be very clear about ac­count­abil­ity and ex­pec­ta­tions.”

This ar­ti­cle ap­pears in the March edi­tion of AGSM’s thought-lead­er­ship pub­li­ca­tion The Leader. Pro­fes­sor Robert Wood is an AGSM Fel­low, Di­rec­tor of The Cen­tre for Eth­i­cal Lead­er­ship and fac­ulty mem­ber at AGSM Short Cour­ses. AGSM Short Cour­ses pro­vide unique so­lu­tions to busi­ness chal­lenges be­ing faced by lead­ers in their ca­reers and or­gan­i­sa­tions at the points in time it’s needed most. For in­for­ma­tion about AGSM Short Cour­ses and to sub­scribe to The Leader visit www.agsm.edu.au/short­courses

Pro­fes­sor Robert Wood

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