Michelle Scarborough, Managing Partner, BDC Capital’s Strategic Investments and Women in Technology Venture Fund
When it comes to the value of diversity for organizations large and small, the numbers speak volumes.
Take a landmark study by the Boston Consulting Group that surveyed more than 1,700 companies across a wide range of industries in eight different countries. The researchers came to three eye-opening statistical conclusions.
One, companies with above-average diversity in their management teams posted innovation revenue 19 percentage points higher than those with below-average scores.
Two, earnings-before-interest-and-taxes margins were also nine percentage points higher.
And three, relatively small changes to a management team’s composition can have a major positive impact on revenue.
It would stand to reason that companies everywhere would be rushing to diversify their boards. Yet on this point, the numbers tell a different story. Fewer than 40 per cent of respondents in the BCG survey said their organizations possess characteristics that enable diversity – participative leadership, fair employment practices and openness to new ideas. Meanwhile, just 27 per cent of women say they are benefiting from diversity programs at organizations that have implemented them.
My sense is this disconnect stems less from an unwillingness to foster diversity in the workplace and more from a lack of understanding of how to do so. That knowledge gap results in a haphazard trial-and-error approach of education seminars and employee surveys that often lack follow-through from senior leadership and fail to leave a sustainable organizational mark.
Fostering a gender-diverse culture is a journey, not a destination. What’s needed are thoughtful, continuing efforts whose outcomes are continually benchmarked. Fortunately, there are a number of steps organizations can take to set themselves on the right path.
Take ownership of diversity efforts. Without buy-in from senior leadership, diversity initiatives will fail to gain momentum. It starts at the very top: Management needs to reflect the importance of gender diversity by including female executives at the highest levels. Providing appropriate resources for diversity initiatives is also crucial to fostering their success and signalling their sincerity. It can be worthwhile to seek outside counsel from diverse communities when designing policies, as Comcast NBCUniversal has done to great effect. Being transparent about their progress on diversity is another strategy companies such as Alphabet Inc.'s Google, Facebook Inc. and Microsoft Corp. have adopted to encourage continued progress.
Here in Canada, Lindsey Goodchild and her team at Nudge Rewards, one of BDC’s portfolio companies, are a shining example of leadership-led diversity. The Toronto-based retail technology startup focused on diversity from Day 1 and openly stressed its importance at all levels of the company. As a result, Nudge Rewards has garnered a reputation as an attractive place to work and receives a steady stream of qualified referrals for job openings. This not only reduces recruitment costs, but also builds authenticity around the brand.
Embed diversity in the hiring process. A diversity of perspectives is a proven ingredient to developing successful growth strategies and pivoting in the face of fundamental business challenges. If you are selling to a global, diverse customer base, your team should reflect that target market. For this reason, managers must get comfortable with the idea of bringing aboard female candidates and those with professional backgrounds atypical in their industry. In many cases, these applicants possess soft skills that are highly transferable and are crucial to creating a dynamic workplace culture.
Attracting these gender-diverse candidates often starts at the hiring process. Research by Britain’s Government Equalities Office suggests concrete actions that can make job descriptions more appealing to female candidates, such as removing gender markers from résumés before review, providing salary ranges to encourage negotiation and using structured rather than free-wheeling interviews. A regular audit of hiring, promotion and compensation outcomes will also keep gender discrepancies in focus.
Implement gender bias training. Everyone has hidden bias that skews the fairness of their decision-making. New research from the Harvard Business Review shows investors pose different types of questions to male and female entrepreneurs, which can greatly influence how much funding they receive. Though bias is largely unconscious, it can be addressed through gender bias training. HBR researchers discovered employees believed to be the least supportive of women were more likely to express support for policies designed to help women after bias training. BDC is currently rolling out gender bias training from coast to coast and already teams are seeing a positive difference.
Stay committed to the diversity roadmap. A diverse workplace takes time to develop and build, so nurturing policies over time through continuing evaluation is critical. Regular check-ins with employees every six to eight weeks for an honest assessment of their corporate culture is one way to help the team remain vigilant with inclusivity and address any issues early. Making diversity policies explicit and visible throughout the company also helps improve follow-through.
Adding diverse talent doesn’t create an inclusive workplace in itself. Advancement and retention are the two biggest issues that women report as obstacles to gender diversity. Companies need to make conscious efforts to celebrate budding leaders from diverse backgrounds and promote their professional growth whenever possible. For example, enabling female managers to head up new business segments or fill international postings are powerful ways of deepening their professional experience, prime them for senior-level advancement in the future and make them more visible to both colleagues and the public.
Ultimately, the most important step an organization can take to encouraging diversity is to talk about it. Broadly speaking, those conversations are happening. By making it clear that diversity and inclusion are important, we begin to spread knowledge, dispel misconceptions and change attitudes.
Progress may be slow and uneven, but it’s progress nonetheless – and it makes a ton of dollars and sense.