The writer is is the president and CEO of Women in Capital Markets
In a world where the pace of change throws ever-increasing challenges at our businesses every day, companies need to be agile and nimble. The ability to shift strategies and business practices to reflect new technologies, regulations, and market dynamics provides a critical competitive advantage.
Is your workforce up to the challenge?
Does your corporate culture allow new, innovative ideas to rise to the top?
Does it value diversity of thought?
Research shows that one of the biggest challenges to innovation and change can be what is often referred to as the "frozen middle", those middle managers who are the gateway between junior to mid-level employees and leaders in the corporation.
The frozen middle is the most conservative layer in the organization. It is the most resistant to new ways of doing business, and to innovative ideas and perspectives. "Middle-status conformity effect" leads individuals to choose the safety of the tried-and-true over inventiveness and ingenuity. Middle managers have worked hard to gain some respect and value in their standing, and they do not want to jeopardize that status. They prove their worth by conforming to the corporate culture and the norms of established business practices.
The implication this has, from a talent perspective, is that the frozen middle tends to also weed out diversity in the hiring and talent development process. The desire to conform and reinforce existing norms results in the hiring and promotion of people who "fit" with the team in place. After all, history has proven that talent that looks and thinks like the current management team is successful. Why take a flyer on someone who does not fit the current mold for success?
To my mind, this is the largest impediment senior leaders face today when they strive to achieve diversity in their talent pool.
I have observed inspiring leaders champion diversity initiatives, supported by best-in-class human resource practices and professionals, yet still they struggle to achieve results. The reason for that lack of progress is the disconnect between a leader empowered to take risks and a middle layer of management that is heavily invested in the status quo. The challenge for leaders is bridging the gap between the desire for change and an infrastructure of risk-averse middle management.
The simple answer to the question is compensation.
Employees will give lip service to new, innovative initiatives CEOs are championing, yet translating that into a change in behavior when everyone is back at their desks going about their day-to-day business is a tough row to hoe. While compensation is a somewhat blunt instrument to drive cultural change, it does send the irrefutable message that the CEO is serious about evolving from the status quo.
For business leaders hoping to drive transformational change in their talent pool and company, there is no doubt that compensation is an integral part of that process. Management at all levels needs to be held accountable for hiring, developing and promoting diverse talent. They need to be compensated for the success of that talent in order to truly be invested in driving diversity in the organization. If performance evaluations do not include clear objectives and rewards for the diversity goals of the company, then employees will quickly dismiss the initiative and focus on those objectives that result in greater compensation and more rapid promotion.
Inspiring cultural change and innovation at all levels of the organization is no small feat for any leader. The propensity of middle management to opt for the status quo should be factored into any initiative which aims to shift the talent pool and culture in the company. Middle management must be rewarded by senior leaders for taking evolutionary risks and driving diversity of thought and innovation. Motivating those employees to challenge the status quo is the key to building diverse talent pools and competitive companies that are up to the challenges of today's global economy.