How to Build a Diverse Workforce for the Global Economy

Jan Alexander

Studies show that gender, ethnic, and cultural diversity are key factors in boosting companies’ profitability. Achieving diversity takes commitment, communication, and creativity. Practices range from teaching financial literacy in Kenya to holding blind auditions for the Chicago Symphony Orchestra.

A diverse group of five business people sitting around a conference table.

When a multi-national company commits to having a culture of diversity and inclusion (D&I), the effort can entail far more than just hiring and promoting a diverse pool of executives. Mama Jane, for example–that’s what her neighbors call her–is a Kenyan woman and young business owner who grows tea for Unilever’s Lipton brands and is has become a mentor to other women in Kenya’s tea farms. Mama Jane took Unilever’s classes in financial literacy, learning how to save money and build a small business. She now owns chickens, a cow, and land, and helps the other women tea growers do the same. Unilever has found that for a diversity policy to make a real difference, it has to factor in the needs of the people at the base of the supply chain.

Without a program to empower them, the women–by far most of the tea growers in Kenya are women– were sometimes missing work and not making their quotas. It turned out that they were often afraid to go into the fields because of rampant sexual harassment. In response, in 2013 Unilever launched a massive diversity initiative, increasing the ratio of female leaders on the farms from 3 percent to 40 percent, and focusing on prevention of sexual harassment through education and policies that it has  developed with the participation of local employees and community representatives. Amita Chaudhury, the global diversity director at Unilever, describes diversity as “embracing difference at all levels – across physical and cultural boundaries, time zones, life stages and management styles – to come together as a perfectly synced team.”

What’s more, there’s a business case for diversity. Unilever’s policies in Kenya have helped the company’s tea yield. Large companies of all kinds are initiating  programs aimed at increasing diversity, in part because any number of studies over the last few years have shown that diversity is good for a company’s  value and a win-win situation for everyone. Morgan Stanley, in a 2016 report, found that companies with high levels of gender diversity delivered slightly better returns, with lower volatility, over a five-year period. McKinsey’s latest study on diversity, published in early 2018, looked at more than 1000 companies around the world and found that those with the most gender diversity on their executive teams were 21 percent more likely to have above-average profitability than those at the bottom, while companies at the top for ethnic and cultural diversity were 33 percent more likely to outperform on profitability.

Part of the reason for the superior performance is a simple logical equation: if you have more representatives of the population at large designing, overseeing, and yes, harvesting,  products, they’re likely to come up with products that appeal to a wider market of customers.

Consider that the Container Store once had an item on its shelves that wasn’t selling: a cosmetic organizer. Company founder Kip Tindell looked into the matter and realized that the male team of designers had created something more appropriate for holding fishing tackle than cosmetics. So he hired women to redesign it and sales quadrupled. Joane Lipman relates that story in her book, “That’s What She Said: What Men Need to Know (and Women Need to Tell Them) About Working Together,” a book that is partly about why men overlook women in the workplace, but also looks at the next step in overall D&I– how companies can actually get there.

It often takes creativity to boost diversity. Among the techniques that Lipman uncovered in her research: Bloomberg, Dolby Laboratories and BBC Digital are taking a cue from the Chicago Symphony Orchestra’s blind auditions, in which  judges listen to the music behind a wall so that they don’t see the musician and therefore can’t make any unconscious assumptions based on gender, ethnicity, or other factors. These companies have applicants for technical jobs complete a test that’s evaluated by a hiring manager who doesn’t know the applicant’s name or even their educational background. Goldman Sachs offers “returnships,” a role that is something like being an intern, but is designed for people who’ve been out of the workforce for a while, particularly women who’ve taken time off to raise children.

LinkedIn has made a number of diverse hires through its open mic nights. The company’s recruiters and employee resource groups, comprised of employees from underrepresented segments, extend invitations to a diverse range of professionals  through their networks. Employees and guests can go on stage and sing, play an instrument, read poetry or do standup comedy, while hiring managers mingle with the crowd. The open mic nights were the brainchild of former diversity strategist Lesley Toche–previously a musician–who is now running a company called Nextplay Events, which puts together networking, live performances and jam sessions to connect students and professionals of color to opportunities in the technology industry at large.

“Cultural change does take time – and sustained commitment – but change is possible across industries and settings, and inclusive cultures benefit the business,” says Julie Nugent, the vice president of research and chair of the Catalyst Award Evaluation Committee at the New York-based think tank Catalyst, which has been advocating inclusive workplaces for women since its founding in 1962. The annual awards that Nugent committee bestows go to organizations that have come up with innovative ways to advance diverse talent; the 2018 winners were The Boston Consulting Group, IBM, Nationwide, and Northrop Grumman Corporation.

“Accountability is also an important element in building an inclusive culture,” Nugent says. “For example, many organizations tie executive’s compensation to D&I goals and progress, and we’ve seen that this helps real change to happen.” Catalyst’s researchers have recognized, however, that the first part of the battle is overcoming fear on the part of dominant groups–ie. straight white males–that diversity is a threat to their standing.

In a report called “Anatomy of Change”, Catalyst looks at how Rockwell Automation, a 2017 Catalyst award winner, made its culture more inclusive by appealing to the white male managers. In 2011 managers began participating in total immersion leadership development labs conducted by the advocacy organization White Men as Full Diversity Partners, where they learned to recognize white male privilege, as well as how to initiate conversations with employees about gender discrimination and racism. The conversations extended to interactions with distributors and customers; one manager, for example, steered a conversation with a client away from off-color jokes. The critical dialogue helped create a climate where employees felt free to share diverse perspectives and identify inequities, and led to a commitment to action.

Rockwell now has an initiative it calls the Culture of Inclusion Journey. The emphasis is on “journey”; the D&I efforts have not been perfect. But diversity, says Nugent, “is about making small shifts every day in our behaviors to help employees feel more included at work. These changes are not always easy and setbacks will likely happen. However, setbacks should never be viewed as failures, but as opportunities to learn and try again.”