New Directions in Diversity and Inclusion: A Dialogue on What Truly Works

Gabriela Burlacu, SAP SuccessFactors; Bernardo M. Ferdman,Ferdman Consulting; Aarti Shyamsunder, Psymantics Consulting; Alice Eagly, Northwestern University; Lisa Kepinski, Inclusion Institute; & Julie S. Nugent, Catalyst Research Center

Diversity and inclusion are among the most popular topics driving SIOP submissions and research over the last decade (SIOP, 2016). Although this field has been the focus of sustained work by many I-O psychologists, inspiring at least two volumes in SIOP’s Professional Practice Series (Ferdman & Deane, 2014; Jackson and Associates, 1992), some basic questions in this area remain controversial, and worse, unaddressed. At SIOP’s 2017 annual conference in Orlando, a panel of experts discussed some of these questions in the context of what is “innovative” and “new” in the field of diversity, with the goal of distinguishing organizational practices that may be fads from more substantive, effective approaches to fostering diversity and inclusion (Shyamsunder, Burlacu, Eagly, Ferdman, & Nugent, 2017).

The panel brought together established researchers and practitioners who have looked at this topic in a variety of ways. Bernardo M. Ferdman, Distinguished Professor at the California School of Professional Psychology at Alliant International University and principal at Ferdman Consulting, brought a perspective based on research and his consulting experience to focus on inclusion as a key outcome that diversity initiatives seek to influence. Alice Eagly, Professor of Psychology at Northwestern University, shared insights about problems that arise when claims about diversity are not evidence based. Julie S. Nugent, Vice President and Center Leader of the Catalyst Research Center for Corporate Practice, shared her perspective on defining and measuring organizational inclusion. Gabriela Burlacu, Human Capital Management Researcher at SAP SuccessFactors, shared insights into how companies are applying technology to address diversity and inclusion challenges. The discussion was led by Aarti Shyamsunder, an independent consultant based in Bangalore, India who routinely engages with companies on diversity and inclusion issues.

The panelists raised critical topics in the research and practice of diversity and inclusion. In this article, we distill some of the themes brought forth concerning pressing questions in this field.

Theme #1: What Is the “Value” of Having More Women on Corporate Boards?

Companies are spending more than ever before on diversity (Dobbins & Kalev, 2016), but it remains hotly debated whether this spending has yielded sufficient results. Often, this discussion emphasizes the “business case” argument that financial rewards should determine the investment. The panelists explored a well-investigated aspect of this argument by focusing on the “business case” for including more women on the boards of organizations.

The popular view—espoused by consulting organizations, media, and advocacy firms—is that gender-diverse boards create improved business outcomes (e.g., McGregor, 2014). In their research paper titled “Why Diversity Matters” (Hunt, Layton, & Prince, 2015), McKinsey reported that, in the United Kingdom, every 10% increase in executive-level gender diversity led to 3.5% increase in organizational earnings before interest or taxes. Catalyst, a nonprofit organization seeking to accelerate the progress of women at work, revealed similar findings: They found that companies with more women on their boards had 16% higher return on sales and 26% higher return on invested capital than those with fewer women (Carter & Wagner, 2011). They also found that there is a “critical mass” of women on boards, with three or more women required for the organization to experience the value of having female representation at the top. These kinds of findings have influenced policy and law. Getting greater representation of women on boards is considered so imperative that some countries and regions have passed legislation mandating it (Catalyst, 2017a).

During the panel discussion, Eagly argued that the scientific research has not supported this link. First, correlation does not equal causation. Often advocacy firms conduct research at one point in time, correlating proportions of female board members and company financial performance. However, it is unclear whether there may be other variables that could cause an increase in both. It is also unclear whether causation may go in the other direction, with greater financial performance giving companies better resources to seek out and attract female board members.

A recent meta-analysis of over 140 studies (Post & Byron, 2015) compiled correlations between percentage of women on boards and firm performance. On average, these were near zero, even when measuring financial outcomes in different ways. Further, the relationship was moderated by sociocultural context: It was more positive in countries with stronger shareholder protections and in countries with greater gender parity. These moderators suggest that investors’ perceptions and impressions may also influence organizational profitability. Thus, researchers need to look at the question in more complex ways.

The panel also discussed that, from a practical perspective, there are benefits to having women on boards that may not necessarily be reflected in objective measures of financial performance. For example, research suggests that female leaders can serve as role models for future female workers (e.g., Beaman, Duflo, Pande, & Topalova, 2012; Herrman, et al., 2016), and as indicators that organizations value women as leaders (Bear, Rahman, & Post, 2010; Strauss, 2016). It has also been suggested that having a diverse board can lead to diversity of thought, greater innovation, and reduced groupthink (Galia & Zenou, 2012; Miller & Triana, 2009) and that for organizations serving increasingly diverse customer bases, a diverse board can ensure better service of customers’ diverse needs (Arfken, Bellar, & Helms, 2004). However, whether the causal relations implied by such claims can be substantiated has yet to be determined.

The notion of establishing a “business case” for more women on boards—as well as for more diversity in general—was itself questioned by some of the panelists in terms of being an effective practice. Burlacu, for example, suggested that because women are in the workforce and boards should reflect the workforces they lead, no business case proof should be required. This reflects how other researchers have examined the business case for LGBT inclusive practices (King & Cortina, 2010). Shyamsunder countered that different stakeholders may be engaged or “convinced” using different data points and evidence, so in general our field should better clarify the compelling reasons that business leaders should care about increasing women’s access to board positions and for more broadly increasing the diversity of organizational leadership.

Conclusion

It is unclear whether having more women on boards causes organizations to perform better financially. However, although the financial gain itself may be minimal, there may also be nonfinancial reasons organizations should consider investing in processes that enhance women’s access to board positions, including the idea that a traditional “business case” may be unnecessary. I-O psychologists can greatly advance this area of study by clarifying the scientifically based reasons business leaders should maintain a focus on increasing female representation at the board level and more generally on increasing the diversity of organizations’ top leaders.

Theme #2: What Are the Methods That Work to Increase Diversity and Foster Inclusion?

Despite increased organizational focus on diversity, the World Economic Forum (2016) has shown that gender-based pay gaps remain across the world, with women earning less than men in nearly every region. Just 5.2% of S&P 500 and 6.4% of Fortune 500 organizations are currently led by women (Catalyst, 2017b; McGregor, 2017). Various researchers have documented bias in organizational hiring practices, with job candidates from underrepresented groups being less likely to be interviewed and subsequently hired (e.g., Scheiber, 2015; Terkel, 2014; Watts, 2014). Dobbins and Kalev (2016) have argued that relative lack of progress occurs because organizations have relied for years on the same ineffective methods to address diversity.

So what practices will drive real change in creating more diverse workforces and inclusive organizations? The panel discussed the relative merit of emerging approaches.

Unconscious Bias Awareness Training

Having taken many forms over the years, diversity training now often includes a focus on participants’ awareness of their own unconscious biases (McCormick, 2016). Unconscious bias awareness training involves teaching about the biases we all hold and how these can inadvertently affect our actions. The ultimate intent is to get people to think differently about the factors that influence how they act and speak at work, and how they treat people from different identity groups. Many well-known companies, including Google, have administered this kind of training to employees (Guynn, 2015).

Unfortunately, unconscious bias awareness training may have limited long-term effectiveness (e.g., Dobbins & Kalev, 2016). First, it suffers from a challenge impacting all diversity training: Simply hearing about diversity and individual differences can activate or exacerbate the biases that people have. Research has shown that people high in social dominance orientation—the belief that individuals exist within a hierarchy and some people are simply better than others—respond poorly to diversity training (Sabat, et al., 2016). Second, simple awareness of our unconscious biases does not guarantee that we will apply those lessons to behave differently at work. Although unconscious bias awareness training is on the rise in organizations, continued experience of microaggressions and workplace discrimination suggests that transfer of training is limited (e.g., Sterzing, Gartner, Woodford, & Fisher, 2017). Further, it is not clear how such training serves to change the larger organizational or societal systems that create, foster, or perpetuate bias (Ferdman, 2014).

Inclusion Nudges

The panelists discussed a new method being deployed in organizations called inclusion nudges, which involves creating processes and tools that “nudge” people toward making unbiased decisions at work (Nielsen & Kepinski, 2016). An example would be enlisting a checklist approach to performance feedback to ensure the feedback is rich in content and substance, regardless of the employee receiving the feedback, as vague feedback untied to clear business objectives is something women disproportionately experience (Correll & Simard, 2016).

This approach differs from diversity training because it influences behavior as it occurs. It also removes the potential obstacle of having participants reject or respond poorly to the intervention, as it does not need to be presented as a diversity initiative despite its power in eliminating bias and unfair treatment. However, some change to existing processes and tools is required.

The panel also discussed applications in technology designed to support “nudging” decision makers toward unbiased behavior. Technology companies have begun embedding these kinds of tools in human capital management software solutions (Kostoulas, 2016). Although leveraging technology to nudge behavior is promising, this practice requires diversity professionals’ involvement in purchasing decisions as well as decisions regarding how the technology is configured for organizational use. In the panel’s view, this involvement is not yet a common practice among businesses, where these decisions more likely fall under the latitude of HR information technology teams.

Focus on Inclusion

Organizations are increasingly recognizing that focusing on diversity highlights differences among people, while focusing on inclusion highlights the welcoming culture that is sought to encompass and harness these differences (Dobbins & Kalev, 2016; Ferdman, 2017; Moran, 2017). A diversity-based practice might be to hire more women into leadership roles. An inclusion-based practice might be to facilitate opportunities for all employees to contribute ideas while also ensuring equitable access into leadership for women and fair treatment of women’s contributions. Inclusion is not a new concept in the literature; researchers have been exploring ways to measure and enhance feelings of inclusion for over a decade (e.g., Ferdman, Barrera, Allen, & Vuong, 2009; Mor Barak & Cherin, 1998; Roberson, 2006; Stamper & Masterson, 2002). But particularly in recent years, practitioners have noted that more and more companies are finding that inclusion-focused practices generate the best outcomes, least backlash, and greatest alignment with business objectives (Sherbin & Rashid, 2017).

In discussing approaches to fostering inclusion, Nugent shared results from a Catalyst survey designed to identify how employees determine whether an organizational environment is inclusive. The findings suggest that repeated exclusionary experiences, such as microaggressions and stereotyping, have a cumulative effect. Conversely, strong social connections among colleagues, inclusive leadership, and demonstrated organizational commitment to diversity all indicate to employees that their opinions, experiences, and perspectives are valued. Ferdman shared a multilevel model of inclusion in which individuals’ experiences are embedded within a system that includes the practices, policies, and ideologies of teams, leaders, organizations, and society as a whole (Ferdman, 2014), noting the tensions and paradoxes between initiatives designed to make individuals feel included and those designed to harness diverse, different perspectives in the workplace (Ferdman, 2017). More rigorous scientific research is needed to clarify what makes an organization truly inclusive and how this can be achieved through the actions of team members and leaders. Nevertheless, the panel indicated that interventions focused on fostering inclusion that appropriately involve employees, managers, and other stakeholders in their development appear to have merit in supporting sustained workforce diversity.  

Conclusion

Many organizations continue to use traditional methods, particularly training, to address diversity. But new methods have emerged that directly influence employees’ actions and attitudes and change the structural conditions and processes that shape behavior. I-O psychologists can greatly advance organizational thinking by contributing rigorous scientific research to determine the relative merit of these approaches. As a starting point, the panel concurred that a focus on inclusion (and diversity) rather than only diversity appears to hold promise in dispelling negative attitudes toward diversity training and fostering an organizational culture in which all employees can thrive.

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