THE BUSINESS CASE FOR DIVERSITY INCLUSION CAPITALIZING ON

THE BUSINESS CASE FOR DIVERSITY & INCLUSION CAPITALIZING ON DIVERSITY MAXIMIZING PERFORMANCE Presented by Georgia Coffey Deputy Assistant Secretary for Diversity and Inclusion U. S. Department of Veterans Affairs 1

HISTORICAL PERSPECTIVE 1960 s: 1960 s 1970 s: 1970 s 1980 s: 1980 s 1990 s: 1990 s 2000+: 2000+ Civil Rights Enforcement Affirmative Action Respecting Diversity Management The Business Case for Diversity & Inclusion; Diversity of Thought 2

DEFINITIONS Equal Employment Opportunity (EEO) The set of laws, regulations, and policies that guarantee every individual’s right to EEO in the workplace, irrespective of race, color, religion, national origin, sexual orientation, age, or disability (reactive, legally driven). Affirmative Action The requirement under Executive Orders 11246 and 11478 to measure the representation of certain demographic groups in the workforce in comparison with the available labor market, in order to identify potential barriers to equal opportunity and take affirmative steps to correct manifest imbalances through expanded outreach (assimilation). 3

DEFINITIONS Diversity Management A proactive effort that responds to the changing demographic profile of the workforce through the implementation of programs and services that support and empower a diverse workforce through multicultural approaches (program-oriented). Business Case for Diversity & Inclusion The return on investment (ROI) in terms of performance and economic outcomes that results from leveraging the variant knowledge, skills, abilities, talents, intellectual capital, perspectives, working styles, etc. of a diverse workforce (process-oriented). 4

WORKING DEFINITIONS EEO COMPLIANCE is about ensuring that we comply with all the laws, regulations, and policies prohibiting discrimination and requiring affirmative employment in the Federal workplace. DIVERSITY is about valuing and promoting differences, similarities and unique characteristics of groups and individuals in the workforce. INCLUSION is about empowering and leveraging diversity in the workforce by enabling individuals to contribute to their fullest potential through individual development, retention, and pluralistic work processes. 5

WHY DIVERSITY & INCLUSION? We know there is a legal imperative, but is there a… Business Imperative Does workforce diversity have a quantifiable effect on business/performance outcomes? Economic Imperative Is there a financial/economic benefit to workforce diversity? Human Imperative What is the human cost? How does organizational culture impact one’s contributions to the mission? What does the research show? 6

THE BUSINESS IMPERATIVE What does the research show? Diversity Research Network Workforce diversity is positively associated with higher business performance outcome measures. Racial diversity is positively associated with higher performance in organizations that integrate and leverage diverse perspectives as resources for product delivery. Gender diversity is positively associated with more effective group processes and performance in organizations with people-oriented performance cultures. * * The Effects of Diversity on Business Performance: Report of the Diversity Research Network, October 2002. 7

THE BUSINESS IMPERATIVE What does the research show? Center for Creative Leadership Diverse teams are more creative and perform better in problem solving than homogeneous teams. Diversity in workforce and processes results in better decisionmaking. The effects of diversity are highly dependent on the presence of facilitating or inhibiting conditions in the organization; absent facilitating conditions, the aforementioned outcomes are reversed. * * Marian N. Ruderman et al. (eds. ). Selected Research on Work Team Diversity. 1994. 8

THE BUSINESS IMPERATIVE What does the research show? UCLA Study Medical students who attend racially and ethnically diverse medical schools indicate they are better equipped to provide care for diverse patient populations. * Conclusion Diversity enhances performance but requires attention. * Somnath Saha et al. “Student Body Racial and Ethnic Composition and Diversity-Related Outcomes in US Medical Schools, ” Journal of the American Medical Association, September 10, 2008. 9

THE ECONOMIC IMPERATIVE What does the research show? The Conference Board Racial and gender diversity are positively associated with higher establishment productivity, product quality, and economic benefits. * U. S. Banker Most highly diverse executive management teams generate far greater revenues and profits than those organizations with the lowest percentage of women on their executive teams. ** * Linda Barrington and Kenneth R. Troske. Workforce Diversity and Productivity: An Analysis of Employer-Employee Matched Data. April 18, 2001. ** Rebecca Sausner et al. "Diversity and Profit: Working the Fundamentals, U. S. Banker, October 2008. 10

THE ECONOMIC IMPERATIVE What does the research show? National Urban League Diverse companies generated 18% higher productivity than the U. S. economy overall. * Wall Street Journal Workforce diversity reflecting consumer/market diversity results in: New product development Consumer confidence Increased product/service marketability Significant revenue growth (e. g. , Mc. Donalds, Pepsi-Cola, IBM 3, 000% growth from 1998 -2001 attributed to diversity market)** * National Urban League. Diversity Practices That Work: The American Worker Speaks, 2004. ** Carol Hymowitz. “The New Diversity, ” Wall Street Journal, November 14, 2005. 11

THE ECONOMIC IMPERATIVE What does the research show? American Sociological Association Companies reporting the highest levels of racial diversity brought in nearly 15 x more sales on average than those with the lowest levels of racial diversity. Companies with a more diverse workforce consistently reported higher customer numbers than those with less diversity. Racial diversity was among the most important predictors of a company’s competitive positioning relative to other firms in the industry. * Cedric Herring. "Does Diversity Pay? : Race, Gender, and the Business Case for Diversity, " American Sociological Review, April 2009. 12

THE ECONOMIC IMPERATIVE The flip side… UNC Business School Workplace conflict results in 22 -53% lost productivity. EEOC Average EEO complaint costs approximately $60, 000 (administrative process) up to $250, 000 (including settlement/damages). 25 -40% of workforce attrition rate and 5 -20% in lost productivity can be attributed to poor diversity management; turnover costs 75150% of the replaced employee’s salary. Conclusion: Conclusion Diversity requires investment, but the ROI outweighs the cost. 13

THE HUMAN IMPERATIVE Observations: By 2042, there will be no single majority demographic; people of color will comprise more than 50% of the U. S. population; the majority of new entrants into the labor market will globally diverse. Our labor market, like our economy is irreversibly global. 46% of employees who experienced intolerance/discrimination indicated they would remain with the organization vs. 71% of employees who had not. * Defining diversity solely as race and gender can have a detrimental effect; inclusion and multidimensionality are essential in defining diversity in order to gain acceptance. ** * The Gallup Organization. Employee Discrimination in the Workplace, Public Opinion Poll. December 8, 2005. ** Stella M. Nkomo. “Identities and the Complexities of Diversity, ” in Susan Jackson and Marian Ruderman (eds. ), Diversity in Work Teams: Research Paradigms for a Changing Workplace, 1999. 14

THE HUMAN IMPERATIVE Gallup Survey: Survey Employee engagement is a validated predictor of organizational performance; diverse workplaces with culturally competent workforces have the highest employee engagement. * Sirota Survey: Survey Key motivators for employees are equity, achievement, and camaraderie. ** Conclusion: Conclusion Empirical data show a quantifiable link between diversity and employee engagement and performance outcomes. * Gallup Organization. Q 12 Employee Engagement Survey, performed in the Food and Drug Administration, February 2005. ** David Sirota et al. The Enthusiastic Employee: How Companies Profit by Giving Employees What They Want, 2005. 15

LESSONS LEARNED INTELLIGENCE COMMUNITY: 9/11 Obstacles leading to intelligence failures included: Hardened attitudes against change Insular organizations Resistance to external recommendations Insistence on preserving the status quo* Recommendations for improvements in performance culture include: Agencies should encourage dissent, not smother it Move away from tradition of searching for consensus in favor of open debate and more diverse spectrum of views** * Walter Pincus and Peter Baker. “Dissent on Intelligence is Critical, Report Says, ” Washington Post, March 30, 2005. ** The Commission on the Intelligence Capabilities of the United States Regarding Weapons of Mass Destruction, March 31, 2005. 16

LESSONS LEARNED SCIENTIFIC COMMUNITY: NASA “Organizational culture refers to the values, norms, beliefs, and practices that characterize the functioning of a particular institution. ” Causes that contributed to the Columbia accident included: An organizational culture that squelched dissent A performance culture that stifled differences of opinion Resistance to external criticism and doubt Imposition of the “party line vision…(which) led to flawed decisionmaking, self-deception, introversion, and diminished curiosity” Organizational barriers that prevented open, effective communication* NASA has since implemented one of the strongest diversity management programs in Federal government * Columbia Accident Investigation Board Report, 2003. 17

LESSONS LEARNED ECONOMIC COMMUNITY: LEHMAN BROS “A culture that is too strong can also end up too rigid and can shut out diversity, especially diversity of perspective. ” * Issues leading to its bankruptcy and one of the worst economic meltdowns of the 20 th century: Insular organization Narrow decision-making; failure to gain broad input/perspective Outmoded, embedded cultural habits Hoarding information Misuse of talent Rigid, inflexible culture Many of these issues are identical to those that led to Enron’s Failure a decade earlier. * Hope Greenfield. “Culture Crash” The Conference Board Review, Fall, 2009. 18

TAKE-AWAYS What does this mean for the Federal workforce? Diversity & Inclusion in the workplace enhance performance and productivity; they are business, economic, and social imperatives. Diversity should be broadly defined, including but not limited to legally protected groups. Diversity of thought & perspective is rooted in our race, gender, and ethnicity. Diversity & Inclusion strategies must be strategically aligned with business goals Diversity management strategies must be complemented with inclusion strategies and effective conflict management. Intolerance to diversity breeds disastrous and costly results; agencies must first guarantee equity in the workplace before diversity can thrive. 19

ATTRIBUTES OF INCLUSIVE ORGANIZATIONS • Leadership commitment • Equity in employment, advancement, & recognition • Diversity & Inclusion principles incorporated in strategic planning • Accommodation for diverse physical, cognitive, and developmental abilities • Powerful communication and information sharing (transparency) • Shared accountability and responsibility (Shared Leadership) • Continuous learning • Competency-based diversity training (starting with managers and supervisors) • Participatory work processes • Interdisciplinary, pluralistic teams for optimum perspective • Inclusive organizational culture • Culturally competent retention and rewards strategies (empowerment, not just $) • Collaborative, constructive conflict management 20

HOW DO WE MEASURE SUCCESS? • Organizational composition – Workforce demographics vs. RCLF/CLF – Analysis of promotions, separations, hiring… • Organizational culture – Climate/employee surveys – EEO complaints, grievances, disciplinary actions • Organizational performance – Line of business objectives – Outcome metrics: quality, service level, efficiency Correlate: Establish baseline in year 1, then correlate annually thereafter to gauge progress. 21