Diversity & Inclusion Are Strategic

Ensuring diversity and inclusion among your credit union’s employees and leadership it not just the right thing to do, it delivers measurable business results. Companies that rank above average for diversity have greater returns from innovation, higher margins and improved customer-centric service and market awareness than less diverse peers.

Diversity involves the intrinsic traits that you were born with, such as gender, ethnicity, age and sexual orientation. It also encompasses characteristics that one acquires through experience like disciplines studied, industry background, career path and foreign work experience, where one learns to greater appreciate cultural differences. When leadership teams have a mix of inherent and acquired diversity, results happen.

Diverse teams are better able to unlock innovation that drives market growth. Nonlinear thinking and adaptability are needed more than ever in today’s fast-changing business environment, and smart leaders will tap into the power of diversity and inclusion to spark this growth. A recent BCG study found diverse management teams were more innovative than less diverse teams, as evidenced by the portion of revenue from products and services launched in the last three years. For the 1700 companies surveyed of varying sizes and with differing global locations, above-average diversity translated into greater innovation revenue (45% of total) than for companies with below average team diversity (26%) – a 19% innovation-related benefit. Just as importantly, overall financial performance was better. A study published by the Harvard Business Review found EBIT margins were about 9% higher in companies with more diverse management teams than for those with below-average diversity. Those companies with the highest levels of digital investment exhibited the strongest link between diversity and innovation revenue.

Diversity helps employees uncover market opportunities. Members of diverse teams regularly see things in a differing light, are more in tune to different ideas and arrive at novel solutions to problems. They may see unmet needs in the market, especially for market segments that have demographics similar to the non-majority team member. And, a single diverse perspective benefits the whole team. A 2013 HBR study reported when at least one team member shares a client’s ethnicity, the entire team is better able to understand the client than those teams in which no member has that background.

A culture of inclusion is a must to harness the dynamism that diversity brings. Trying to “recruit diversity” is virtually impossible if the organization does not have a culture that supports a diverse employee base. All employees must feel valued, included and empowered. Fair employment practices are a basic prerequisite. These include a strong non-discrimination policy, equal pay practices and a welcoming work environment where all voices are heard – where people feel safe to propose new ideas and ideas are considered regardless of age, background or experience level. Outside perspectives and diverse voices get airtime. Innovative twists on old and new problems are considered. Agility, risk-taking, bold thinking and action orientation are rewarded. Decision-making authority is shared. Feedback is clear, actionable, and has a real focus on what is working well and going right. Leaders and the teams share credit for successes. Furthermore, when traditionally underrepresented groups achieve a level of critical mass, it is easier for all to feel included. This all means that employees are free to contribute to their full potential.

A successful diversity and inclusion strategy starts at the top. The CEO must own it, promote it and live it as a business imperative. It takes courage to proactively foster diverse viewpoints and perspectives throughout the organization. For organizations that have had traditional hierarchical administration that was comprised primarily of white men, such a change feels disruptive. Leadership must drive impact, invention and innovation, even if uncomfortable disruption is required. Change comes when all employees find senior management goes to bat for compelling ideas regardless of the source and when leaders model behaviors of inclusivity and promote actionable ways in which employees can feel an integral part of the team. Committed leaders demonstrate they value diversity and inclusion through words and action. They implement practices and procedures and supply the resources to help diverse teams engage and flourish. Management tools like training and technology are deployed. A culture of innovation, which is built upon a diverse and inclusive workforce, is integrated into the compensation system. Budgets, communications, management systems, and metrics that track diversity and inclusion all reflect this priority.

Give your organization every opportunity to perform to its peak potential and strengthen your organization by making diversity and inclusion a strategic priority.

Stuart R. Levine is Chairman and CEO for Stuart Levine & Associates and EduLeader LLC. He can be reached at 516-465-0800 or slevine@stuartlevine.com.