2020 was a year of racial reckoning that prompted many organizations to acknowledge that the status quo was unacceptable. Despite widespread agreement that something must be done, figuring out exactly what to do is a challenge for many. As the call to take action related to DEO (Diversity, Equity and Opportunity) grows louder, organizations are looking for concrete and achievable ways to address racial inequities¹. A recent poll to over 20 MHTC member organizations found that 100% have committed to DEO as a priority but, so far, fewer than half have successfully translated their DEO vision into a detailed, multi-year action plan. In discussing the process to convert a vision into action one leader mentioned:

“Although we have a lot of energy to tackle diversity and inclusion, we need to figure out how to organize all the energy to create sustainable change and build an inclusive culture.”

This publication outlines discrete actions that organizations can take to make tangible headway as they jumpstart their DEO journey.

Understand Your Point of Departure

Organizational change begins with a “look in the mirror” moment – a realization that we are not where we need to be and must work differently to make real progress on racial diversity, equity and opportunity in the workplace. From there, establish a baseline point of departure rooted in facts. The most effective DEO diagnostics leverage available demographic data and evaluate outcomes over time (e.g., hiring outcomes, retention trends, etc. cut by race/gender). When it comes to the diagnostic phase, several actions are widely beneficial:

• Diagnose before you prescribe: The best diagnostics are inherently objective and seek to identify both the symptoms (e.g., representation by gender/race, employee satisfaction by cohort) and root causes of inequities (e.g., hiring processes that favor certain demographics, biased performance management processes) by leveraging data.
• Design for repeatability: A goal of this exercise is to establish a baseline against which to measure future performance – this analysis should be re-run and refined in the future to track progress. Keep that in mind while designing your process and collecting data. One expert on organizational transformation mentioned:

“Every company needs to think about how to track data over time. They need to improve the precision of their data and share it. Now is an excellent time, so many people need to be informed and better inform their organization on DEO data.”

• Bring marginalized voices to the center of the data gathering: The quantitative data does not always tell the full story. Listening to stories and personal narratives from key stakeholders, particularly those from underrepresented groups, can illuminate root cases around why the status quo exists. Vivid qualitative experiences coupled with compelling quantitative information truly helps leaders more deeply understand their starting point.

We frequently hear that certain data sets have never been tracked and therefore “do not exist” – this is a common symptom of relative DEO immaturity. Do not let this be a deterrent; there are many ways to get started with limited data. Instead, work with the existing information that you have (even if it means literally walking the halls) to estimate the current state and, concurrently, craft your data wish list for the future such that you can systematically work to plug gaps.

Set and Communicate a Bold Ambition

Armed with the facts around the current state environment, turn towards defining your DEO ambition and commitments. Much can be learned from what others have done.

• Articulate the vision: based on our research, an effective ambition is:
  • Measurable: Quantifiable and concrete to track progress
  • Time-bound, with intermittent stage gates: Specific and realistic around the time horizon required to deliver the ambition, even if it will take 5-10 years. Leaders install interim checkpoints along the way to ensure they are on the right track
  • Achievable and fit for purpose: Tailored to the needs and circumstances of the organization (e.g., maturity, size, employee mix, culture, location, etc.)
• Avoid the ambition doom loop: Avoid the tendency to overly scrutinize your ambition and get bogged down in debating the precise target. Your ambition can and should evolve. The key is to commit to something inspiring, but realistic, to rally around – even if you have not fully solved how to get there on Day 1.
  • Craft a plan to communicate your ambition: Although you do not need to state your ambition publicly, many organizations do, and the demand for public transparency is steadily increasing. At a minimum, be transparent with your employees from the outset – their enrollment in this journey is integral for success. The best internal communication plans break down ambitions into smaller discrete goals that are targeted at specific business units, offices, etc. so employees understand the overarching vision as well as what it means for them.

That said, a strong ambition is necessary but not sufficient. There is no “one size fits all” approach and each will be unique. Ultimately, the key will be translating ambition into tangible action.

Translate Ambition into Action

After setting an ambition, the real work begins. There are three key principles that enable organizations to harness their energy and excitement to translate commitments and aspirations into action.

• Prioritize acute pain points: Having a clear focus in each year of the journey is paramount in building and sustaining momentum as it allows you to establish a proof of concept and put some wins on the board. Often times, we recommend starting with initiatives that can clearly demonstrate in-year progress such as recruiting (e.g., increasing the diversity of candidate pools, removing exclusive language from job descriptions, addressing biases in the interview process, etc.). That said, affecting real change inevitably will require pulling multiple, interdependent levers (e.g., actively recruiting more diverse candidates and creating an environment in which they can thrive to ensure you retain them). Bain’s Opportunity Identifier is a helpful survey-based tool that enables organizations to benchmark their current state maturity versus peers across key DEO areas and prioritize opportunities for improvement.
• Emphasize systemic changes in conjunction with underlying cultural shifts: Enduring DEO change requires an “all of us, all the time” mentality. Our experience shows that focusing on process changes (e.g., mandating a diverse slate of candidates for a given role) can be easier to execute while reinforcing some of the behavior changes that will take time to unfold. One MHTC leader commented:

“Changing minds is hard. Instead, we should change the systems that people work in to change the way people work and create better outcomes.”

• Test, learn, fail (occasionally…and quickly!), evolve: For many, moving the needle on DEO is “uncharted waters” – treat it as such and embrace the uncertainty. Testing efforts, such as pilot programs, establish proof of concept and sharpen the understanding of what is required to succeed at scale (e.g., resourcing needs, timeline, sequence, etc.). Not all efforts will prevail, so build in feedback mechanisms to change course quickly. A leading technology company said:

“Pilot programs ensure that we are keeping change management principles in mind. We are changing the way people hire and want to make sure this is well-received and are clear on the case for change.”

• Keep looking downfield: Like any transformation, leaders approach DEO with a multi-year roadmap that sequences goals and priorities. Over half of the organizations we surveyed have a DEO plan that is linked to their broader company strategy so that DEO remains a priority in the years to come.

Invest in Key Enablers to Sustain Momentum

After beginning their DEO journeys with energy and enthusiasm, sustaining the momentum needed for long-term change can be a struggle. These strategies can help:

• Invest behind DEO (as you would any other business priority): Many ambitions are not set up to succeed because DEO efforts are not adequately funded, staffed, and supported. Consider formal resource allocations to DEO initiatives (e.g., full-time employees dedicated to DEO, 15% of an executive sponsor’s time reserved for DEO efforts).
• Be transparent: Create mechanisms to ensure accountability (e.g., DEO performance dashboards, recurring updates at companywide town hall meetings, etc.). Communicating progress and setbacks is essential in maintaining organizational focus on DEO. Prioritize a shortlist of concrete, measurable outcomes that map to your ambition and ensure your leaders discuss them regularly (e.g., percent racial representation by level, promotion rates across race/ gender).
• Embrace a ‘red is good’ mentality: When looking at the data there will always be areas that are off-track or have room for improvement (and, if everything is “on track”, we might argue you are not being bold enough). Instead of avoiding these areas, review them regularly and encourage your teams to raise concerns early such that you can triage and quickly address.
• Design incentives to breed results: Of the organizations surveyed, only 40% embed DEO efforts in performance reviews, and only 10% have a system in which DEO efforts directly influence employee ratings and compensation. However, as humans we know that sustainable and lasting change requires incentivizing desired behavior. Strategies like raising DEO outcomes to appear on executive scorecards and tying incentives to performance signals a clear and enduring enterprise-wide commitment to DEO.

Conclusion

Aside from a widely shared belief that it is the right thing to do, there is mounting evidence that there are tangible business benefits for organizations who are able to increase diversity and inclusion. For example, in several large-scale studies, diversity was correlated with higher growth², more innovation³, and increased returns⁴. While the research is continuing to evolve, and naysayers will be quick to debate correlation versus causation, one thing is certain: in the end, organizations will be judged by the actions that they take and the DEO outcomes that they drive.

To learn more about how to start your journey or get involved with the Council’s efforts please contact Rob Ruffin, Partner at Bain & Company or Chris Anderson, President at MHTC for more information.