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Strengthening Diversity, Equity and Inclusion Efforts

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Improving diversity, equity and inclusion in the workplace seemingly remains an elusive goal for many companies. This persists even as many business leaders have stepped up to demonstrate that they value diversity and inclusion by making public commitments and dedicating time and money to training and development for their teams.

Society has a legal and moral obligation to extend equal opportunity to all people—regardless of gender, gender presentation, sexuality, sexual orientation, skin color, social class, religion and age, among other factors. But there is also a strict business dollars-and-cents reason for doing so: judging people on their talents and their potential, regardless of any of the factors above, means that you are getting the best people available. Discriminatory hiring practices simply dilute the talent pool.

A diverse workforce also brings a range of viewpoints and perspectives to a company. If employees feel safe to bring their authentic selves to work, they will feel empowered to help develop new ideas, products and missions to support the business and cater to its customers. Medium’s HR Blog and Resources published an article showing that diverse companies have increased revenue, more innovation, improved decision making, higher rates of job acceptance and better performance compared to competitors.  

Additionally, a 2018 analysis by McKinsey painted an even clearer picture:

  • Companies in the top 25th percentile for gender diversity on their executive teams were 21% more likely to experience above-average profits.
  • Companies with more culturally and ethnically diverse teams were 33% more likely to see better-than-average profits.

While most leadership teams believe that it is important to prioritize diversity and inclusion, they may also think it is something that will just fall into place. In reality, it will only succeed if it is deliberate—companies must plan for it, buy into it and incentivize it. It is also easy for businesses to believe they are doing a good job promoting inclusion and unwittingly stumble. Unconscious bias is real, and even people with the best of intentions can be guilty of microaggressions and other offenses against underrepresented groups.

Organizations seeking to embrace inclusion need to do so from the very top, and the practices, language, norms and processes that support these inclusionary goals need to move directly and effectively down the organizational chart. Something along the lines of superficial copy written in a policy memo will not do. Too often those kinds of actions are taken to “tick a box” without ever moving the needle. Company leadership needs to clearly set the tone and be certain managers and supervisors are not only onboard, but executing these missions on a regular basis. As with any for-profit project, achieving diversity is a goal that requires a comprehensive plan identifying the deficiencies and setting goals and a timeline to correct them.

Ensuring that promotions and new hires reflect diversity are obvious goals, but how does a company achieve them if it does not recognize that groups are still underrepresented in its workforce despite following what it believes are anti-discriminatory practices? A few years ago, a Silicon Valley startup called GapJumpers developed a platform to allow companies to hold blind auditions for openings in lieu of the traditional application and resume review process. They developed this process from an initiative that many of the world’s classical music orchestras undertook in the 1970s to try to diversify groups of predominantly white male musicians. The results were eye-opening: 60% of the applicants that made it through the selection process for interviews were from underrepresented groups. This approach may be out-of-the-box thinking for many organizations, but the fact that many companies are still struggling to achieve their diversity goals indicates that this is the time to throw out the old playbook.

Goals need to be set high enough so they are challenging while remaining realistic considering the company’s size and turnover rate. Achieving diversity is not a quick, one-size-fits-all fix and it is not going to happen overnight. However, as with many goals worth achieving, mindfulness, perseverance and commitment can prevail.

Working to Close the Gender Pay Gap

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U.S. government regulators at the Equal Employment Opportunity Commission (EEOC) are requiring all private companies with over 100 workers to provide information including their workers’ genders, race and ethnicity as it relates to compensation. The EEOC uses this information, in part, to measure any pay gaps between employees that could be based on these characteristics. The EEOC instituted the requirement in 2016, and it covers about 70,000 employers and 54 million workers.

The Trump administration halted the rule’s implementation in 2017, but advocacy groups sued the EEOC, and in April, a federal district judge ordered its reinstatement. The rule requires that employers submit information about employees’ median pay and hours in various positions within the company, from sales staff to executives, both full-time and part-time.

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The policy is intended to make companies confront the actual data about their gender and racial pay gaps, which they may be reticent to do. Former EEOC commissioner Jenny Yang said, “Right now, there’s a strong incentive to not look under the hood, because if you find problems, many feel they’re under an obligation to immediately fix it, so they’d rather not.”

Not all companies are so unwilling to address the issue. For example, Nordstrom announced that it had achieved full pay equity, but that it was still working to ensure an equal share of men and women in leadership and top-paying jobs.

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Intel also announced “full representation” in its workforce—that the makeup of their workers mirrors the available talent pool—and pay equity for male and female employees.

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At the same time, U.S. pension funds and investors are similarly applying pressure to companies over their pay gaps. The pension funds for the states of Connecticut, Minnesota and Oregon are reportedly pushing for companies to disclose information about the promotion and compensation gaps within their ranks, as are private investment firms. These investors see companies’ insufficient gender equality as a risk that affects their bottom line. Tobias Read, treasurer of Oregon, told the Financial Times, “Gender equality, if we are not paying attention to that as a risk, we are not living up to our fiduciary responsibilities.”

Investment firm Arjuna Capital has filed multiple shareholder proposals to the various companies it invests in, asking for them to disclose median pay information related to gender and race. In response, Citigroup disclosed that its female employees make 29% less than their male colleagues, and pledged to continue working to increase representation of women and minorities within the company. Famously, the firm State Street Global Advisors put a bronze statue of a small girl near the Wall Street bull to raise awareness of index funds of companies that have gender-diverse leadership. Reportedly, as a result of the publicity, hundreds of companies worldwide moved to add at least one woman to their boards.

Investors making decisions based on environmental, social and governance (ESG) factors has been a growing trend, as Risk Management reported in the May article “Getting Serious About ESG Risks.” As that article stated, investors have used their clout to make companies focus on issues like climate change, and start considering not only the affect that environmental changes have on the business, but also the effect the company’s operations have on the environment. These considerations are changing risk managers’ evaluations and calculations of their companies’ risk profiles, and slowly changing companies’ gender diversity.

A lack of gender equality in pay or representation can not only lead to reputational damage for a company, but companies that do not have diverse workforces at all levels can miss out on the innovation that diversity and inclusion can bring. And this does not just mean bodies in the room—it means actually listening to different voices from different groups of people.

From Westeros to Government and Business, Women Have Less Voice

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In the final, contentious season of HBO’s fantasy epic “Game of Thrones,” two powerful queens face off in a battle for control over the entire known world. Meanwhile, other formidable female characters outmaneuver their rivals to command entire kingdoms and (spoiler alert) strike the blow that saves humanity from eternal darkness. But looking solely at on-screen speaking time, you’d never know that women were main characters and, arguably, the show’s driving force. According to Statista, women on the show got just 22% of the speaking time in the last season, and only cracked 30% in one of the show’s eight seasons.

Of course, this kind of imbalance is hardly confined to the fictional world. Recently, Montreal city official Sue Montgomery made headlines for vividly illustrating the issue in the city’s monthly executive committee meetings. Montgomery tracked the difference in the amount of time that men and women spoke by knitting in red when men were speaking and in green when women did. The resulting product is overwhelmingly red with occasional smatterings of green. In response to questions on Twitter about the committee’s gender makeup, Montgomery noted that the committee is far more balanced, comprising 31 women and 34 men.

The concepts of “mansplaining” (when men condescendingly explain something to women) and acknowledging that men often talk over women in both professional and personal settings are now increasingly familiar and more widely discussed cultural issues. In fact, Merriam-Webster officially added “mansplaining” to the dictionary in March 2018. There is even a website called arementalkingtoomuch.com, which helps users track these disparities during meetings or social situations by clicking a button when “a dude” is talking and another when “not a dude” is talking.

A 2017 study by research company Prattle did just that, examining 155,000 business conference calls from the past 19 years, finding that men dominated the meetings by speaking 92% of the time. The study also found that women’s remarks in these meetings largely focused on investor relations staff introductions and not as much substantive contributions. While studies have shown that men far outnumber women in corporate leadership positions, as with the Montreal city meetings, Prattle CEO Evan Schnidman noted that the statistics on talking time do not necessarily correlate to the rate at which men outnumber women in the room. Indeed, Schnidman said, “Male executives provide significantly more verbose answers to analyst questions than their female counterparts.”

Gender diversity in corporate settings is hardly just about optics or legal requirements, it also offers broader benefits for employees and their employers that can pose critical advantages. For example, as discussed in “Pale, Stale and Male: Does Board Diversity Really Matter?” in Risk Management, McKinsey & Company found that companies with higher gender diversity in their board rooms are 21% more likely to have “above-average profitability” than those with lower rates. Efforts focusing on equitable representation particularly continue to lag with regard to women of color, who are the least represented group in every corporate setting except entry-level positions.

However, the cases above indicate that a balance of men and women in the room may not be enough, leading more people to discuss how their companies can promote both diversity and inclusion in their workplaces. In addition to focusing on diversity of those in the room, employers should be taking steps to ensure that they are facilitating a diversity of voices as well. Creating environments that encourage more women to voice their opinions can foster different perspectives and more innovation, and promote employee loyalty, engagement and well-being.

Spotlight on Risk Management’s Resilient Women

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Ahead of International Women’s Day, RIMS is celebrating women’s achievements in the profession. Three women leaders in different stages of their careers recently spoke with Risk Management Monitor about what motivated them to make the move into and within the industry, and what the can be done to even the landscape for all professionals. Download the current RIMScast episode for their full interviews.

Kathleen P. Crowe, Aon Risk Solutions and chair of the RIMS Rising Risk Professionals Advisory Group.

What is your impression of risk management’s playing field?

Crowe: I’ve been in the industry for about six years and even in that time I’ve seen a pretty significant change in the overall makeup of the risk management and insurance positions. A lot of companies – Aon included – have women in leadership positions, which I appreciate. Women represent three of my four largest clients – we’re talking about massive, publicly traded companies and they are responsible for risk management functions.

It used to be the boys club but it’s becoming the women’s club, too, and I am glad to have these fantastic women to look up to. There’s been a lot of significant progress and I’m excited about the future.

How much of a challenge is knowledge transfer in risk management?

Crowe: I think everyone is facing similar issues in finding ways to integrate people into different areas so they can be trained to step up. The knowledge sharing process takes time and effort and though it’s a constant reminder that everyone is busy, it’s a way to prioritize and make sure we’re investing appropriately in the younger generation. This will enable them to succeed in higher positions as they progress through their careers and take on management positions and oversee others.

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Cassandra R. Cole, Department Chair of Risk Management Insurance, Real Estate, and Legal Studies at Florida State University; Director of the Master of Science in RiskManagement and Insurance Program and the William T. Hold Professor in Risk Management and Insurance.

You have been an educator for years. Does your curriculum evolve to reflect news and industry trends?

Cole: Definitely. Much of my research comes from what’s going on in the world. It makes the classroom more exciting and the information you share more relevant. It helps the student better understand the connection between what’s going on in the textbook and what’s going on in the real world.

For example, I teach employee benefits on a regular basis and with the passage of the Affordable Care Act, that had implications for company health insurance plans and we spent a lot of time exploring how that law would impact companies, what they offer, their cost of insurance and how it would affect employees.

Are more female students showing an interest in risk management courses and degrees? What could higher education and the profession itself to generate or maintain enthusiasm? 

Cole: There has been a significant shift overall in terms of a gender spread. At the undergraduate level, it’s probably more 50-50. At the advanced programs and doctoral level is where I’m seeing a difference and where we still need to continue to inspire women to pursue those advanced degrees.

I think one of the things other than the actual teaching experience is connecting with students, helping them make decisions, [and] helping prepare them for that transition into the work. It is nice, though, to hear from a student who says ‘you’re the first female business professor I’ve had,’ because it demonstrates where they can go in their careers.

We are definitely making some advances but there are disparities in pay that need to be addressed and corrected.

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Soraya Wright, founder and CEO of SMW Risk Management Consulting and also a member of the RIMS Diversity & Inclusion Advisory Council.

You were at Clorox for more than 20 years and left as the vice president of Global Risk Management and Crisis Management. What influenced you to go out on your own?

Wright: I initially thought I would be semi-retired, but two friends hired me as a consultant. I realized I had to formalize myself as a company if I was going to take on all these projects.

One of my mentees influenced me to keep working because she appreciated that I was someone who raised the issue of bringing on women and people of color onto strategic projects while I had been at Clorox. I thought about the work I was doing as a consultant and her words and they grabbed at my heart, and I felt another purpose. So, I continue to stay engaged and learn and practice my expertise as a risk manager. But I also devote some time for my passion, which is mentoring and coaching others and influencing change so there are opportunities for under-represented members of our profession.

How do you feel the profession can further encourage women to maintain their careers?

Wright: By providing opportunities for those who demonstrate an interest. Mentorship is important and I believe we’re obligated to reach back and help the next generation and also our peers. Our clients have more leverage than many realize, so just requesting that certain types of people with certain viewpoints work on your project can make all the difference in your work and in someone’s career. If we do that we’ll continue to see this wave of advancement and the leveling of the playing field.