Diversity, Equity, Inclusion –
A Watershed Moment For
Corporate America

By: Execs In The Know

Employees, Customers, and the World Are Watching How We Respond

Two-thousand and twenty has been a year like no other in recent history. From the sudden and devastating global impact of COVID-19 to the ongoing social unrest in our country, it feels as if we are at a watershed moment. Our employees, customers, and the world are watching how we, as leaders, respond. While these two issues may seem unrelated on the surface, they are intertwined because how we react to the latter will most definitely have an impact on our collective recovery from the pandemic and how it impacts our employees and customers. But more importantly, taking a close look at how we address diversity, equity, and inclusion (DEI) is simply the right thing to do.

In this article we will address this complicated and critically important topic based on external data, as well as insights from three highly respected organizations and those responsible for leading DEI strategies:

  • Corey Flournoy, Global Head of Inclusion and Diversity, Groupon
  • DeShaun Wise Porter, Vice President of Diversity, Inclusion, and Recognition, Hilton
  • Farrell Redwine, Senior Vice President of Human Resources, Nordstrom

First, we will discuss why it is important to keep the focus on DEI, especially considering recent events impacting us globally. Then, we will take a deep dive into how leaders can and should respond to DEI at this critical juncture.

Why Focus on DEI?

This seems like an obvious question for many organizations as it is no longer necessary to create a business case for driving DEI. But it is important to ground ourselves in the “why” to ensure DEI initiatives are not merely a checkbox activity. And the first answer is, again, because it is the right thing to do. There are many reasons that DEI cannot be ignored as business leaders. As stated in Harvard Business Review, “Ensuring people from underrepresented communities are recruited and advanced is far more beneficial for an organization than any one individual. Diversity, equity, and inclusion attempts to level the playing field to allow the best ideas to flourish, connect talented individuals from underrepresented backgrounds with opportunities that those in the majority often have unfair access to, and empower the best organizations to thrive. Done right, creating diverse, equitable, inclusive organizations yield greater profitability, innovation, and smarter teams.”

To further emphasize this with data, McKinsey & Co. published a report in 2020 that found:

  • Companies with greater gender diversity were 25% more likely to experience above-average profitability compared to their counterparts.
  • Companies with greater ethnic and cultural diversity were 36% more likely to experience above-average profitability compared to their counterparts.

This is further demonstrated in this data from McKinsey’s report:

Additionally, the impact of COVID-19 has the possibility of being even more devastating to companies and people’s lives if DEI strategies are not prioritized. Due to the sudden impact of COVID-19, some organizations may have de-prioritized their DEI efforts as they were laser-focused on how to plug the holes created by the pandemic. While that may sound like a reasonable approach on the surface, McKinsey’s report emphasizes that research and history warn us that diverse talent can be more at risk during a crisis for many reasons:

  • Downsizing, which many organizations have had to do, can often have a more severe impact on roles occupied by diverse talent.
  • With more staff working from home, companies run the risk of unintentionally reverting to unconscious biases and undermining inclusion.
  • Technology challenges, childcare, homeschooling responsibilities, and quality of home workspace also threaten to put affected staff at a disadvantage while working remotely.

Organizations have an opportunity to not only protect their bottom line, but the employees in their care. McKinsey’s report states, “There
is ample evidence that diverse and inclusive companies are more likely to make better, bolder decisions — a critical capability in the crisis. For example, diverse teams have been shown to be better able to radically innovate and anticipate shifts in consumer needs and consumption patterns. Moreover, the shift to technology-enabled remote working presents an opportunity for companies to accelerate building inclusive and agile cultures — further challenging existing management routines. Not least, a visible commitment to DEI during the crisis is likely to strengthen companies’ global image and license to operate.”

How Should Leading Companies Respond to this Watershed Moment?

Most organizations have a DEI strategy, and possibly even a dedicated DEI team. So, what should leaders do differently to take decisive and bold action? In our discussions with the DEI leaders from Groupon, Hilton, and Nordstrom, four common themes emerged as priorities which we will discuss below:

LISTEN, LEARN, AND ACKNOWLEDGE

The first step in addressing DEI honestly and systemically in your organization begins with acknowledging what it means and understanding how your internal processes and policies may have contributed to conscious or unconscious bias. It involves educating yourself about the history of racism and understanding honestly how minority co-workers have experienced aggressions and microaggressions inside or outside of your organization. Take the time and do the research using credible data to understand current and historic events. Give employees a safe and genuine space to have their voices and feelings heard, in groups and one-on-one.

Our colleagues at Groupon, Hilton, and Nordstrom have all taken important steps in these areas.

When asked what organizations should focus on in light of recent events, Corey Flournoy with Groupon said, “One of the most important things organizations should do is to create space for needed conversations to address systemic racism, anti-racism, accountability, and engagement of white counterparts in addressing challenges within the workplace.” Groupon has implemented a number of programs and initiatives to facilitate these conversations, one of which was a four and a half-hour course launched in 2018 based on unconscious bias theories. Its focus is on solutions and real business case studies that illustrate the power of effective DEI strategies and practices and their impact on companies’ bottom line and image. The workshops include action steps to foster relationships across cultural lines and practices to engage in difficult conversations. Additionally, Groupon hosted an open virtual forum this summer where more than 700 employees logged in. The powerful 90-minute conversation led to increased engagement and action by employees, including the creation of four “action groups”:

  • LISTEN: Employee Forum Action Group, committed to continuing conversations and dialogue on racial challenges within and outside of Groupon’s culture, including the launch of an ongoing anti-racism book club. More than 500 employees took part in reading and discussing Robin DiAngelo’s White Fragility in an effort co-led by interim CEO Aaron Cooper.
  • LEARN: Resource Action Group, committed to finding ways to share resources and engage local organizations committed to anti-racism and social justice activities. This group has expanded in creating activities for employees to continue to learn more about anti-racism and social justice, such as through
    film screenings.
  • MOBILIZE: Diverse Merchant Outreach and Platform Engagement Action Group, committed to working on behalf of Black-, Latinx-, LGBTQ+-, and veteran-owned businesses, both in identifying those currently on the platform and engaging others who are not currently connected to Groupon. This group will work cross-functionally across marketing, sales, technology, and other organizations to mitigate algorithmic bias and help diverse businesses leverage Groupon’s platform.
  • SUPPORT: Connection and Allyship Action Group, committed to addressing allyship challenges through cross-department networking, career development opportunities, community outreach, and one-on-one connections that can lead to change, growth, and progress.

Groupon has shared their public response and actions through their external platform and has launched other ongoing campaigns in support of minority owned businesses.

DeShaun Wise Porter with Hilton explains, “Setting the stage for inclusivity begins with listening, understanding what inclusivity means for YOUR employees.” To do this, she emphasizes the importance of creating a safe space where your people can be authentic and finding venues where you can actively listen. Recently, the company launched a “Courageous Conversations” virtual learning series to drive greater awareness and understanding across a host of diversity and inclusion issues, and ultimately drive change through dialogue and action. Hilton also consistently conducts engagement surveys that continuously give employees a voice, developing the trust that the company is listening and adapting. It is surveys like these that helped stimulate the plans for “Courageous Conversations.”

Farrell Redwine with Nordstrom believes that one of the biggest challenges in corporate America is acknowledging that racism is real and being clear that diversity is just one step in dealing with systemic racism. To address this, Nordstrom took the initial steps to share their thoughts, beliefs, and approach with employees, customers, communities, board members, and vendor partners. Per Redwine, “Transparency is an important part of our commitment.”

For the last two years, Nordstrom has been very focused on listening and gathering data to unpack employee sentiment as to what makes them feel like they belong, that their contribution is valued, and that they are heard and seen. Redwine explains that one of the most impactful actions they took was to make space for conversations to acknowledge the “heaviness” of the current climate. They hosted a series of “Courageous Conversations” which first focused on the Black experience following the death of George Floyd. This involved video calls for all employees in which Black employees openly shared their experiences and reality. Redwine further explains, “For me, to not only be witness to but lead through that was hard and heavy. The vulnerability our people demonstrated by exposing themselves and discussing things that aren’t typically spoken about in a work environment was a healing process for me, my Black colleagues, and for the entire organization. To say we support you, we see you, we are taking a stand around this issue, and we don’t support racism has been a catalyst for change and call to action.” These formal and informal conversations have led Nordstrom to identify the most pressing areas of opportunity and establish clear goals that will move them in the right direction.

CREATE AN INTENTIONAL, HOLISTIC STRATEGY THAT WEAVES DEI THROUGH THE FABRIC OF YOUR COMPANY

Having a DEI strategy is not a poster on a wall, an internal communication, or an occasional social media post amid national outrage. It goes beyond town halls and listening sessions. While all of these are important to an overall strategy, embodying a culture that lives and breathes DEI starts at the top and must be embedded in all aspects of the company’s leadership and strategy. It involves communicating why you have a DEI strategy and how it is expected to impact employees and customers. For example, in the Harvard Business Review article, examples were given as to how to communicate what you are doing and how it is part of your overall business strategy. One example they provided was, “We realize we aren’t reaching all our customers when we have systems that are biased, and we aren’t making life easier for a diverse range of customers when we don’t have leaders from a diverse range of backgrounds. Here’s how we’re changing that.”

Further, it cannot be a side job or buried within Human Resources with a small budget. It takes a real and concerted effort to weave DEI into the fabric of an organization.

Flournoy agrees that DEI must be part of the overall business strategy. Collaborating across several business units, Groupon launched its first effort in support of Black-owned businesses during National Black Business Month in August. Groupon partnered with other organizations including the National Black Chamber of Commerce, iHeartRadio, and the Illinois Department of Commerce and Economic Opportunity to provide marketing support and a host of other services and workshops to help these businesses survive and thrive during the pandemic. The success of this campaign has led to additional efforts in support of National Hispanic Heritage Month (September 15-October 15) and Women’s Small Business Month in October.

Flournoy advises that before companies begin their “DEI activities,” they should determine their overall vision for what they want to accomplish. There should be a North Star goal in mind to guide all the activities and programs, rather than launching disparate efforts that may fail to make a real impact. Given the current climate, companies may do more harm than good if efforts are simply surface-level and consequently fall flat.

Additionally, Flournoy advises that organizations take a hard look at their DEI leadership structure. He says many organizations are not placing DEI roles at a high enough level to have significant influence and impact within the organization. Most companies have chosen to place DEI roles under the Human Resources umbrella. This often means they lack the authority or power to make decisions or change in the organization, especially across business units. Flournoy believes that for DEI to be successful, companies must consider establishing either Chief Diversity Officer roles as part of the senior management teams or create roles that have direct access to senior leadership and across business operations to ensure maximum impact and intervention for necessary change.

Wise Porter explains that DEI has been at the core of the company’s vision, mission, values, and culture, starting with the founder, Conrad Hilton, for over 100 years. The company’s culture is grounded in his belief that global travel could be a bridge to international peace and understanding. This commitment has been at the heart of Hilton’s overall strategy, fostering an environment of inclusion and belonging. Their dedicated DEI organization, which has been in place for 10 years, operates under a holistic framework that encompasses
three pillars:

  • CULTURE: Creating an inclusive workplace with opportunities such as team member resource groups and inclusion councils with a goal of allowing team members the freedom to voice their unique visions and achieve a sense of belonging.
  • TALENT: Involves processes and approaches focused on attracting and retaining the best and the brightest talent. Wise Porter explains that the key to a successful strategy is to ensure they consistently hire to their culture. Succession planning is also an important component, investing in employees to accelerate development, and ensuring employees have equal opportunities
    for growth.
  • MARKETPLACE: Engaging, supporting, and building business opportunities in the community and being actively involved in philanthropic events and causes.

As a result of their ongoing commitment to DEI, Hilton has been on the highly coveted DiversityInc. top 50 most recognized companies consecutively since 2015, ranking No. 2 this past year as well as No. 1 in supplier diversity.

Nordstrom has also worked diligently to embed DEI into their overall strategy. Redwine describes one of the company’s key values, “Owners at Heart,” which is about ensuring every member of their team is empowered to use good judgment and do the right thing for their customers and people. They have galvanized the organization around values (such as this one) and connected it to their diversity strategy. So, their day-to-day decisions, processes, and policies are all driven by it. In Redwine’s words, “Our DEI strategy is NOT an HR effort – it is seen as a business effort and a business-driven approach.”

It is up to all of them to bring their strategy to life across all areas of the business. As such, their framework consists of four strategic pillars including talent, leadership, culture, and marketplace. This summer, they published and communicated their goals to employees, explaining how they are tied to these pillars and how they directly affect company growth and overall business results.

This has resulted in the ability to focus on systemic opportunities, leading to the achievement in pay equity for all genders and races in the company. Redwine said, “We recognize our holistic approach must continue to make systemic and sustainable change. You must consider the values of your organization and what it stands for – our goal is to deliver fashion authority and the best customer experience. That takes people, so we are digging deep with a leader-led approach embedding diversity into our overall business strategy.”

LEAD WITH COURAGE, COMPASSION, EMPATHY, AND ACCOUNTABILITY

Achieving diversity, inclusion, and equity within an organization starts at the top, but requires all levels of leadership’s commitment. A CEO who makes an announcement to the media about its stance on racism and plans to improve diversity in the company is but one piece of the puzzle. It involves everyone at every level. Leaders must not only be able to have the tough conversations but encourage them. To create a truly diverse and inclusive work environment, one must lead with compassion for all employees, demonstrating a true understanding of underlying struggles (both past and present), and hold all levels accountable. Accountability involves consistent, public, and transparent reporting of diversity metrics, but it also involves holding leaders and staff accountable not only for the numbers, but the overall objective and culture. It is not easy and requires careful consideration of who you hire and promote in leadership positions as they set the tone for the company.

Fostering and teaching empathy is critical to Groupon’s overall DEI strategy. As Flournoy explains, “To make meaningful progress, it requires leaders and staff to have empathy for other people.” In fact, the company’s mission is to cultivate an empathetic global community where commerce, innovation, and brand loyalty thrive through DEI. One of the things Groupon does to develop empathy is to conduct an Inclusion Workshop, which creates experiences for attendees where they are put in a position of removing their “blinders” and thinking from another perspective. Additionally, they conduct an allyship interactive workshop, focused on developing authentic relationships.

To develop leaders and support career growth, their “GREAT Leadership Program” involves 15 diverse women and minorities at mid management at any one time. The goal is to invest in leadership and career growth by providing them with executive coaches for eight sessions. To further embed diversity and inclusion among leaders, every director and above is required to meet with someone in a minority or under-represented group both internally and externally.

From a leadership accountability perspective, Flournoy cautions leaders that one of the mistakes he has seen organizations make is the belief that diversity and inclusion only involves people of color and women. This work must engage and hold accountable non-minorities who are in positions of power and influence to address and make systemic change. Flournoy also emphasizes, “Organizations that focus primarily on employee resource groups and unconscious bias training will not actually make the changes and impact required to improve and move the culture. People must engage across cultural lines and learn the importance of allyship, accountability and responsibility to make progress.”

The responsibility for DEI spans all levels of the leadership team at Hilton. As Wise Porter explains, “It is part of our DNA and the expectation is that every leader has a responsibility to put DEI front and center.” They hold their leaders accountable for driving an inclusive culture, going so far as to tie it to compensation structures. The intent is not to force it but to put the best people in the right roles, truly infusing DEI into every aspect of their organization. They measure gender and ethnicity diversity as part of hiring goals but also with succession planning and promotions.

For Hilton, courageous leaders are critical, and for over a century they have taught their leaders to “lead with hospitality.” Wise Porter further explains, “The world is changing every day. There is no way we could have predicted what we faced in 2020, and our leaders had to show up with grace, maturity, and compassion. When you have courageous leaders that can naturally pivot and lean into challenging and difficult conversations…when you have leaders that can truly come to work and just ‘have a conversation’…they have a true sense of humanity and adapt quickly – that’s where you will find the greatest success.” And even though the pandemic has unfortunately forced some furloughs and reductions in force, the leadership team has remained committed and focused on DEI. They may not be recruiting at the same level as before, but their goals remain in place, focusing on developing talent internally, while staying true to their core values.

Nordstrom’s “leader-led” approach is what enables their overall strategy and business outcomes. So, with their strategic pillars and measurable goals in place, the company is now focused on establishing programs that will help them get there. To do this, they have created the Nordstrom Diversity Inclusion and Belonging Council, which is co-chaired by Pete and Erik Nordstrom and Christine Deputy, their Chief Human Resources Officer. It is made up of a diverse mix of leaders from across the company and board of directors. Together, the group
will focus on developing, implementing, and measuring programs that drive their strategy. They have also published the specific goals and metrics that define their success.

The company’s approach to leadership involves the entire employee life cycle from onboarding to exit, with the goal that the employee experience is just as renowned as the Nordstrom customer experience. Their objective is to lead by ensuring employees do not just feel as if they are included, but that they belong. As such, they are constantly working with their leaders to ensure they have the resources they need to help support their teams. Redwine emphasizes, “This work has never been more important, particularly given the new ways of remote working and the recent events of racial injustice that deeply impact our employees and customers. We’ve rolled out a number of new trainings and resources to help them lead in the face of great uncertainty.” All these efforts continue to cement their focus and approach at every level of the company.

RECOGNIZE THAT DIVERSITY DOES NOT EQUAL EQUITY AND INCLUSION

Striving for and achieving a diverse workforce is but one component. Numbers are important, but they are just numbers. The hard part is creating a truly equitable and inclusive culture that provides a sense of belonging for all employees. There is plenty of evidence and research that suggests inclusive cultures contribute to better decision making, higher levels of performance, and greater employee retention. Simply put, the more inclusive the environment, the more engaged the employee and the more they thrive and perform.

In the same research conducted by McKinsey & Co., the findings showed a vast difference between employee sentiment comparing diversity to inclusion. Specifically:

  • Overall sentiment on diversity was 52% positive and 31% negative, while sentiment on inclusion was significantly worse at only 29%positive and 61% negative.
  • Additionally, the research found particularly high levels of negative sentiment about equality and fairness of opportunity, ranging from 63 – 80% negative sentiment across industries.

So, even if companies are making progress in workforce diversity, there is still a lot of work to be done to address inclusion.

Training is only part of the solution, and many organizations conduct courses such as “unconscious bias training” and it is important. But how do you ensure you are removing biases? What are you doing to encourage an inclusive environment, and give people a sense of belonging, free from bias and discrimination? Again, it requires a holistic, systemic approach, with accountability at all levels of the organization. Transparency, honesty, openness, and leadership capabilities are all central to creating a truly inclusive and equitable environment – one in which employees feel they can bring their true and best selves to the workplace.

Groupon recognizes that diversity is just part of the equation. As Flournoy explains, “We place a great emphasis on creating a culture where people feel supported and championed by our senior leaders, and we strive to include diverse voices in our decision-making process. At the end of the day, our employees and their shared experiences are the best recruitment tools we can utilize to attract more diverse talent. We must create a culture that is inclusive to prevent a ‘revolving door’ of black and brown talent who come to Groupon and do not stay long-term. The Business Resource Groups, our Global Pillars, and programs like the GREAT Leadership program have helped to retain and promote diverse talent, even during challenging times.”

Hilton similarly strives to create an inclusive culture, ensuring employees have a voice and sense of belonging. An inclusive culture to them is one in which employees feel comfortable to “show up, innovate, collaborate and bring their best selves to work.” Hilton leaders bring this to life through recognition programs, injecting open dialogue and upward feedback into professional development conversations, and supporting the company’s strong network of Team Member Resource Groups. Above all else, though, Hilton Team Members learn from day one that they are part of a values-driven company, the first of which is to lead with hospitality – which, by definition, is all about creating a sense of belonging for all.

Nordstrom is keenly aware of the need for employees to not just feel included but to feel they belong. Redwine acknowledges that this is indeed the hard part and a priority that is at the heart of their strategies. One of the ways they have found to create a true sense of belonging for employees is the creation of their Employee Resource Groups (ERGs). These groups represent a variety of seen and unseen identities that exist across our employees, and they offer a sense of community, connectivity, and shared experiences. Nordstrom have had these programs in place for two years, and they have been particularly critical this year in supporting and leading important, difficult conversations. As part of the new goals announced last month, they also shared that they will be expanding these groups beyond the Seattle area so all employees can participate.

Seize the Moment. Be Bold.

Many organizations are at a crossroads and have an opportunity to seize this moment, taking bold action to drive systemic and lasting change. It is an opportunity like no other for leaders to rise above and ask themselves honestly if DEI is woven into the fabric of their company, if all aspects of their business are rooted in DEI, and if they can lead from a place of compassion and courage. Those who do will reap the rewards professionally but also personally. It is not an initiative that has a beginning and an end, but one that must always be front and center to reshape the landscape of corporate America.

 

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