Create a People-First Diversity, Equity, and Inclusion Strategy

Build a sustainable strategy by focusing on real people’s experiences to uncover and address systemic inequities.

Executive Summary

McLean & Company Insight

Diversity, equity, and inclusion (DEI) is a continuum – an ongoing journey of unlearning and learning the deeply rooted dogmas that guide the way organizations operate. The DEI strategy is a mechanism through which systemic issues and the ingrained way things are done at organizations can be challenged and changed. Creating a scaled and purposeful strategy, upheld by strategic pillars, and customized DEI initiatives kick-starts the journey.

Situation

• Most organizations recognize that there are several benefits that come from being inclusive to diverse groups of employees.
• However, despite the implementation of numerous diversity, equity, and inclusion (DEI) initiatives, organizations are still having trouble with making progress.

Complication

• DEI is complex and heavily nuanced. This means that every DEI strategy needs to be based on the specific DEI challenges the organization faces.
• DEI is often siloed under HR, but everyone has a role to play as allies, leaders, and champions when it comes to creating an organization that has diverse groups of employees and is equitable and inclusive. However, it is not always clear how everyone participates in creating a diverse and inclusive organization.

Solution

• Organizations must create a DEI strategy that is based on their specific organizational DEI challenges. Assess the current state of DEI through organizational data and focus groups, not based on current trends and fads in DEI training.
• With a DEI strategy project team, identify a clear purpose for DEI that is upheld by defined strategic pillars, carried out by specific DEI initiatives (e.g. inclusive leadership behavior training, implementing sponsorship programs, expanding campus recruitment strategies to more diverse schools), and overseen by a governance model.
• Implement DEI across the organization with initiatives that support all parts of the employee lifecycle.

Take a planned approach and start with the DEI strategy before embedding inclusion into your culture

1. Strategy

   Build the Diversity, Equity, and Inclusion (DEI) Strategy
   While it’s important to have an inclusive culture, the organization must start with defining a DEI strategy. The strategy sets the tone and direction for DEI at the organization. A defined strategy includes clear roles and accountabilities along with specific goals and initiatives that are customized to the organization’s DEI needs and challenges.

2. Culture

   Embed Inclusion Into Your Culture
   Once the organization has defined the DEI strategy, inclusion must be embedded into the culture. For DEI initiatives to succeed, the organization needs to ensure that all employees feel a sense of belonging, valued for who they are, and empowered to participate and contribute freely.

See McLean & Company’s Embed Inclusion Into Your Culture blueprint for more information.

McLean & Company Insight

Diversity, equity, and inclusion must go hand in hand. Having a diverse employee base will not achieve benefits such as higher rates of innovation and profitability if the culture is not inclusive. It is essential that organizations seek to be both diverse and inclusive.

Review the Diversity, Equity, and Inclusion Primer

Review the Diversity, Equity, and Inclusion Primer to understand key concepts such as allyship, intersectionality, and privilege. Use the primer as a reference as you work through this blueprint and create the DEI strategy.

This resource can also be provided directly to employees, managers, and senior leaders to expand individual knowledge on key DEI concepts.

Diversity The unique traits that individuals possess. It can be understood in two general ways: Inherent diversity, e.g. race, gender, sexual orientation, or disability Acquired diversity, e.g. diversity of thought, cross-cultural communication, language, or social skills Inclusion It is a state in which all employees feel a sense of belonging, valued for their differences and empowered to participate and contribute freely.

Diversity, Equity, and Inclusion Primer

DEI brings several benefits to organizations

Organizations with diverse employee bases perform better than their less-diverse peers

• Gender diversity – The performance differential between the most and least gender-diverse organizations is 48%.
• Ethnic and cultural diversity – Organizations in the top quartile of ethnic and cultural diversity outperform those in the bottom quartile by 36%.
• Board diversity – When an organization’s board of directors are in the top quartile of gender diversity, they outperform their peers financially by 28%.
(McKinsey, Jan. 2018)

When organizations act on DEI:

• Larger revenue growth
  Achieve 3x the revenue growth compared to less-inclusive organizations (Bush et al., 2018).
• More-positive employee experience
  18% more effective at creating a positive employee experience.
• Better retention
  Better at retaining employees, with turnover rates 4% lower than those not acting.
(McLean & Company Trends Report, 2020; N=416)

Organizations with above average diversity achieve impactful business results

• 1.4x more likely to have sustainable growth with greater gender diversity (DDI, 2018).
• 19% higher innovation revenue compared to organizations with below average diversity (BCG, 2018).
• 33% more likely to outperform on EBIT (Earnings before income and tax) margin with greater cultural and ethnic diversity (McKinsey, Jan. 2018).

Appreciating diversity strengthens teams and builds trust

Understanding the demographic and geographic factors that influence identity and the stereotypical assumptions team members hold reduces conflict (Sparkman, 2019).

However, many organizations are struggling to have diverse groups of employees and an inclusive culture

Leaders and employees are not on the same page when it comes to DEI

68% of leaders feel they create empowering environments where employees can be themselves, raise concerns, and innovate without fear of failure. However, only 36% of employees agree.

Additionally…
The proportion of employees who do not feel included in their organization is 10x higher than what leaders believe.

• Employees 20%
• Leaders 2%
(Accenture, 2020)

There are conflicting priorities. Although 87% of leaders recognize the need for an inclusive organization, they are challenged in making it a priority due to the pressure of delivering short-term results (WEF, 2019).

Current DEI initiatives are not making an impact

• Ninety-seven percent of organizations have established a gender diversity program, but only 25% of employees in diverse groups said they have personally benefited from it (BCG, 2019).
• Fifty percent of employees interviewed believe their organizations do not have the right practices in place to mitigate bias (BCG, 2019).
• Almost half of the organizations tracked by McKinsey have made little to no progress in increasing diversity at their organizations since 2014 (McKinsey, 2020).

Organizations need to go beyond acquiring diverse groups of employees and ensure they are retaining diverse groups of employees

• 36% of women surveyed say that retention is a key issue.
• 45% of women surveyed say that career advancement is a key issue.

When asked if they are participating in programs that promote non-traditional forms of diversity such as diversity of thought or gender diversity: 69% of organizations said no. (THRiVE 360, 2019; N=109)

McLean & Company Insight

Leaders must listen, put people first, and put their own perspectives and assumptions aside. It’s imperative that leaders understand and prioritize DEI challenges as they control budgets and influence employee behavior.

Diverse representation is an ongoing issue

Although there is gender representation in Fortune 500 companies…
In 2020, the number of women leading Fortune 500 companies rose again, hitting an all-time high (This all-time high represents only 7.5% of Fortune 500 companies).

Number of female Fortune 500 CEOS

• 32 – 2017
• 24 – 2018
• 33 – 2019
• 37 – 2020

…there is very little diverse representation across racial groups. In Fortune 500 companies, there are only:

• 3 Women of color CEOs
• 0 Black women CEOs
• 4 Black male CEOs
(Fortune, 2020)

Nearly 60% of Black executives who oversee major lines of business at Fortune 500 companies felt they had to work 2x harder and accomplish 2x as much to be seen as equal to their peers (Korn Ferry, 2020).

The gender pay gap differs across various races

Overall, women earn $0.82 for every dollar earned by men.
However, there are significant differences when this is broken down by race:

• $0.90 Asian Women
• $0.79 White Women
• $0.62 Black Women
• $0.57 Native American Women
• $0.54 Latina Women
(National Women’s Law Center, 2020)

DEI challenges are systemic and covert

Systemic versus systematic

Systemic inequalities or structural inequality refer to how the unequal treatment of specific minority groups are maintained through policies, programs, systems, and structures.

While systemic inequalities have deep roots in organizational structures, some forms are harder to see than others.

Systematic inequalities are intentional practices that maintain inequities such as wage secrecy policies or segregation.

An example of systemic inequalities:

Dress code policies are often used to determine how employees should dress in the workplace. However, for Black women, such policies have been used to define natural hair as unprofessional. The enforcement of these policies have marginalized and institutionalized prejudiced notions that Black hair is unprofessional.

To address this issue, California passed the CROWN Act (Creating a Respectful and Open World for Natural Hair). This bans policies or actions that discriminate against those with natural hairstyles (HR Dive, 2020).

Microaggressions are covert acts of sexism and inequality that are common in the workplace

Microaggressions are subtle actions, comments, or statements that communicate a derogatory, hostile, or negative assumption based on someone’s identity group. They may be intentional or unintentional.

All women experience microaggressions at a higher rate than men, and Black women experience microaggressions at a higher rate than other women. (McKinsey, Oct. 2018)

An example of a microaggression women experience more than men:

• Needing to provide evidence of your competence more than others do
  • 29% – White Women
  • 36% – Asian Women
  • 30% – Latinas
  • 42% – Black Women
  • 34% – Lesbian Women
  • 16% – All Men
(McKinsey, Oct. 2018)

To be successful, DEI strategies require support across the organization

Employees have a better experience when both their direct manager and senior leaders are committed to DEI

These results are representative of respondents who are women, LGBTQ, and/or people of color. (BCG, 2018)

Employees of organizations where their direct manager isn’t committed to DEI are:

• 2x more likely to feel excluded at work
• 3x more likely to seek employment elsewhere

To be successful, organizations need to ensure all leaders are committed to diversity, equity, and inclusion. (BCG, 2018)

Diversity leaders take a holistic approach to DEI

Diversity leaders are organizations that have shown sustained improvement and are approaching gender parity. These organizations:

• Take an intentional and organizational-led approach to DEI.
• Have a strong culture of accountability.
• Deploy innovative and ambitious interventions.
• Display strong leadership commitment.

McLean & Company Insight

It is not enough to just have the C-suite champion DEI – everyone needs to understand that they have a role in ensuring the organization is diverse and inclusive for all people.

Creating a comprehensive DEI strategy can help organizations achieve their goals

McLean & Company Insight

Diversity, equity, and inclusion is a continuum – an ongoing journey of unlearning and learning the deeply rooted dogmas that guide the way organizations operate. The DEI strategy is a mechanism through which systemic issues and the ingrained way things are done at organizations can be challenged and changed. Creating a scaled and purposeful strategy, upheld by strategic pillars, and customized DEI initiatives kick-starts the journey.

Follow McLean & Company’s four-step process to create a people-first DEI strategy

Step 1

Conduct a current state assessment

After completing this step you will have:

• Created a DEI strategy project team.
• Gathered organizational data to uncover DEI gaps and challenges.
• Conducted focus groups to uncover the employee experience.
• Reviewed the organization’s broader strategic goals and priorities.
• Completed the DEI Assessment.
• Gathered external data to understand the broader DEI landscape.

Document the current state assessment in the DEI Workbook

Use the DEI Workbook to document: The DEI strategy project team (tab 2) Organizational data (e.g. engagement, new hire/exit survey) (tab 3) Focus group results (tab 4) Organizational strategic goals and priorities (tab 5) External data (e.g. competitor DEI programs) (tab 6)

Diversity, Equity, and Inclusion Workbook

Review the DEI strategy project team’s roles

This team is responsible for creating the DEI strategy.

Tip: The DEI strategy project team is not the same as a DEI committee. The DEI committee is part of the governance model discussed in Step 3. However, some individuals from the project team may also be members of the DEI committee.

McLean & Company Insight

Developing a DEI strategy is a lot of work. When building a project team, be conscious of who would think or feel it burdensome. To build an impactful and sustainable strategy, you need people who are passionate about championing DEI efforts and initiatives.

Recruit members for the DEI strategy project team

Select members who are:

• Influential. Include individuals who have a degree of influence in the organization and can act as DEI champions.
• Knowledgeable. Include individuals who have the skills, knowledge, or background specific to the anticipated DEI issues that need to be addressed.
• Representative. Include a cross-functional and diverse group of individuals (i.e. departments, identity categories). This will ensure the organization is represented holistically and all groups have a spokesperson to bring issues that impact them to light.

Recruit project team members using the following approaches:

1. Communicate the project and ask for volunteers:

   • Have the executive champion introduce the DEI project to the organization in a town hall meeting or communicate it via email/newsletter/intranet indicating what a DEI strategy is and what it hopes it achieve.
   • Ensure the information they share includes:
     • The intent of the project and why it’s a priority for the organization.
     • The desire for input and assistance from employees at every stage of the project.
     • HR contact information for any individuals who are interested in participating on the project.

2. Involve key stakeholders:

   • If you are aware of specific individuals who are passionate about DEI and would be good additions to the team, reach out directly and ask for their participation.
   • Reach out to individuals who have formal or informal influence in organization. Their support helps generate buy-in throughout the organization.
   • If you already have a diversity department or employee resource groups, they can provide input for project team members.

Avoid common biases when conducting data analysis

• Past-Experience Blindness
  Individuals instinctively categorize and identify patterns, leading to the use of a practiced rather than a new approach.
• Confirmation Bias
  Individuals are more likely to lend more weight to information that confirms pre-existing beliefs.
• Conjunction Fallacy
  Occurs when multiple events are projected to have a greater probability of occurring together than apart.
• Self-Serving Bias
  Individuals give themselves credit for successes while avoiding the blame or laying it at the feet of others (Cherry).
• Hero Mindset
  Leaders often feel it is their responsibility to make all decisions, as they have the most experience and knowledge and are accountable for organizational welfare.
• Optimism Bias
  Individuals overestimate the likelihood of positive events taking place while underestimating the likelihood of negative events or underestimating their impact.
• Inside-Out View
  People focus on their unique circumstances and rely on personal experiences, ignoring broader patterns that tend to be more predictive of future events – this often holds true even when they are aware of the broader patterns (Kahneman).

McLean & Company Insight

Having a diverse project group with different backgrounds and experience levels and from different functions will mitigate these biases and improve the accuracy of the external analysis.

See McLean & Company’s Biases & Heuristics Catalog for more information.

Gather organizational data to uncover DEI gaps and challenges

Tip: Build the DEI strategy to address specific challenges occurring in the organization. For example, if exit surveys show higher turnover of people of color (POC), the strategy must address how to retain POC employees.

Conduct focus groups to understand the employee experience

Why?

Discrimination often goes unreported. Listening to employees share lived experiences shines a light on key narratives that are good indicators of deeper or broader DEI-related issues in the organization.

Tip: Use shared lived experiences as high-level indicators of broad trends and as signals to probe deeper into a situation.

Keep in mind that focus groups on DEI require careful and intentional execution, as it touches on personal and sensitive topics. Ensuring employees are psychologically safe will enable authentic discussions.

Plan focus groups thoroughly

Determine facilitators:

• Inclusion is a sensitive topic. Evaluate whether an external facilitator would result in more honest discussions. Source language interpreters where required.

Draft agenda and questions:

• Use quantitative data gathered to guide probing focus group questions to help explain the “why.”

Confirm anonymity:

• Communicate that feedback collected will be anonymized and participation will be confidential.

Focus group composition

• Create voluntary sign-up sheets. Allow employees to sign up for the focus groups in which they feel the safest.
• In addition to general focus groups, organize optional focus groups for any identity categories.
• Do not make focus group questions unique to these identity categories.

Note: Due to the sensitive nature of the topic, provide an option for employees to share their experiences in one-on-one interviews.

Draw out employee experiences on:

• Empowerment
• Openness
• Belonging
• Leadership

Refer to the appendix for best practices on how to conduct focus groups on inclusion and how to analyze focus group data.

Use McLean & Company’s Standard Focus Group Guide to prepare for focus groups.

Identify shared DEI challenges at the organization

Review organizational data and focus group feedback to identify shared DEI challenges. Shared challenges are categories of similar insights that appear across the data collected from different sources. For example:

• Focus group theme
  Parents found rigid work hours make it difficult to attend to the needs of their children.
• Engagement data
  Low engagement results on “I can maintain a balance between my work and my personal life” among parents.
• Exit data
  High turnover of employees (primarily women) within one year of returning from maternity or parental leave.

Shared challenge: Parents at the organization are finding it difficult to feel like they belong with the organization due to work-life balance

• Focus group theme
  LGBTQ2IA + employees agreed that non LGBTQ2IA+ coworkers often seemed uncomfortable when they would talk about something related to their sexual orientation.
• Engagement data
  Low engagement results on “my co-workers care about me as a person” question among employees who identify as LGBTQ2IA+.
• New hire survey
  Low scores on “my manager invested time to get to know me” question among employees who identify as LGBTQ2IA+.

Shared challenge: Coworkers and managers make LGBTQ2IA+ employees feel like outsiders or that their whole selves are not welcome.

Review the organization’s broader strategic goals and priorities

Align DEI

The DEI strategy must be aligned with all other organizational priorities and initiatives, such as:

• Talent programs
• Sustainability goals
• Vendor, supplier, and procurement strategies

Evaluate areas such as:

• People/organizational strategy
• Corporate social responsibility (CSR) or environment social governance (ESG) strategy
• Other priorities: Senior leaders often have concerns or priorities that are not formally documented (e.g. culture). Consult with stakeholders in various functions to discover these concerns or listen closely to what you hear organizational leaders regularly talking about.

Identify the DEI implications of strategic goals and priorities. For example:

“DEI must be an explicit part of the business operating model and, as the architect of organizational culture, the CHRO must align DEI activities and strategies to the future business strategy.” (World Economic Forum (WEF), 2019)