How to survive the looming recession? This is a question dominating the mind of most organizational leaders these days. Driving a growth agenda while anticipating potential recessionary conditions is demanding leadership attention. At the same time, the news of mass layoffs is dominating headlines. While a common reaction to such events is to first cut back on any expenditures that are deemed non-essential such as travel and annual office parties, it can often trickle down to people programs that could be instrumental in orchestrating the turnaround the organization desires.
Diversity, Equity, and Inclusion (DE&I) initiatives are often one of those programs that tend to take a hit in such cost-challenging environments. However, cutting investments in DEI programs can compromise the fundamentals that keep organizations on their growth trajectory. While it is imperative to focus on defensive measures in times of crisis, it is equally crucial to identify, prioritize and double down on those investments that optimize the business and help it grow.
DEI programs fuel innovation and agility and these investments provide strategic value when facing economic adversity. However, these programs are not a ‘nice to have’ initiative anymore. These now assume strategic necessity.
DEI is good for business
There are enough studies that prove the value that diverse teams bring to organizations.
McKinsey research shows that
- Companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the fourth quartile
- Companies with more than 30% women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn, these companies were more likely to outperform those with even fewer women executives or none at all
- In the case of ethnic and cultural diversity, the top-quartile companies outperformed those in the fourth one by 36% in profitability.
Having resilient, strong and diverse teams deliver business value when the economy is strong and when it’s flailing. These teams bring in different points of view and find inventive solutions in challenging times. Diverse teams are logical, creative, and adept at identifying errors and account for a wider array of variables in planning owing to different experiences of the workforce.
Higher cognitive elaboration compels better thought
Diverse teams breed innovative thinking because of greater cognitive elaboration. With cognitive elaboration, people think with greater depth, evaluate counterfactuals, and urge teams to think about challenges and opportunities differently. It is all about making broader connections and forming associations between new information and prior knowledge.
Since these teams build cognitive elaboration, the problem-solving approach focuses on thinking about a problem from multiple people’s perspectives and thereby accounting for greater perspectives.
Build team intelligence and yield novel ideas
Diverse teams also build greater team intelligence since there is a diversity of thought prompting more discussion. These teams are less likely to accept things at face value.
While there can be friction owing to differing views, ideas, and philosophies which can feel uncomfortable at times, it also helps the team see things from new angles and perspectives. This prompts more creative, and innovative solutions.
A study conducted on 7,600 London-based firms, for example, discovered that “companies with diverse management are more likely to introduce new product innovations than are those with homogeneous “top teams.”
Impactful and effective problem solving
Diverse teams outperform when it comes to detecting errors whether it is identifying errors in lines of code, reviewing critical business information, or creating new hiring strategies…the list can be endless. Having diverse teams makes it less likely to miss the perspective of certain stakeholders, which increases the chances of detecting errors and identifying effective solutions.
Studies show that there are significant performance gains and that the presence of diverse teams stimulates the right set of behaviors in homogeneous groups that can convert challenges into effective gains.
This is perhaps because homogeneous groups have an implicit sense of shared identity that allows them to put too much trust in each other’s judgments. This can build a circle of blind conformity. Diverse groups, on the other hand, scrutinize each other’s decisions more closely and hence take better decisions.
We cannot expect the benefits of diversity to accrue by merely putting a diverse team together. The benefits of diversity are more likely to materialize in such an inclusive and equitable environment. This means that organizations must deliver an environment that values different voices, thoughts, and opinions.
The counter-argument against diversity is that it slows down processes since there is more conversation, debate, and discussion. However, organizations must understand that it is this very aspect that improves decision-making, problem-solving, and innovation. Looking at something from different perspectives might sometimes be a little time-consuming, and this is where homogeneous teams might feel great. But look closely, and it becomes easy to see that they are working quickly, but lacking depth.
This becomes an important consideration since the solutions and products that are being designed today are not for a homogeneous world. It is for a diverse world.
Think small, but tactical
Diversity initiatives are either approached as expensive, highly visible, all-expenses-paid- daylong events or training programs or a perfunctory activity where some employees run barebone calendar events surrounding this topic. These are mostly volunteer-driven events that get over in a day, a week, or at most a month.
What organizations need instead are programs that are adaptable, focused on solving challenges, and building greater understanding.
A recently published article by Times, for example, highlights the challenges that the women workforce, especially mothers, face with the ‘Return to Office’ mandate. According to the article, there is evidence that suggests “that the increase in companies enforcing return-to-office mandates may drive American mothers out of the workforce at a crucial moment.” With more college-educated women than men in the workforce, 31.3 million women, as compared to 30.5 million men, organizations stand to lose out on a highly-trained and skilled workforce for failing to understand the challenges of a specific demographic.
Getting granular focus on specific challenges, identifying mindsets that are not conducive to diversity initiatives, recognizing bias, and presenting these to the workforce with data help in driving DEI initiatives in trying times.
Instead of day-long training programs, DEI initiatives need coaching to help people eliminate those behaviors that impede these initiatives and prevent their success. Coaching managers and the C-suite become imperative here to foster a culture that supports DEI programs, ensures that these do not remain cosmetic efforts, and ingrains them into the organizational DNA.
Organizations also need a strong DEI strategy at the top and must empower individual managers to interpret and implement it within the context of their day-to-day work. For this, coaching individual managers to adapt and interpret the strategy to work within the context of their own units and teams becomes essential.
It can be tempting to drop DEI programs as a reaction to uncertainty and financial pressure. This, however, won’t serve the organization in the long run since it is during the tough times when the company’s values come into sharp focus. As such, in times of crisis, organizations must double down and refocus on those values.
When the going gets tough, organizations must keep Diversity, Equity, and Inclusion at the center of all conversations, especially the tough decisions like hiring or layoffs. Cutting off these programs when economic uncertainty looms ahead can wreak havoc on employee morale. Continuing to invest in them, on the contrary, demonstrates that the organization cares for and values its employees and thereby sends out a strong and clear message to their existing and potential talent pool about what and who they care for.
Connect with us to see how our AI-powered coaching platform can fuel your DIEB program and ensure that it becomes a part of the company culture.