Diversity and inclusion in the workplace is about more than just a focus on numbers. Diversity and inclusion can also boost a company’s bottom line when part of the overall business strategy.
The research of Professor Alison Konrad looks at how firms can manage diversity, equality, and inclusion successfully so that diversity initiatives are not just a costly requirement.
“To be successful, diversity and equality management has to be positive for the firm. It can’t create problems. It can’t be so costly that it damages the firm’s financial performance,” she said.
Ever since the Civil Rights Act of 1964 in the U.S. outlawed discrimination based on race, colour, religion, sex, or national origin, companies have sought to develop ideas, practices, processes, and tactics to increase opportunities for all. The Civil Rights act influenced Canada’s later creation of human rights laws and the Employment Equity Act of 1986. The Employment Equity Act requires firms with 100 or more employees in federally regulated industries, such as banking and airlines, to increase their representation of women, Aboriginal Peoples, people with disabilities, and visible (racioethnic) minorities.
The dilemma is in determining which practices are effective. Konrad’s previous research in 1995 outlined more than 100 specific practices and she says there have likely been many more since.
“It’s overwhelming and many firms don’t know what to do,” she said. “How do you do these things without it being costly and burdensome to the firm and how do you do it in a way that is going to work for your local context?”
Diversity practices under the microscope
Konrad’s recent research with Ivey Assistant Professor Cara Maurer and Yang Yang, an assistant professor of management at the Rohrer College of Business at Rowan University, looks at how Canadian firms have been tackling the issue and what approaches pay off.
They surveyed 155 Canadian firms in fall 2004 and spring 2005, assessing them on six types of diversity and equality management system practices:
- Linking diversity to strategic business goals and human resources (HR) planning;
- Recruiting a diverse workforce;
- Selecting a diverse workforce;
- Training and developing a diverse workforce;
- Monitoring the effectiveness of staffing for diversity; and,
- Providing work-life flexibility.
The survey questioned whether the firms took specific actions to boost diversity, such as:
- Setting diversity goals in HR planning;
- Supporting job fairs targeting diverse candidates;
- Requiring hiring managers to interview a diverse group of candidates;
- Tracking the diversity of applicants, interviewees, new hires, and promotions;
- Ensuring a diverse group of employees received mentoring; and,
- Offering work-life flexibility options such as work-at-home, job-sharing, or reduced work hours to help prevent turnover.
The researchers found there are three basic approaches to diversity and equality management systems:
- Classical – Where firms don’t do much around diversity, often because they are smaller, not regulated through Canada’s Employment Equity Act, and diversity initiatives may seem too costly;
- Institutional – Where firms covered by Canada’s Employment Equity Act do some things to remove barriers in hiring so they’ll meet the requirements, but don’t go beyond to develop an understanding of how diversity and inclusion contributes to their overall business strategy; and,
- Configurational – Where firms go beyond requirements and are attempting to be leaders in workplace diversity. Konrad said such firms might include diversity in their overall business strategy, provide greater support for the career development of a diverse set of employees, and/or reflect diversity in their products or services or in marketing and sales messages.
Big effort, big results
Results also showed firms that go further with diversity practices – those in the configurational group –have better diversity-related employment statistics and perform better financially. Such companies might include diversity in their missions or vision statements, have diversity experts on staff, and/or have HR staff involved in developing business strategy.
“For some firms, diversity is part of their strategy. It’s a people management strategy. It’s about being forward in the field in attracting and building a talent base,” she said. “We don’t have a long lag in the data to show this lasted a long period of time, but we can say it’s not hurting firm performance to do this forward-in-their field push for diversity and equality management.”
The researchers’ paper, “Antecedents and Outcomes of Diversity and Equality Management Systems: An Integrated Institutional Agency and Strategic Human Resource Management Approach,” has been published in the January-February 2016 edition of Human Resources Management.
It builds on the growing body of research that shows having a diverse cohort of leaders can boost firms’ performance.
“There’s a very important role for business in building opportunities for everyone and for building diversity and inclusion,” she said. “We can be proud of the business sector in Canada for moving forward with this and finding an effective means of doing so.”
Konrad joined Ivey in 2003 as a Professor of Organizational Behaviour and has been a member of the Women's Executive Network (WXN) Advisory Board for Canada's Most Powerful Women Top 100.