How to assess the effectiveness of your DEI program, and what to do next.
In recent months, the conversation surrounding diversity, equity and inclusion (DEI), specifically in corporate America, has significantly accelerated. However, real progress requires accountability. That is why companies and their leaders must move beyond verbal commitments to DEI and focus on tangible results.
Boards play a critical role not only in setting the tone for an organization’s overall inclusive culture, but also in holding management accountable for outcomes. That requires these oversight bodies to be reflective of the diverse stakeholders they are serving. Deloitte’s Board Inclusion Framework provides an actionable strategy for boards to instill accountability for better outcomes. We recommend that the high-level vision of DEI into concrete steps that directors can take to increase inclusion across their organizations.
Boards must promote inclusion as well as diversity. A clear understanding of the distinction between these terms is necessary.
- Diversity refers to the presence of people who, as a group, have a wide range of characteristics, seen and unseen, that they were born with or have acquired. These characteristics may include their gender identity, race or ethnicity, military or veteran status, sexual orientation, ability, experience, background, skill set or perspective.
- Inclusion refers to the practice of making all members of an organization (including board members) feel welcomed, giving them equal opportunity to connect, belong and grow — to contribute to the organization, advance their skill sets and careers, and feel comfortable and confident being their authentic selves. In an inclusive culture, employees are much more likely to see themselves as part of a high-performing organization in which teams collaborate and customer needs are more consistently met.
Organizations that operate in an inclusive culture with a diverse workforce generate up to 30% higher revenue per employee, are more profitable than their competitors and are eight times more likely to achieve positive business outcomes. These teams also have less “groupthink” and higher levels of innovation, as noted in the Bersin by Deloitte report, “High-Impact Talent Management: The New Talent Management Maturity Model.”
Below are recommended actions paired with initial questions boards should consider to assess the level of inclusion across five key areas of a board’s organizational oversight. These questions are designed to spark honest discussions as boards evaluate and understand the maturity of their inclusion governance. Considering the questions can provide insight on ways to improve DEI strategies and create better organizations.
Strategy: Boards can help management define a clear direction on both diversity and inclusion for the organization. Even beyond strategy, investment in DEI from the top should go beyond hiring a team of diversity and inclusion professionals or delivering a diversity program — it also requires the right tools, technology and resources.
- How aligned are board members on their definitions of “diversity” and “inclusion”?
- How does the board help make the DEI strategy an integral part of the organization’s business and a focus of management strategy?
Talent: Boards should embody inclusive leadership traits among their own members and hold management accountable for developing talent that demonstrates inclusive behaviors. Deloitte identified six signature traits of inclusive leadership: cognizance of bias, collaboration, curiosity, courage, commitment and cultural intelligence.
- How effectively do the board’s norms and practices within the boardroom organically promote inclusive behaviors and outcomes?
- How seriously does the board consider inclusive leadership traits when governing leadership succession, including in the candidate pipeline, leadership development and compensation?
Governance: Boards should operate with an inclusion lens and demonstrate inclusive governance practices that are core to the business strategy. Boards should be mindful of how diversity and inclusion decisions affect nontraditional areas such as risk management and mergers and acquisitions.
- How effectively does the board document and communicate the expectation that its members will practice inclusive behaviors in the boardroom and govern through an inclusion lens?
- How does the board challenge management to consider the impacts to the organization’s DEI effort when making strategic decisions?
Integrity: It is natural for boards to benchmark DEI efforts against their peers’ efforts as a baseline comparison. While there is value in understanding industry and competitor progress on diversity and inclusion, reliance on comparisons alone can lead to change that is merely incremental. Boards should conduct comprehensive diversity and inclusion maturity assessments to understand their organization’s current state objectively and holistically.
- Is the diversity data that the management team is sharing appropriately disaggregated?
- How regularly does the board assess the organization’s internal (workforce-based) and external (market-based) perception of the organization’s reputation for inclusion and current practices?
Performance: Boards should hold the entire organization — itself, management and all employees — accountable for high performance around inclusion. Without tying diversity and inclusion to succession and performance measures, an organization is often unable to achieve either strong diversity in its leadership ranks or a truly inclusive culture. Boards should hold management responsible for taking proactive measures on diversity and inclusion within succession and performance management processes. These measures should also be applied to board member recruitment and selection, in addition to evaluation processes.
- Is inclusive behavior a formal criterion for evaluating the board’s own performance and the performance of its senior leaders and executives?
- How regularly does the board discuss the success of current measures and the pursuit of new efforts to improve the organization’s diversity and inclusive culture?
Where do we go from here?
The following steps are actionable ways to initiate the conversation on inclusion governance in the boardroom:
- Articulate the current state of the board’s approach to inclusion governance.
- Define a vision for governing inclusion across all five key areas and assess the board’s current state against that vision.
- Identify what can be done to achieve inclusive governance goals.
- Implement the changes necessary to accomplish those goals and measure progress.
For boards at any maturity level, practicing inclusion governance means recognizing collectively which actions and mindsets to adopt and which to avoid. There will likely be missteps and pitfalls along the way. However, with board members committed to growth and education, there are opportunities to make significant impact.
Tone at the top matters, and boards have a meaningful role to play in building an inclusive enterprise and governing in ways that drive C-suites and organizations on a positive path forward.