IMPACT OF DIVERSITY, EQUITY, AND INCLUSION ON BUSINESS AND MOST INCLUSIVE AND DIVERSE COMPANIES (WITH CASE STUDIES)

IMPACT OF DIVERSITY, EQUITY, AND INCLUSION ON BUSINESS AND MOST INCLUSIVE AND DIVERSE COMPANIES (WITH CASE STUDIES)

Ways in Which Companies Can Increase Diversity, Equity, and Inclusion in Their Workplaces

Industry experts have written several articles, blogs, and studies highlighting the efforts that companies should undertake to increase diversity, equity, and inclusion in their workplaces. Acknowledging bias and pay inequality, reviewing their current recruitment practices, evaluating their executive team for diversity, celebrating all religions and cultures, and fostering a company culture of fairness and equity are five such ways. These are discussed below in detail.

1) Acknowledging Bias and Pay Inequality in the Workplace

  • Research has shown that people have a ‘bias blind spot,’ in which they detect more bias in others than in themselves. However, being aware of the biases helps determine the actions to be taken to manage and curb such behavioral tendencies.
  • The same principle applies to companies. Acknowledging the bias that exists in the workplace goes a long way in improving diversity, equity, and inclusion in the company. One of the main points of bias in many companies around the world is gender pay inequality.
  • Research has shown that women employees earn $0.81 for every $1 that a male employee makes. This pay gap drops down to $0.75 for women belonging to minority communities. Also, the pay gap becomes more pronounced at the corporate executive level.
  • To promote equity in the workplace and a culture of transparency and trust, companies should open communication channels with employees around gender and potential pay disparities and reveal the average compensation levels received by male and female employees.
  • One solution that companies can use to promote clarity and transparency is posting the average compensation range for each job title. Then the companies should communicate to the employees the type of performance they should demonstrate to reach the high-performance salary range. If the payment data is skewed for reasons like claimed maternity leave and unclaimed paternity leave, the companies should communicate such data to the employees.
  • Also, companies should ensure equitable compensation for employees belonging to different races and ethnicities to increase diversity, equity, and inclusion in the workplace.

2) Reviewing Their Current Recruitment Practices

  • Research has shown that 80% of all jobs are not posted online but are filled through referrals or internal hires. Hence, the current employees play a major role in ensuring what candidates are hired next. Considering this fact, it becomes difficult for companies to increase diversity in the workplace if the majority of the employees are of a single demographic, as research has also shown that these employees would mostly refer candidates from the same demographic.
  • Besides referrals, extensive research has revealed that the recruitment process in most companies is unfair and full of bias. A job applicant’s name in a resume is enough to cause bias.
  • According to research, job applicants with White-sounding names are 50% more likely to be interviewed than applicants with Black-sounding names. Also, Black applicants are 2.5 times more likely to receive interview calls if they have whitened their resumes than if they have left their ethnic details intact.
  • The bias is evident when it is taken into consideration that only three of the current Fortune 500 companies have Black CEOs.
  • Companies that want to have more diverse, equitable, and inclusive workplaces must review their current recruitment practices. These include recruiting content, job descriptions in job postings, how and where they source their candidates, how they review the resumes, and how they conduct interviews and candidate selections.
  • These companies should ideally review the recruitment practices being employed by diversity and inclusion leaders within the same industry and inculcate these practices within their organizations.

3) Evaluating Their Executive Team for Diversity

  • A survey conducted by the Boston Consulting Group (BCG) has revealed that among the CEOs of the Fortune 500 companies, only 24 are women. The same survey also revealed that three CEOs are Black, three CEOs are gay, and one CEO is a lesbian.
  • Since the executive team of a company portrays the diversity and inclusion within the company to the workforce, stakeholders, customers, and partners, it is very important for companies to evaluate their executive team for diversity, equity, and inclusion.
  • Companies should ensure that women and people from various cultural and religious backgrounds are represented fairly in the executive team.
  • Since the initial research has already established that above-average diverse and inclusive companies have better financial results and employee engagement than below-average diverse and inclusive companies, companies must build diversity and inclusion into the core value.
  • Companies should drive the diversity and inclusion vision into each employee so that they remain aligned with the vision and understand the vision and their respective role in driving the vision. To ensure this, the executive team should communicate authentically and transparently with the workforce about the vision.

4) Celebrating All Religions and Cultures

  • Forbes has written that while 95% of company employees in the US are given holidays for Christmas, and 66% of company employees have the day after Thanksgiving as a holiday, only 39% of company employees are given a holiday on the Martin Luther King Jr. Day.
  • To increase diversity in their workplaces, companies should create a policy wherein a variety of cultural and religious practices are celebrated without bias.
  • Instead of having predetermined holidays, companies can have a set number of flexible holidays to be used by the employees at their discretion throughout the year. Also, companies can provide floating holidays that are separate from company holidays. These can be used by employees for their personal, cultural, or religious needs on the days that are not considered as holidays in the company calendar.
  • Companies can also host theme celebration months for various cultures and demographics. These can be LBGT Month, Women’s History Month, and Black History Month, among others.
  • Companies can also ensure that the workplaces follow the rules of various religious and cultural festivals and events, such as having a special refrigerator to store only Kosher food items separate from other food items.

5) Fostering a Company Culture Where All Employees Are Treated Fairly and Their Voices Are Heard

  • Employees often quit their jobs when they feel that their voices and their authentic selves are not appreciated or valued in their respective workplaces.
  • According to Deloitte, employee engagement is the result of three mutually reinforcing attributes: feeling comfortable at work, feeling connected with colleagues, and feeling that they contribute to the work outcomes.
  • In Deloitte’s 2020 Global Human Capital Trends survey, where survey respondents were asked what they felt was the biggest driver of belonging in a company, 25% of the respondents stated that fostering the right company culture where everyone is treated fairly and can voice their opinions was the biggest driver. 31% of the respondents stated that team connection was the biggest driver. 44% of the respondents stated that alignment with the company’s mission and vision and being valued for their individual contribution was the biggest driver.Graph
  • Considering that morale plays a huge role in an employee’s performance, companies need to create an environment in which employees can express themselves freely and can get a sense of connectedness with the company and their colleagues.
  • Companies need to create a culture of inclusion irrespective of age, gender, race, religion, sexual orientation, physical condition, cultural background, or country of origin of the employees.
  • Companies can create an environment of inclusion within the workplace by investing in a workforce communication platform. By integrating all their communication channels into one platform, companies will ensure that all employees are reached. This will empower the employees to freely express themselves, thus ensuring that all employees feel connected and aligned with the bigger goals of the company.

Most Diverse and Inclusive Companies in the World

The D&I Index ratings published by Refinitiv ranks the top 100 companies in the world in terms of workplace diversity and inclusion. According to the 2020 D&I Index, the top-5 most diverse and inclusive companies in the world are BlackRock, Natura & Co. Holding SA, Accenture PLC, Royal Bank of Canada, and Inditex. The top 30 companies and their respective D&I scores are presented below.

Overview of the 2020 Diversity & Inclusion (D&I) Index

  • The D&I Index measures the relative performance of companies against several factors. These factors define diverse and inclusive workplaces.
  • The index uses innovative analytics to rate companies against 24 separate metrics across four major pillars: diversity, inclusion, controversies, and people development. Only companies that measure up against the above four pillars are rated and assigned scores (out of 100). The overall score obtained by companies is the average of the parametric scores. The top 100 companies having the best overall scores (percentage scores) are ranked in the index.
  • The D&I Index is announced every year by Refinitiv (previously known as Thomson Reuters Financial & Risk). The 2020 D&I Index ratings are dependent on Refinitiv’s Environmental, Social, and Governance (ESG) data, which measures the relative performance of almost 10,000 companies across 450+ ESG data points with transparency and objectivity. These companies represent more than 80% of the global market cap.
  • The D&I Index published by Refinitiv is globally recognized by companies and industry analysts. The top 30 companies in the 2020 D&I Index are presented below.

The Top 30 Companies in the 2020 D&I Index

1) BlackRock, Inc.

2) Natura & Co. Holding SA

3) Accenture PLC

  • Accenture PLC is a multinational software & IT services company headquartered in Dublin, Ireland.
  • Accenture PLC has come 3rd in the 2020 D&I Index, having received an overall D&I score of 80.
  • The global website of Accenture PLC can be accessed vide this link.

4) Royal Bank of Canada

  • The Royal Bank of Canada is a multinational banking and financial services company headquartered in Toronto, Canada.
  • The Royal Bank of Canada has been ranked 4th in the 2020 D&I Index with an overall D&I score of 79.
  • The website of the Royal Bank of Canada can be accessed vide this link.

5) Industria de Diseno Textil, S.A. (Inditex)

  • Industria de Diseno Textil, S.A., also called Inditex, is a Spanish multinational clothing company. It is one of the biggest fashion retailers in the world, having eight brands under its umbrella: Zara, Zara Home, Oysho, Uterque, Bershka, Pull&Bear, Stradivarius, and Massimo Dutti.
  • Inditex has been ranked 5th in the 2020 D&I Index with an overall D&I score of 78.5.
  • The website of Inditex can be accessed vide this link.

6) L’Oreal S.A.

  • L’Oreal S.A. is a French multinational personal care and cosmetics company. It has several popular brands like Maybelline, Garnier, Biotherm, Nyx, Essie, and CeraVe, among several others.
  • L’Oreal S.A. has been ranked 6th in the 2020 D&I Index with an overall D&I score of 78.
  • The website of L’Oreal S.A. can be accessed vide this link.

7) Allianz SE

  • Allianz SE is a multinational insurance and asset management company headquartered in Munich, Germany.
  • Allianz SE has been ranked 7th in the 2020 D&I Index with an overall D&I score of 77.75.
  • The website of Allianz SE can be accessed vide this link.

8) Telecom Italia SpA

9) Novartis International AG

10) Bank of Nova Scotia

  • The Bank of Nova Scotia, which operates under the name Scotiabank, is a multinational banking and financial services company headquartered in Toronto, Canada.
  • Bank of Nova Scotia has been ranked 10th in the 2020 D&I Index with an overall D&I score of 77.25.
  • The website of Scotiabank can be accessed vide this link.

11) CCC S.A.

12) Hera Group SpA

  • Hera Group SpA is an Italian multi-utility company that operates in the fields of gas, energy, and water distribution and waste disposal.
  • Hera Group SpA has been ranked 12th in the 2020 D&I Index with an overall D&I score of 77.
  • The website of Hera Group can be accessed vide this link.

13) Sony Corporation

14) Toronto-Dominion Bank

15) Owens Corning

16) HP Inc.

  • HP Inc. is a multinational IT company and manufacturer of computers and computer peripherals. The company is headquartered in Palo Alto, California.
  • HP Inc has been ranked 16th in the 2020 D&I Index with an overall D&I score of 75.75.
  • The website of HP Inc. can be accessed vide this link.

17) The Enel Group (or Enel S.p.A)

  • The Enel Group (or Enel S.p.A) is an Italian multinational energy company that generates and distributes electricity and natural gas.
  • The Enel Group has been ranked 17th in the 2020 D&I Index with an overall D&I score of 75.25.
  • The website of the Enel Group can be accessed vide this link.

18) The Estee Lauder Companies Inc.

19) Societe Generale S.A.

20) Vodafone Group PLC

  • Vodafone Group PLC is a UK-based multinational telecommunication services company. The company is headquartered in Berkshire, England.
  • Vodafone Group PLC has been ranked 20th in the 2020 D&I Index with an overall D&I score of 75.
  • The website of Vodafone Group PLC can be accessed vide this link.

21) Telefonica, S.A.

22) Infrastrutture Wireless Italiane S.p.A

23) Roche Holding AG

  • Roche Holding AG is a multinational healthcare, pharmaceuticals, and diagnostics company headquartered in Basel, Switzerland.
  • Roche Holding AG has been ranked 23rd in the 2020 D&I Index with an overall D&I score of 74.5.
  • The website of Roche Holding AG can be accessed vide this link.

24) Home Product Center PCL

25) Salvatore Ferragamo S.p.A

  • Salvatore Ferragamo S.p.A is a luxury goods company that specializes in the manufacture of shoes, handbags, leather accessories, watches, jewelry, ready-to-wear apparel, clothing accessories, fragrances, and sunglasses for men and women. The company is headquartered in Florence, Italy.
  • Salvatore Ferragamo has been ranked 25th in the 2020 D&I Index with an overall D&I score of 74.5.
  • The website of Salvatore Ferragamo can be accessed vide this link.

26) British American Tobacco PLC

  • British American Tobacco PLC is a multinational company that specializes in the manufacture of tobacco and nicotine products like cigarettes. The company is headquartered in London.
  • British American Tobacco PLC has been ranked 26th in the 2020 D&I Index with an overall D&I score of 73.75.
  • The website of British American Tobacco PLC can be accessed vide this link.

27) Bank of Montreal

  • The Bank of Montreal is a multinational investment bank and financial services company headquartered in Montreal, Canada.
  • The Bank of Montreal has been ranked 27th in the 2020 D&I Index with an overall D&I score of 73.75.
  • The website of the Bank of Montreal can be accessed vide this link.

28) Kering S.A.

  • Kering S.A. is a French luxury goods manufacturer headquartered in Paris, France. The company has several reputed brands like Gucci, Saint Laurent, Brioni, Bottega Veneta, Alexander McQueen, and Ulysse Nardin, under its umbrella.
  • Kering S.A. has been ranked 28th in the 2020 D&I Index with an overall D&I score of 73.5.
  • The website if Kering S.A. can be accessed vide this link.

29) Marriott International, Inc.

  • Marriott International, Inc. is a US-based multinational hospitality company that owns and operates several luxury hotels and lodging facilities around the world.
  • Marriott International has been ranked 29th in the 2020 D&I Index with an overall D&I score of 73.5.
  • The website of Marriott International can be accessed vide this link.

30) Hewlett Packard Enterprise Co.

Research Strategy

During our search of the most diverse and inclusive companies in the world, we found some articles and blogs that mention a few diverse and inclusive companies in the world, such as 10 or 15. However, a comprehensive top-100 list of diverse and inclusive companies has only been released by Refinitiv. Hence, we have used this report as the basis of our research. We also found another top-100 list published by the ‘Great Place to Work Institute.’ However, this list only considers diversity but does not consider inclusion. Hence, we have not considered this list.

Case Studies of Companies

Horizon Therapeutics PLC, NASA, the Alibaba Group, Accenture PLC, and L’Oréal S.A. are five companies that have focused on diversity and inclusion, leading to increased business financial returns and employee engagement. The initiatives undertaken by these companies have been discussed in the following case studies of these companies.

1) Horizon Therapeutics PLC

  • Horizon Therapeutics is a biopharmaceutical company that researches, develops, and commercializes medicines for people suffering from rare and rheumatic diseases. The company is headquartered in Dublin, Ireland, with offices in Germany and the US.
  • Horizon Therapeutics has promoted diversity, equity, and inclusion in its workplaces with a series of efforts. It has introduced an ‘allyship’ program by identifying and supporting employees who demonstrate inclusive behaviors in their interactions with diverse colleagues. The qualities that Horizon looks for are attentiveness in learning and listening, comfort level in speaking up, modeling positive and inclusive behaviors, and sharing their own experiences.
  • The company encourages and promotes diversity, especially for its science, technology, engineering, and mathematics (STEM) roles. There is also no pay discrepancy at Horizon, ensuring equal pay for equal work for all men, women, and people belonging to diverse ethnic backgrounds.
  • The extensive efforts have created a tremendous work culture and employee engagement at Horizon. Fortune Magazine and ‘The Great Place to Work Institute’ have recognized Horizon as one of the best companies to work for in the healthcare and biopharma sectors.

2) National Aeronautics and Space Administration (NASA)

3) Alibaba Group

  • The Alibaba Group is the world’s third-largest ecommerce company after Amazon and China’s Jingdong.
  • The Alibaba Group has emphasized on human capital as one of the foundational pillars of the company. The culture within the company promotes meritocracy over hierarchy, optimism, idealism, out-of-the-box thinking and innovation, and the spirit of embracing change.
  • The company operates a diverse, inclusive, and transparent work environment with an emphasis on communication and participation. It provides equity-based compensation irrespective of gender.
  • At Alibaba, 34% of the senior management roles are filled by women, which signifies the emphasis on diversity. Only 8% of the workforce is above the age of 40 years, which signifies the company’s emphasis on recruiting and retaining young talent.
  • The company’s chairman Jack Ma has repeatedly described women as the ‘secret sauce’ behind the company’s enormous market share and dominance.

4) Accenture PLC

  • Accenture believes in taking decisive action against racism, intolerance, and inequality. Through a policy of equality irrespective of differences in gender, religion, ethnicity, sexual orientation, culture, and disability status, Accenture seeks to drive its innovation agenda forward and become a globally responsible business leader.
  • Diversity is at the core of Accenture’s company values. Accenture’s Board of Directors is made up of people from six countries, namely Ireland, France, the UK, Australia, the US, and India. 42% of the directors are women. This signifies both geographical and gender diversity.
  • Accenture has set its sights on becoming a gender-balanced workforce by 2025. The company has over 118,000 members in its Pride Ally program (for the LGBT+ community) and over 27,000 members in its global Disability Champions network. Accenture also promotes diversity in sexual orientation within its workplaces and supports LGBTQ+ communities.
  • Accenture had invested US$973 million in 2018 for the continuous learning and professional development of its employees. Accenture focuses on a policy of innovation throughout the company and wants to keep its employees skilled for future developments.
  • Accenture promotes cross-cultural diversity in its workplaces as its global workforce of 513,000 people in 120 countries support each other and work as a seamless network.
  • The company believes in compensating its employees fairly and equitably. Pay disparities are fixed at the earliest by the company.
  • Accenture’s continuous focus on workplace diversity, equity, and inclusion has seen it being recognized in Refinitiv’s Diversity & Inclusion (D&I) Index as the most diverse and inclusive company in the world for two successive years (2018 and 2019). Accenture came third in the 2020 D&I Index.

5) L’Oréal S.A.

  • According to Jean-Paul Agon, CEO and Chairman of L’Oréal S.A., the company is fully committed to achieving diversity and inclusion in its workplaces so that people feel valued and appreciated despite their differences in gender, age, disability status, and socioeconomic background.
  • Since the mission statement of L’Oréal is ‘Beauty for All,’ the company has to create diverse beauty products for diverse people from around the world. L’Oréal believes that diverse teams having diverse perspectives on beauty can better understand the emerging opportunities and create better and diverse products.
  • To promote diversity and inclusion (D&I) in its workplaces, L’Oréal works with public and private organizations. The company has made its D&I principles an essential condition for collaboration with its partners and stakeholders.
  • To ensure that it delivers its promise of gender diversity, L’Oréal has 30% women in the executive committee, 53% as board members, 54% women in leadership positions, 66% women as global brand General Managers, and 70% women in the total workforce.
  • L’Oréal has managed to ensure equal pay for equal work for both men and women in France. Even though the gender pay gap still exists in its workplaces in other countries, the median difference was only 2-4% as of 2019. The company has promised to close the gender pay gap soon.
  • L’Oréal provides flexible work timing to its employees to ensure a better work/life balance. The company has also conducted several awareness training programs to ensure inclusive workplaces in which employees can freely discuss their problems with each other.
  • The cosmetics giant had invested 92 million euros in 2019 for the training and development of its workforce on D&I topics. 42,100 employees were trained around the world, and the program received an 86% employee engagement rate.
  • The D&I initiatives undertaken by L’Oreal have ensured recognition from Refinitiv as one of the top diverse and inclusive companies in the world. L’Oreal has been awarded the 6th place by Refinitiv in the 2020 D&I Index. Besides, L’Oreal has become one of the major cosmetics companies in the world. The company currently enjoys market shares of 20% in Western Europe, 13% in Eastern Europe, 13% in North America, 8% in Latin America, 10% in the Asia Pacific region, and 10% in Africa and the Middle East.

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