Why Companies Seeking Diversity Should Start at the Top

February 15, 2018 Karla Friede

2017 pulled the curtain back on how far we still have to go in the U.S. to embrace gender and ethnic diversity in the workplace. At the same time, there is a growing mountain of evidence that teams made up of diverse individuals outperform homogenous teams by wide margins, across multiple spheres of human endeavor—including business. And, a McKinsey study estimates that advancing women’s equality alone could add 12 trillion to global GDP by 2025.

For those who want to create and lead high performing companies of the future, it’s fair to say that putting together a diverse workforce can give you a competitive advantage.

With that in mind, over 20 percent of Fortune 500 companies now have a Chief Diversity Officer—a senior HR leader focused on diversity and inclusion. Trying to manage this through HR is a way to acknowledge the problem. However, real change has to come from the senior leadership team, which influences the behavior of the whole company—more than they realize.

diverse inclusive work place team working together new ideas
Diversity starts from the top. - Nvoicepay

For example, research shows that companies with women on their board of directors are more likely to hire women executives. It’s safe to assume that companies with more women executives hire more women managers and that companies with a more diverse group of people on their boards overall hire more a more diverse group of executives, and so on down the line.

That’s not surprising. People almost unknowingly like to hire people that look, talk and think like themselves. It's human nature. It's a shortcut to establishing trusted relationships. Cultures don’t change until you have diversity in the room, and they don’t change without the support of the senior team. So, if you want a diverse workforce, you have to be deliberate and intentional about creating it—from the very top down.

Parking it to the side

The risk of hiring a CDO and turning diversity into a role is that it can become a way of parking it to the side, and not integrating it into the fabric of the company. That could put your efforts behind the eight ball from the start. Leadership could go about their business, feeling comfortable that the diversity and inclusion box is checked. It becomes a separate thing, something to talk about, a remedial program where people get labeled as “diverse.” I’d love to lose that idea. 

Hiring the best people for your company is paramount to this equation. Once you start hiring people specifically because they are “diverse,” your program is dead. First, it is a form of discrimination, but second, it's going to lead to big problems with the other half of the equation: Inclusion. Bringing someone in as a “diversity” hire puts inclusion at risk from the get-go.

Exceptional comes in all styles

No company today can afford to hire people who are not exceptional. It’s the idea that exceptional people all look and talk a certain way that has to change. Companies collectively must open their minds to those people who are exceptional but look and think and act differently. If CDOs can accomplish that at the board and C-level, that could have an impact that reverberates throughout the entire company.

CDOs could also make an impact helping leadership get comfortable with being uncomfortable. It's not as comfortable a workplace when you have people who come from a wide range of backgrounds and experiences. It can mean more discussion and debate to reach an understanding. This can take more time, and you have to work harder to reach alignment in the short term, but it's much more effective in the long-term.

When you have people who think differently, you get more ideas on the table. You get different approaches. You get a better answer. And, something else very positive starts to happen: As people come to understand that they're not going to be judged by how they look, but on the results of their effort, they become enthusiastic about their workplace. It leads to a more positive vibe and a different culture.  

The dominant group

It’s a very different vibe than when you have one dominant group. In sociology, a dominant group is defined as “a social group that controls the value system and rewards in a particular society.” Whenever you have one dominant element in the room, they have more power and influence, and that affects the culture of the group more than people realize.

I distinctly remember two classes during my time at Harvard Business School. I was in one class that had 22 percent women and another with about 35 percent women. This may not sound like much of a difference, but these classes had very different social norms. The class with the better balance of men and women had more discussion from all corners of the room, with more participation from women and also from men who were usually quiet. The room was less constrained by the dominance of one group and had a different feel with a much richer discussion.

Until you get enough diversity to neutralize the dominance of any one group, there will always be a tendency for the group to adhere to the behaviors and value system of the dominant group—whether the dominant group is based on age, size, gender, race, or sexual orientation.

What we need is enough diversity at the highest organizational levels so that there is no dominant group. Then the environment changes, a broader range of candidates is considered all the way down the line, and inclusion is much less of an issue.

Changing to win

Businesses change to achieve better results or avoid negative consequences. With all the evidence that teams made up of diverse individuals outperform homogenous teams by wide margins, companies will start falling behind and feel the consequences. Adding a CDO can be a step toward more positive outcomes, but it likely won’t lead to better results unless the CDO can help achieve diversity at the top.

It’s time for company leaders to evaluate their workforces, question their hiring practices, and pay more careful attention to the dynamics of how people interact with the company. Who is listened to? Whose ideas get the most airtime? Who gets included and excluded? Who wins the awards and accolades? Who is being mentored or promoted?

It’s a time to consider a new, more intentional, company-wide way of building and supporting a diverse company culture. Leaders and innovators of high-performing companies will begin this change now. You’ll know you’ve arrived when your workforce at every level resembles your customer base and the population around you, and instead of thinking of people as “diverse” you simply think of them as teammates.

About the Author

Karla Friede

Karla Friede is Chief Executive Officer, co-founder, and member of the Board of Directors at Nvoicepay. She has over 30 years of experience in management, finance, and marketing roles in both large and early-stage companies. Karla, along with the founding team, has grown Nvoicepay into a leading B2B payment automation solution provider. Prior to founding Nvoicepay, she was President and CEO of privately held Zevez Corporation, VP of Marketing for GeoTrust (acquired by Verisign in 2006), Director of Marketing at Mentor Graphics, and part of the PBAS team at KPMG. Karla earned an MBA from Harvard Graduate School of Business and a BS in Accounting from the University of Idaho.

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