“The COVID-19 pandemic exposed and exacerbated existing inequalities in our economies and societies. An equal, diverse and inclusive workplace is a key driver of resilience and recovery”

Manuela Tomei, Director of the ILO Conditions of Work and Equality Department.

Diversity and inclusion play a “critical role… in the high performance of the workforce, businesses, economies and societies globally,” the report says. “If inclusion remains a privilege experienced only by those at senior levels, enterprises risk missing out on… considerable benefits.”

International Labour Organization (ILO), Transforming Enterprises through Diversity and Inclusion , 2022

“Employees need to feel they are valued, respected, fairly treated and empowered through inclusive business practices, inclusive organizational culture and inclusive leadership.“

Deborah France-Massin, Director, ILO Bureau for Employers’ Activities

The report of International Labour Organization (ILO), Transforming Enterprises through Diversity and Inclusion  (2022), emphasises that promoting equality diversity, and inclusion is linked to higher levels of innovation, productivity, and employee well-being. However, only half of the survey respondents believe that diversity and inclusion are sufficiently integrated into workplace culture and strategy. Additionally, just one-third of companies currently measure inclusion, despite its importance for progress in this area.

The study was conducted between July and September 2021, amid the COVID-19 pandemic, involving over 12,000 employees in 75 countries.

The report suggests that the most effective way to encourage more companies to make sustainable and transformative changes is by combining the business case for diversity and inclusion with appropriate policies, legislative frameworks, and a supportive corporate culture.

Figure 1. “Do you feel included at work?”, all results

Source: ILO survey on DEI, 2021

Within a group, diversity encompasses the portrayal of multiple dimensions of identity, which may encompass but are not restricted to factors such as race, ethnicity, nationality, gender identity, LGBTQIA+ status, socioeconomic background, physical and cognitive abilities, religious beliefs, and age. Diversity pertains to the range of individuals included within the workforce. Examples of diversity in professional settings include:

• Gender diversity: What makes up the composition of men, women, and nonbinary people in a given population?
• Age diversity: Are people in a group from mostly one generation, or is there a mix of ages?
• Ethnic diversity: Do people in a group share common national or cultural tradition, or do they represent different backgrounds?
• Physical ability and neurodiversity: Are the perspectives of people with disabilities, whether apparent or not, accounted for?

The result of embracing diversity and inclusion is a state where every individual has equitable access, opportunities, resources, and influence to flourish, while being mindful of and dismantling the historical and systemic barriers and advantages that lead to oppression.

In contrast, equality involves treating all individuals in an identical manner, irrespective of the historical and systemic barriers and advantages they may face. Equity, on the other hand, emphasizes impartial treatment for all individuals, aiming to ensure that a person's outcomes and opportunities in the workplace are not determined by their identity.

Equity distinguishes itself from equality in a subtle yet vital manner by recognizing an individual’s unique circumstances and adjusting their treatment accordingly to achieve an ultimately equal outcome.

Inclusion involves the proactive measures taken to comprehend, embrace, and harness the distinctive strengths and aspects of an individual’s identity to ensure that everyone feels accepted, appreciated, and nurtured.

It pertains to the overall workplace atmosphere and the extent to which organizations foster an environment where every employee is valued and empowered to make meaningful contributions. For companies committed to attracting a diverse workforce, it is equally vital to cultivate a culture of inclusivity where all employees believe their perspectives will be acknowledged. This is especially crucial for organizations aiming to retain their talent and fully tap into the potential of their diverse workforce.

“The LGBTQ+ community is underrepresented in the workplace, especially at more senior levels. As a result, many feel like an “only” at work and are more likely to experience microaggressions; they might feel unable to talk openly and comfortably about themselves, for example, or need constantly to correct assumptions about their personal lives.”

McKinsey Talks Talent Podcast and DEI expert Diana Ellsworth

Figure 2.  Diveristy, Equity, Inclusion and Belonging at Organisations.

Source: AIHR, Academy to Innovate HR

The Global Parity Alliance, dedicated to advancing Diversity, Equity, and Inclusion (DEI), initiated the DEI Lighthouse Programme.

The objective is to empower leaders with best practices, enhancing the focus of DEI efforts for more effective outcomes.

The 2023 Diversity, Equity, and Inclusion Lighthouses Report has pinpointed five shared elements of success among DEI initiatives that have delivered substantial, measurable, and enduring benefits for marginalized communities. These success factors encompass a:

• nuanced grasp of underlying issues
• a meaningful definition of achievement
• committed and responsible business leaders
• context-specific solution design
• meticulous monitoring with the flexibility to make necessary adjustments

In-depth understanding of root causes

• Inform prioritisation --> use data analysis to pinpoint DEI areas that need focus
• Set goals --> Establish objectives based on insights and challenges
• Design solutions --> develop strategies aligned with the identified opportunities
• Data sources --> utilise employee surveys, focus groups, and interviews

Lighthouse Case Study (p.42): Walmart’s Social Mobility Initiative Objective: enhance social mobility for employees through education and upskilling. Challenge Identified: disparities in career progression, particularly among the 39% Black and Hispanic/Latino frontline workers Insights: skill and degree requirements were barriers to internal advancement due to time and cost constraints. Impact: 20% increase in retention among program participants 87.5% higher promotion likelihood for Black program participants compared to nonparticipants

Defining success and building a case for change

• Goal Setting --> Prioritise opportunity areas and establish specific, measurable goals for short and long-term success
• Articulating the case for change --> Clearly communicate why the organization is prioritizing this effort and how it aligns with company values, mission, and business objectives, inspiring employee action

Lighthouse case study(p.31): Schneider Electric's Pay Equity Initiative Objective: Implement a global-local pay equity framework (GPE) to eliminate pay disparities worldwide Progression: Early Focus: Scale GPE across 85% of the global workforce by 2017 and 95% by 2020 2021 Goal: Limit pay gap to less than 1% for all employees by 2025 Gender Balance Objective: Achieve 50/40/30 gender representation by 2025 Cases for Change: Ensure fair compensation and break gender barriers Enhance competitive employer standing and attract diverse talent Impact: 99.6% workforce coverage by the GPE framework by 2020 Ongoing year-over-year improvement in the pay gap for women since GPE initiation

Accountable and committed business leadership

• Executive Commitment --> strong support from top management is crucial for DEI success, demonstrating its significance and providing necessary resources
• CEO and senior leaders’ roles -->
  • Prioritize DEI as a core business objective
  • Accept accountability for outcomes, not just efforts
  • Act as role models for desired changes
  • Allocate adequate resources: budget, expertise and timeline

Accountable and committed business leadership

Lighthouse Case Study (p.35): Shiseido's Gender Parity Initiative Objective: Accelerate gender parity at board and executive levels in Japan's office and local business community Approach: Employ inclusive work policies, process redesign, upskilling, and community engagement Senior Leadership Priority: CEO made DEI a cornerstone of corporate strategy in 2014 Accountability Measures: Senior leaders were responsible for increasing the ratio of women managers and leaders, with a «social value indicator» impacting performance metrics and compensation CEO’s involvement: Advocating training and coaching programmes Personal involvement in female candidate succession planning Serving as chair of Japan’s «30% Club» Impact: ~24% increase in women leaders from early 2017 to early 2022 44% of program participants promoted to vice president or director roles from 2017 to 2021

Solutions designed for context

• Addressing root causes --> create solutions that tackle the underlying problems, which may involve modifying critical processes and work methodologies
• Sustainable approach --> ensure the solution is well-equipped for success by providing employees with the necessary knowledge and skills for change, and by fostering a culture of contribution and collaboration

Lighthouse Case Study (p.38): Tata Steel's intersectional gender diversity initiative Objective: enhance intersectional gender diversity among employees by tackling fundamental issues: Stereotypes and support structures Legal and geographic constraints Persistent consequences of historical marginalization Noninclusive policies Unsafe work practices Comprehensive Approach: employed a multifaceted solution involving: Upskilling Career support Job opportunity creation Inclusive policy and infrastructure redesign Impact: notably introduced India’s first-ever transgender hiring programme

Rigorous tracking and course correction

• Evaluating effectiveness --> regularly assess progress toward the aspiration to ensure the solution's effectiveness
• Adaptability --> adjust the approach to enhance impact as necessary
• Resource optimization --> direct company resources more effectively based on measured progress

Lighthouse Case Study (p.29): Randstad’s economic empowerment initiative Objective: empower at-risk women in the United States through upskilling and opportunity creation Performance Tracking: regularly monitored key performance indicators and collected participant feedback, including one-on-one check-ins at critical program stages, to measure participant completion and program effectiveness Adaptive Approach: after the first year, incorporated childcare and professional clothing support into the program to meet participant needs for successful program completion and long-term employment Impact: Assisted 1,000 at-risk women, with 95% of apprenticeship graduates advancing into sustainable job opportunities through the program

For organisations aiming to strengthen inclusivity and enhance their broader DEI initiatives, five key action areas emerge:

BCG's Diversity and Inclusion Analysis Tool (DIAL)

BCG offers robust diversity and inclusion analysis along with extensive expertise to drive change.

What is DIAL?

• BCG's DIAL tool analyzes diversity and inclusion benchmarking data across various industries and regions.
• With over 25,000 responses from around the globe, we help identify the right goals and metrics to enhance human resource strategies.

How They Measure Diversity, Equity, and Inclusion

Their diversity and inclusion analytics, combined with their proven framework, help organizations focus on the most crucial metrics in five primary areas:

• TALENT ACQUISITION
• EMPLOYEE RETENTION
• CAREER PROGRESSION
• REPRESENTATION
• REMUNERATION

Talent Acquisition

Ensuring a robust influx of candidates from historically underrepresented groups, like women or minorities, is of paramount importance, particularly in sectors where retaining such talent has proven to be a challenge, such as industrial goods and the technology industry.

• Number of inquiries, applications, interviews, hires
• Employees’ perception of the company’s efforts to hire diverse talent
• External perception that the company is a good place for diverse talent to work
• Cultivating sources of diverse talent

Employee Retention

Organizations must be aware of the gender and race distribution among employees at various seniority levels, and they should monitor attrition rates at each level to identify points where career progression may be hindered.

• Actual retention numbers, accounting for voluntary and involuntary departures
• Engagement survey results on employees’ morale and intent to stay at the company
• Engagement survey results on employees’ well.being and personal reslience

Career Progression

Organisations should quantify the annual promotion rate of underrepresented employees, including women, as a proportion of the total cohort, and then compare this rate with the promotion rates of men and majority groups.

• Percentage of promotions by level and business unit
• Diversity in succession plans
• Parity of performance reviews

Representation

Women and individuals from other underrepresented groups who reach senior positions should not be disproportionately concentrated in administrative functions like HR or marketing. It is important to ensure they have fair representation in operational units.

• Percentage of level and business
• Employees’ perception of inclusion (e.g. Do you believe your opinion matters? Do you have a role model at work?

Remuneration

Compensation should be determined by an employee’s job role, rather than their race or gender. However, the perception of fairness is crucial, even if pay is objectively equitable. Companies should conduct employee surveys to ensure that their workforce believes that pay structures are fair for all employees.

• By role and tenure
• Base pay
• Discretionary and bonus pay