Why Diversity Needs to Remain a Priority on Board Agendas in 2024

Embracing diversity isn’t just the right thing to do, there’s a growing and compelling body of evidence that it will positively impact the bottom line.

Most people instinctively know that creating an inclusive culture and embracing diversity is the right thing to do. But against a backdrop of an ongoing cost-of-doing-business crisis and a challenging economic environment, discretionary spend is under the spotlight -- investment in DEI is no exception.

For Green Park, being able to better attract, retain and improve leadership talent and create comparative advantage through inclusive cultural practices are the corner stones that demonstrate the business value of diversity. It's been our Golden thread since 2006, linking all the firm’s activities. Unsurprisingly there is a growing body of academic research that supports investment in DEI.

Just last month, a BlackRock study of the MSCI World index found that companies with more gender-balanced workforces outperformed their least-balanced peers by as much as 2 percentage points annually between 2013 and 2022. Researchers found that a higher return on assets was especially marked for companies where gender parity was greatest in revenue producing, engineering and top-paying jobs.

One of the most oft-cited reports is McKinsey’s 2015 study, which showed that companies in the top quartile for gender diversity were 15% more likely to have financial returns above their respective national industry medians. Subsequent McKinsey research has consistently found that companies with more diverse leadership teams tend to outperform their peers in terms of financial performance.

Molly Hugh, in Green Park’s Diversity, Inclusion, Culture & Ethics (DICE) Practice, says there is no shortage of research that makes the business case for diversity in all its guises, “but it's so important to utilise multiple lenses when thinking about the business case - things like the customer experience, financials and creativity benefits - because they all feed into each other.”

The balance of benefits will also vary depending on the industry sector in which organisations operate. However, extracting maximum commercial value hinges on a holistic approach, says Liz Walker, a Director in Green Park’s Private Sector Search practice. “It doesn't matter what industry you're in, the world is diverse and that needs to be represented in how you do business.”

Green Park’s approach is characterised by a commitment to finding the right candidates while actively working to promote diversity and inclusion. “Clients come to us because they want to reach out to a more diverse pool of talent, which they know will help strengthen their business. They are still looking for the best person for the role, but working with Green Park enables them to have exposure to a wider range of talent,” Walker says.

At the same time, diversity and inclusion must go together as a complete package, Walker warns. “Candidates tell us that they are only interested in going to organisations if they are genuine about their commitment to inclusion. There's no point us introducing a fantastic diverse talent into an organisation if they're not going to be able to bring their authentic selves to work. In six months’ time they’ll leave because they haven't felt supported by an inclusive environment and culture. Unconscious bias can exist at every level of an organisation so it's really important that we work hand in hand with our colleagues on the DICE team to make sure that the talent we introduce is embedded effectively.”

While business benefits are compelling, there’s no quick fix to meaningful diversity and inclusion in a business – it is a long-term strategy that requires investment, but it will have a direct positive financial impact, not least in terms of your cost of talent attraction and retention, but also in terms of productivity.

Understanding where your organisation is in its DEI journey is critical to charting a course to progress, but simplistic data around gender and ethnicity representation will only get you so far, Hugh warns. Looking at the intersection between different characteristics is key as is tracking the experiences of employees at different stages of their careers.

“On the inclusion side of things, we're seeing more and more organisations start to measure things like sickness and absence levels by different diversity groups and using applicant tracking system data to get more of a sense of the experience from an inclusion perspective. What limits organisations is they often don't have very good diversity data profiles to begin with,” Walker says.

Meanwhile, measuring uptake of inclusive policies and benefits can give you more meaningful insight into the success of your DEI strategies. “Organisations might offer enhanced family, maternity or paternity leave but if few people take that up, it could be because they don’t feel they can and it becomes virtue signalling tokenism,” Hugh says.

Data is important and an essential tool, but it is not enough in itself. Similarly, diversity targets have a role to play, but they must be achievable or risk being counterproductive. “If they are too ambitious, you can end up overpromoting people to hit targets which engenders a sense of unfairness and tokenism which then leads to lower employee engagement and higher attrition,” Walker says.

Growing demand for diverse talent engagement programmes illustrates the strategic value attributed to diversity. Rather than approach diversity on a case-by-case basis, these forward-looking organisations are trying to change the landscape in a much more pre-emptive way, Walker says. “We’ve seen that proactive effort from clients on diversity has been fundamental in positioning them as trail blazers and thought leaders in their field. Internally too, it’s a real plus point from an engagement perspective.”

This is why Green Park’s DICE practice takes the time to get to know clients’ organisational aspirations, tailoring solutions specific to their needs and challenges. “We support our clients through challenging realizations and, at times, uncomfortable truths which can be hard to swallow. But we stay by their side as a critical friend and partner, and there is nothing more rewarding than witnessing DEI work its way to the top of business priorities as leaders and employees alike see the results and benefits first hand. That's when the real change happens,” Hugh says.

Diversity and inclusion is embedded in Green Park’s own values and the firm is proud that 52% of recent appointments have been female and 32% from an ethnic minority background. “We live by our values. Green Park was born out of diversity, and it’s one of the founding cornerstones of the practice,” Walker says. The temptation to revert to the familiarity of recruiting in your own image is a difficult habit for some organisations to crack. However, Green Park’s skills-based approach to recruitment pays dividends for its clients.

“Diversity isn't just having a different skin colour, gender or sexual orientation, or being neurodiverse. We scan the market and find people whose diversity of thought and experience will be really additive to your business. It's about not being afraid to think differently,” Walker says.

In a talent hungry market, with the focus on speed in hiring, leaders understand that diversity hiring might take more time to build networks and earn trust, time that hiring managers may simply feel they don’t have. There may also be a feeling that a lack of diversity in some sectors leaves people not wanting to try.

This is where Green Park can help. “Green Park’s DICE practice arms senior executives with the tools they need to understand the benefit of diverse talent within their organisation. Meanwhile, we offer strategic hiring products, audit and diagnostics tools, insights, mapping solutions – all combined with a deep network of candidates developed over the past 17 years,” Walker says.

“By partnering with us as you plan for your hiring each year in Q1, we can get ahead of DEI challenges. If a backfill comes up suddenly, we’ve already been plugged in as your ambassadors in the market ready to support you,” Walker adds.

Given its strategic importance, leaving DEI to chance simply isn’t an option, Walker says: “We can't just keep banging on the drum of ‘you should have diverse talent and a strong inclusion policy because it is the right thing to do.’” The business case is gaining momentum. Ignore it at your peril.