A diverse workforce that is treated fairly and has equitable opportunities for advancement is a crucial component to organisational success and will remain so in 2022.
Diversity, equity, and inclusion (DEI) in executive teams has shown to improve the financial performance of a business, according to research by McKinsey. Data the business consulting company gathered from more than 1,000 large companies in 15 countries suggests that companies where women made up more than 30% of executives outperformed companies with fewer women executives in the past decade by as much as 48%. The most culturally and ethnically diverse companies outperformed less diverse businesses by as much as 36%.
Innovation and resilience, characteristics that distinguish diverse and inclusive companies, will be crucial as the global economy enters the third year of the pandemic. Otherwise, it will be difficult to bring about a systemic change in the workplace.
Also, factors such as talent shortages and supply chain disruptions have emerged in the past year that will shape the DEI landscape in 2022.
"The world economy is facing a lot of challenges, world trade is decreasing, and raw material prices are on the rise," said Pei Tan, an investment manager at Tianjin Research Institute for Advanced Equipment in Beijing. "For a business to succeed in such an environment, we need creative solutions that only a diverse workforce can provide, but without forgetting about equity."
Spotlight on equity
Diversity and inclusion are only two parts of the equation. The other equally important part is equity. Achieving equity requires acknowledging and countering conscious and unconscious bias against underrepresented groups.
"It is equity that makes diversity and inclusion initiatives a success because diversity is not possible without equal access and equal opportunity," Tan said. "It's time we challenged biases to increase equity, one of the most important business trends I see for 2022."
Workplace equity means people with different backgrounds and experiences have a right to fair representation and fair opportunities for advancement. It can be addressed in several ways, including investing in talent development, Tan said.
European sportswear manufacturer Adidas, for example, committed to fill at least 30% of new US positions from underrepresented groups and made global anti-racism and unconscious-bias training mandatory. US-based tech giants Microsoft and Intel have tied half of executives' annual cash incentives to successfully achieving diversity metrics.
With the increasing levels of transparency required by businesses for reporting compensation, board diversity, and other workforce management practices, workplace equity has become increasingly important for business leaders that wish to drive DEI initiatives forward.
Remote work and DEI
For an organisation seeking to harness the power of diversity, remote work is a valuable tool. By definition remote work is location-independent. Employers and potential employees can connect in ways that would otherwise not be possible, said Jennifer Nutter, ACMA, CGMA, global financial planning and analysis manager with GAM Investments in London.
Companies are no longer limited to sourcing candidates from local talent pools, and job-seekers can find work that matches their skillset — not just what's conveniently located.
"Opportunities to thrive within finance roles or financial services are plentiful in London and less so in other regions," Nutter said. "However, those leaving school, college, or university based outside the greater London area rarely have the financial backing to move to the capital on an average starting salary. This means the pool for applicants is reduced to those fortunate enough to live, or have connections, within the greater London area." Remote work could change that for the better once access to technology is overcome for underrepresented groups, she said.
Remote work is also an excellent means of enhancing diversity, if HR teams, following a solid DEI business strategy, promote an inclusive company culture online by bringing remote teams together in a fair and inclusive way, Nutter suggested.
The increase in remote working during the pandemic has created benefits such as more flexibility for working parents and people with disabilities and health issues. But it can also exacerbate inequities, such as in career advancement for women, who as caregivers have been impacted the most during the pandemic and require flexibility that could result in them falling behind their male counterparts and not advancing in their careers. Also, it doesn't benefit those who traditionally cannot work from home or do not have access to the same work opportunities.
"This has been a real miss," Nutter said.
The pandemic crisis has put jobs at risk, but a diverse workforce may be most vulnerable. If companies do not consciously work to advance DEI efforts, inclusion and diversity plans may stall even after the crisis is over, McKinsey suggested.
Younger workers want to see action
In 2022, more and more educated professionals under 35 are expected to prioritise personal values when they decide where to work. That means they may avoid companies without a diverse workforce, clear promotion track, and commitment to confront biases.
Hiring a DEI manager is a step in the right direction but not good enough. Young professionals expect action and expect to be heard, according to a 2018 Deloitte survey of more than 6,000 respondents across several demographics. Those younger than 35 define diversity differently than older respondents do; they seek a plurality of experiences, identities, and ideas in the workplace.
It is critical for business leaders to show interest in issues that appeal to their employees, actively involving the younger workers, so that they can effect genuine change.
Making data work for DEI
Data is valuable, and talent pipeline metrics will help you assess your company's ability to hire a diverse workforce. Tan explained that most companies do not properly look at it, though, because they haven't yet recognised its value, or they don't know how to use it.
"With the help of technology development, it becomes easier to collect and analyse a large amount of data, which could help companies to understand their workforce better and redefine their DEI strategy," Tan said. "Companies could even perform salary audits to ensure equity in compensation, and that's another way to drive DEI forward as part of a company's strategy."
— Sofia Simeonidou is a freelance writer based in the Netherlands. To comment on this article or to suggest an idea for another article, contact Drew Adamek at Andrew.Adamek@aicpa-cima.com.