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By Wayne J. Taylor
| July 19, 2016
Issues of diversity and inclusion are playing out in the nation’s boardrooms, not only as a subject of deep social concern, but also as a matter of business strategy.
Consider a recent Forbes Magazine article citing research showing that gender-diverse companies are 15 percent more likely to outperform their peers, and ethnically diverse companies are 35 percent more likely to do the same. To the extent that this direct connection between diversity and a business organization’s bottom line exists, it probably needs some explanation.
“We know that such a connection exists,” said Greg Almieda, president of Global View Communications, a market consulting firm in Pawtucket, R.I. “But it’s a bit more nuanced than simply saying that diversity contributes to the bottom line.”
A key to expansion
The experiences at Harvard Pilgrim Health Care (HPHC) help illustrate the point. For this local managed-care provider, creating “culturally competent care” options has been a focal point of its outreach into new markets.
HPHC’s “Eastern Harmony” program integrates eastern and western medicine approaches to accommodate what the non-profit learned when identifying gaps in its coverage with Asian communities, especially people of Chinese and Indian origins.
“This was a community we weren’t serving particularly well,” said Karen Young, chief inclusion officer at HCHP. “But it was one in which we had a great deal of internal competence and also a community connection through various events and sponsorships. It was a natural step for us to understand that there might be a business opportunity here.”
Rockland Trust Company also saw a gap in its connection with ethnically diverse communities. This spring, the bank opened a new branch office in North Quincy, an area with many small businesses and large Asian, African-American, and Irish communities.
“We took a close look at the demographics of North Quincy,’’ said Maria Harris, director of diversity and recruitment at Rockland Trust. “We spoke with community leaders to understand household needs and the kind of banking services the community would find most attractive. In doing so, we launched with a lot more information than we might have had if we’d decided to go with a simple, mass-marketing approach.”
The bank also took steps to be sure that its marketing and product development efforts, its internal recruitment efforts, and its employee training were aligned to better optimize the opportunity to serve a very diverse community of potential new customers.
At HPHC, the care provider broadened its community outreach with successful programs to forge more engaged relationships with diverse suppliers. In identifying healthcare coverage gaps, the organization also built a strong relationship with the transgender community. HPHC developed innovative approaches to helping transgender patients and their families navigate a healthcare system that is substantially built on gender identity.
Such initiatives are certainly laudable. But do they make sense from a business perspective?
Making the strategic business case
“Making the business strategy case for such initiatives typically has three facets,” said Almieda, from Global View Communications:
Getting organizational buy-in is key. A large proportion of diversity and inclusion initiatives are born in the human resources arena, and it’s perfectly natural, if these efforts emanate from there, said Almieda. But ideally, as an organization matures, a culture should evolve in which all strategic decisions are filtered through a diversity and inclusion lens at some stage of the business analysis process.
Senior leaders at both HPHC and Rockland Trust have become champions of the diversity and inclusion platform in their organizations.
HPHC’s Young credits CEO Eric Shultz for bringing her group’s efforts into the boardroom, as does Rockland’s Harris.
“Our CEO Chris Oddleifson is committed to diversity and inclusion as a business proposition,” said Harris. “He understands the value of different perspectives and knows that to come to innovative solutions you can’t work solely from within a homogeneous group.”
Getting from HR initiative to senior management is not an uneventful task. There are likely to be challenges along the way.
“Where most companies stumble is shifting the focus of their diversity and inclusion work from an activity to a strategy,” said Almeida.
Even with the imprimatur of senior leadership, he points out, a diversity initiative needs to be scrutinized closely and the question asked, “Is there more than we can get out of this from a business perspective?” Only then, if a proposal survives that level of scrutiny, can it be elevated to strategic objective status.
But someone also has to “own” the initiative.
“If everyone has responsibility, then no one has responsibility,” said Almieda. “Someone needs to drive the work process in order for it to contribute to the overall strategy.”
Another stumbling block is that companies often don’t spend the time necessary to determine the value proposition of the diversity initiative. Customer intimacy, for example, was the value proposition that Rockland Trust adopted with its branch expansion strategy into more diverse markets. Seeking to broaden its view of customers from beyond their strict transactional value to more of a lifetime value profile, the bank believed the strategy would reduce customer churn and, over time, increase profitability.
The challenge, according to Almieda, is to move diversity and inclusion programs past being viewed as a cost-center initiative that ticks off a necessary compliance box.
“That’s why it’s so important to have a strong voice—or two or three—in the senior leadership team to help the organization discard past perceptions and look toward the future.”
HCHP’s Young puts it somewhat differently.
“Diversity and inclusion is a mindset,” she said. “And therein lie both the opportunities and the barriers.”
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