A typical startup’s Head of People owns an ambitious and ambiguous agenda, usually with an anemic budget and very little guidance.  Prioritization and proper phasing of initiatives, therefore, becomes a key success factor (and essential for team sanity and well-being! 😉).  When your daily decisions can impact whether or not people are getting paid properly; are hiring candidates with the right balance of skills and fit; are executing in compliance with federal and state regulations; are fulfilling the promise to employees for continuous learning and growth; etc., it can be hard to rate diversity, inclusion, and belonging initiatives as a near-term priority.  (Let’s call these ‘DIB’ for short.)  And, just as important, it can be hard to get executives to view DIB as more than a feel-good, socially responsible thing to do — which means that DIB initiatives can be slow to progress.

Here I’ll lay out the 3 business reasons that led me to my epiphany about the value of DIB to a company’s growth and success.  And then I’ll outline what we have done/are doing about it at the startup where I work.

First, what is the difference among diversity, inclusion, and belonging?

When I first heard about DIB initiatives, I thought they were all referring to the same thing.  And while they are related, they aren’t the same at all.  Borrowing and adapting from Verna Myers, a Diversity & Inclusion expert:

• Diversity is being invited to the party
• Inclusion is being asked to dance

And, my addition:  

• Belonging is knowing the other party-goers are members of your tribe.

Sounds nice-to-have, but not essential to the business, right?  Well, recent research has opened my eyes to the business impact of each of these levers:

• Diversity in a group leads to more innovation by changing how members think about problems and solutions.  
• Inclusion taps into the best ideas of a team, by setting an environment where all voices are welcome and valued.
• Belonging is a primal human need, at the same level as water and food.  Engendering a culture where everyone feels like they belong strengthens employee loyalty, motivation, and resilience in the face of obstacles.

Diversity changes how people think

This October 2014 Scientific American article by Professor Katherine Phillips established a very compelling case for how diversity affects team outcomes.  In a nutshell, group diversity invites:

• Different information, opinions, perspectives.  

This is the obvious benefit of bringing together people from various backgrounds:  applying to a given problem different disciplines and expertise, and the unique perspective and experiences of being another race, gender, etc. Getting a broader set of ideas on the table often leads to more informed and creative decision-making.  Look at how IDEO, the storied global design company, purposely hires and teams together people from a range of backgrounds — entrepreneurs, anthropologists, filmmakers, doctors, etc. — to maximize innovation.

• Change in expectations, and therefore, better preparation and thoroughness in approaching problems.  

Through a series of experiments and extensive supporting research, the author makes the point that the addition of difference can shake homogeneous groups from being complacent about ideas.  Being with similar people leads us to assume that we all hold the same information and beliefs, so there isn’t as much idea-sharing.  When confronted with people who are different, we find their ideas more provocative than if the same idea came from one of ‘us’, and we prepare more to anticipate how they might think.  Expecting that it will be harder to come to a consensus in a diverse group, we pressure-test our ideas and analyze them from different perspectives.  While this may be harder work, this can lead to better thinking.

Inclusion taps into the best ideas

Ok, let’s now assume you have a diverse team.  How do you maximize its potential?  The key here is inclusion.

In his book, “The Difference:  How the Power of Diversity Creates Better Groups, Firms, Schools, and Societies”, Professor Scott Page examines the success of group-authored research papers, and found that those written by the most diverse teams were the most cited and had the most successful patents.  He also found that the least successful patents / cited papers were written by diverse teams.  

In this and other studies, he concludes that simply getting diversity on the team doesn’t lead to the best outcomes.  The key difference between the two types of diverse teams described above was the level of inclusion felt by team members.  And this feeling is what drives people to participate in the discussion, applying their unique perspectives and cognitive abilities to the problem.

Creating an environment of inclusion on a diverse team can be a challenge.  Members have to overcome the lack of trust, communication issues, and validation that can arise from being different from one another.  But overcoming these challenges is imperative to getting the most out of a diverse team.

Separate (but related), Millennials, who now making up the largest population of the US workforce, hold inclusion as a must-have in a workplace.  As reported by Fast Company, “83% of Millennials are actively engaged when they believe their organization fosters an inclusive culture, compared to only 60% who are actively engaged when their organization does not foster an inclusive culture.”

Belonging strengthens employee loyalty, motivation, and resilience

Belonging is the squishiest of these 3 topics, but is a fundamental human need.  To me, this is self-evident, but for the skeptics out there, check out research from Roy Baumeister and Mark Leary, two professors whose 1995 paper initiated the conversation about the importance of belonging in supporting people’s cognitive processes, and the impact of a lack of it on health, adjustment, and well-being.

Greg Walton, a Stanford professor who has written extensively about the power of belonging, has shown through his research that a sense of belonging increases motivation and confidence among ‘out’ groups.  Even a trivial connection such as a common birthday can cause an uptick in motivation.  He writes, “That small cues caused large shifts in motivation underscores the importance of social relationships as a source of people’s interests, motivation, and broader self-identity.”

As Pat Wadors, the head of talent at LinkedIn, writes in this HBR article, I too am personally drawn to the topic of belonging.  I don’t need research to tell me that feeling like an outsider prevents me from freely sharing my ideas and participating in brainstorming.  I’ve lived through that feeling all of my life: as an immigrant growing up in a mostly-white community; one of relatively few women in my analyst class (and certainly the most naive when it came to navigating the business world); and as a new member of an executive team.  

And I bet that most — if not all — of you know what I’m talking about:  the little voice in the back of your head that tells you to be careful about what you say lest you trip up and reveal yourself to not be one of ‘them’.

I don’t want the employees at my company to feel this way.  Ever.  It not only defeats the value of diversity and inclusion by silencing people’s perspectives; it makes people feel scrutinized, judged, and afraid of making mistakes.  This leads to disengagement and fear.  We can’t build a company and a shared identity if that’s how our people are feeling.  Motivating, developing bonds of loyalty, and building up resilience among our employees are crucial to any company’s long-term success.  It’s not just the job of the Head of People; it’s the job of all leaders across the company.

The bottom line

I purposely saved the ‘proof’ of DIB’s value until the end.  I hope that, by now, you recognize that DIB, on its own, creates a lot of benefits for your company and your employees.  You can harness a wider range of ideas; hone in on the best ones; all while making employees feel part of and invested in the core values and identity of the company.

If you need further proof of how diversity can improve business outcomes, here goes:

• Professors Cristian Deszo of University of Maryland and David Ross of Columbia University found, by researching gender diversity at firms in the S&P 1500, that “female representation in top management leads to an increase of $42 million in firm value.”  They also found that companies that prioritized innovation saw greater financial gains when women were part of the top leadership ranks.
• Professor Orlando Richard of University of Texas at Dallas, found that increases in racial diversity clearly related to enhanced financial performance among 177 national U.S. banks.
• Researchers at Credit Suisse found that global companies with one or more women on the board delivered higher average returns on equity, lower gearing, and better average growth.
• Here’s another article in HBR with further evidence.
• Here’s a McKinsey study on diversity’s impact on company performance.

The list goes on, but if you don’t believe it by now in the facing of overwhelming evidence, not sure what it will take.

What we did to address DIB at my company

As I said from the start, startup People teams typically have a lot to do, with few resources to do it.  The great thing about DIB initiatives is that they don’t require tremendous costs if you are able to engage your employees to help out.  It’s usually easy to find a few passionate employees to drive the initiative.  That’s what we did at my company:  we empowered our employees to feel a sense of ownership and responsibility for their workplace experience, and encouraged them to propose and lead initiatives.  The first was our LGBTQ employee group; the second was a group exploring and celebrating our diversity.

Together, the two groups and I determined that opening a dialogue across the company about DIB was important, so we engaged an external DIB expert to lead a company-wide workshop on inclusion and belonging in the workplace.  This workshop highlighted several areas where we — as a company and as individuals — could do more to make people feel included, specifically:

• Design more inclusive team communications that work for different styles of listening and processing: circulating agendas in advance; active solicitation of people’s perspectives; pointing out interruptions
• Normalize ‘belonging uncertainty’ by having managers share stories of their own challenges fitting in; setting up a panel of recent hires to talk to new joiners about their experiences being new
• Be more conscious of and acting upon microinclusions:  being hyperaware of microaggressions and making sure to take steps to convey inclusion and respect to all members of the community

Possibly the most important outcome from the DIB workshop was the message that it sent to employees:  our leadership cares about your well-being and sense of inclusion and belonging, and are committing to improving this for everyone.

Since then, we have been working on refreshing our employer branding messages to include employee demographics, which we hope will attract more minority candidates to apply, and will drive a sense of belonging among employees.  While most of our recruiting practices have been reviewed to minimize conscious and unconscious bias, we want to make sure to be more diligent and mindful about them.  Finally, in the near-term, we are developing manager training that highlights the importance of inclusive leadership and the value of diverse opinions.

For companies looking to get started in DIB, I would suggest starting with identifying and empowering employees who want to lead these efforts.  DIB coming from fellow colleagues is far more powerful and authentic than DIB coming from the People team.  From there, encourage open dialogue among employees by organizing discussion groups around current DIB topics (you could even just send this article around, or any of the links herein), and ask them to propose what they would like to see from the company.  That can help frame the basis for a near-term DIB strategy.  All this without much in the way of resources or People team time.

In addition, as I was preparing for this blogpost, I came across this highly informative and compelling article about the value of diversity and how successful companies implement diversity practices.  While the author, Josh Bersin from Deloitte, wrote the article for 2016, the lessons apply just as well to next year…and beyond.  DIB isn’t just a momentary trend in the history of HR; its value to companies’ performance and to its people is undeniable and therefore something that should be near the top of any company’s leadership agenda.