Convincing a company to commit to diversity and inclusion requires a business case: information that shows how diversity serves their self-interest. Usually, this falls into at least one of three categories: talent, markets, performance. Information from the SMU Cox Latino Leadership center of excellence illustrates.
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Talent. Hispanic is the largest fast-growing demographic, but it is underutilized as a talent resource. The percent of Hispanics in the general population, overall labor force, civilian workforce, mid-managers, executives, and board members can be dramatically represented as a pyramid. At each higher level the percent of Hispanic penetration was smaller and smaller, and always smaller than the Hispanic percentage in the whole population. Pinch points can be easily seen. I recall reviewing these data with AT&T’s Senior Executive Vice President for HR. He immediately zeroed in on the difference between Hispanic penetration in mid-levels and executive levels. The penetration in mid-levels did not provide a large enough pool to expand the penetration in upper levels. He pounded his finger on that point on the graph and exclaimed, “if you can help me solve that, I’ll put in with you.” Our leadership development programs prepared more mid-level talent for executive levels and more lower-level talent for mid-levels.
Markets. Hispanic consumer spending is worth billions of dollars. However, lack of understanding of the market can close the door to this opportunity as was famously the case at General Motors: the Chevrolet Nova was a flop in Latin America because no one considered that Nova in Spanish means, “doesn’t go.” My friend David Gonzales’s experience with the development of chili lime Doritos illustrates how knowledge of a segment and its decision-makers can open an untapped specialized market, lead to other new products, and cross over into mainstream consumer spending.
Performance. Data from SMU’s Latino Leadership center of excellence presented at a recent webinar shows how diversity correlates with better financial performance. Differences of 15% or more between quartile one and quartile four in measurements of gender diversity and 35% or more between the first and fourth quartiles on measurements of ethnic diversity correlate with financial returns above the median in specific industries.
Greater diversity also results in better performance in:
- talent attraction and retention
- customer orientation
- employee satisfaction
- company image
Even though diversity can increase friction in teams by 15%, it can boost productivity and efficiency by as much as 60%.
Once an organization recognizes that a commitment to using diverse talent is in its best interest, what needs to happen to make it work? I will explore best practices in next few Reflections.