D&I Deep Dive

Companies increasingly rely on diverse, multidisciplinary teams that combine the collective capabilities of women and men, people of different cultural heritage, and younger and older workers. But simply throwing a mix of people together doesn’t guarantee high performance; it requires inclusive leadership — leadership that assures that all team members feel they are treated respectfully and fairly, are valued and sense that they belong, and are confident and inspired.

Inclusiveness isn’t just nice to have on teams. Our research shows that it directly enhances performance. Teams with inclusive leaders are 17% more likely to report that they are high performing, 20% more likely to say they make high-quality decisions, and 29% more likely to report behaving collaboratively. What’s more, we found that a 10% improvement in perceptions of inclusion increases work attendance by almost 1 day a year per employee, reducing the cost of absenteeism.

What specific actions can leaders take to be more inclusive? To answer this question, we surveyed more than 4,100 employees about inclusion, interviewed those identified by followers as highly inclusive, and reviewed the academic literature on leadership. From this research, we identified 17 discrete sets of behaviors, which we grouped into six categories (or “traits”), all of which are equally important and mutually reinforcing. We then built a 360-degree assessment tool for use by followers to rate the presence of these traits among leaders. The tool has now been used by over 3,500 raters to evaluate over 450 leaders. The results are illuminating.

These are the six traits or behaviors that we found distinguish inclusive leaders from others:

You’ve probably seen these headlines: “Tech still doesn’t get diversity”, “Only 1 Fortune 500 company is headed by a woman of color”, “Where are the minority professors?”, “More Latinos needed in corporate executive positions.” In U.S. firms, a lack of diversity and inclusion is a major problem – and there is growing recognition the status quo needs to change.

In order to step up diversity efforts, organizations often start with people analytics to pinpoint where to intervene. But as organizations take a data-driven approach to identifying areas of change, many encounter one issue: they have a great deal of data about the experiences of certain groups, but far less on others. In working with companies seeking to improve diversity and inclusion, we have found small numbers can be a big sticking point.

An organization may be able to tell a clear story about how women in general are faring, or may be able to discuss the experiences of people of color broadly, but what about Asian women compared to Black women, or Hispanic men compared to white men? When we start to break down demographic groups, many companies struggle.

We’ve worked with organizations where the smallest groups may represent as little as 1% of the workforce and consist of fewer than 50 employees. Consider, for example, Google’s most recent diversity report: 0.5% of its U.S. technical workforce is comprised of black women and 0.9% is Latinx women. Even in a company this large, the numbers get small.

With such limited data, many companies revert back to broad categories (e.g. “all women”) as they structure diversity initiatives. In fact, articles on people analytics advise practitioners to “beware of small numbers” because it’s hard to determine what they mean.

Taking this logic too far, however, can have highly damaging effects. Pooling “people of color” or “women” to have more data discounts within-group differences and hinders meaningful change. Research shows that “one size first all” diversity approaches often only benefit a subset of employees. And efforts directed at women broadly tend to advance white women at the expense of women of color.

So, what can organizations do to better understand the experiences and outcomes of employees represented in small groups? Our research identifies four key steps companies can take to ensure they don’t fall victim to the faulty logic of small numbers.

Most of us, at some points in our lives, have felt excluded: at parties where we didn’t know anyone, in the school cafeteria or gym class, in some other situation where we felt like the odd person out. When we’ve been in those situations, we’ve felt palpable relief when someone we knew arrived or when someone we didn’t know made an effort to engage us. For many employees with diverse backgrounds in corporate America, that relief never comes. These employees contend with a pervasive sense of otherness that can manifest itself in a thousand small ways, including being talked over in meetings, being the unwilling audience to an off-color joke, and watching other people get credit for their work.

Many companies are taking steps to increase the diversity of their workforces. And for good reason. Research shows that bringing diverse perspectives to the table increases companies’ resilience and agility and boosts innovation and financial performance. (See “Diversity at Work,” BCG article, July 2017, and “How Diverse Leadership Teams Boost Innovation,” BCG article, January 2018.) Yet hiring diverse employees is only the first—and, in many cases, the easiest—step. To reap the benefits, companies must include those employees in the conversation. Diverse employees must feel comfortable sharing their perspectives freely, and their views must be considered and acted upon.

At many companies, that doesn’t happen. According to a comprehensive survey BCG recently conducted, diverse employees—especially those with more than one dimension of diversity—feel far less able than employees of majority groups to share their views at work. Diverse employees who do share their views reported that often they feel that their voices are not heard. We believe that the solution lies in changing the organizational culture to ensure that all employees feel included and all voices are appreciated. This is a different approach to diversity—one that’s not easily accomplished—but diversity for its own sake is little more than a numbers game. Diversity plus inclusion is the source of real value.