HR BRIEFING: Diversity to play a pivotal role in organisations come 2022
Especially in service-based companies, D&I policies are crucial in improving financial portfolios, analysts say.
A study by Singapore National Employers Federation showed that about 70% of Singapore-based firms have yet to instate formal diversity and inclusion (D&I) policies; but this might change in 2022, as a new study found that D&I will be a “major competitive differentiator” amongst businesses next year.
EngageRocket, in its HR 2022 Outlook report, identified D&I as one of the seven key trends that will become relevant in 2022 as organisations try to future-proof themselves.
The study predicted that these trends will define how companies will work next year: “new work” will manifest in new and unexpected ways; the talent war will quickly become a zero-sum game; employee mental health and resilience will propel growth for companies; human resource (HR) will become decentralised; people analytics will fuel buy-in for HR policies and change; and that new productivity key performance indicators will be needed to assess employee performance.
Amongst the seven trends, EngageRocket said D&I policies, in particular, will “improve employee engagement, drive more productivity, and attract better talent” in a company.
This was echoed by Team Lewis’ VP for People APAC & EMEA, Jen Wu, in an interview with Singapore Business Review.
Wu said effective D&I policies allow “for a high performing, diverse team of employees.”
“The whole concept of ‘many brains are better than one’, is probably the most fitting analogy here. If all the brains think the same, you won’t be able to challenge, evolve and innovate. This is fundamentally why D&I is critical to a company achieving growth potential,” Wu added.
The analyst said that when employees “feel they individually matter versus just a ‘cog in a wheel’,” their productivity will naturally improve—and improved productivity can significantly impact a company’s financial performance.
“Staff costs are, for most companies, the biggest overheads. So improved productivity, efficiencies, and lower turnover mean that staff costs can be maintained in a more controlled manner,” the analyst said.
The efficiency of working is critical particularly in services-based companies, Wu said.
“Having a diverse and inclusive employee base means that there is always a fresh pair of eyes to review existing processes and ways of working. Quality of service means lower client turnover and of course allows for more consistent revenue growth,” she explained.
A 2020 report from McKinsey has also shown that “companies in the top quartile for gender diversity in leadership were 25% more likely to have above-average profitability than their bottom-quartile counterparts.”
Why invest in D&I policies now
Wu underscored that companies must invest in D&I policies to see its real benefit and growth rather than just doing half-measured attempts.
“If an organisation is not committed to making these changes in real-time, they risk longevity, given D&I requirements transcend any industry,” the Team Lewis analyst said.
This sentiment was also expressed by Google’s Director of APAC Diversity & Employee Engagement, Roman Matla, who said companies should develop a mindset and not a program towards D&I.
Wu said companies also “risk missing out on the best talent” by failing to invest in D&I policies, adding that millennials and Gen Z are “more conscious than ever on corporate responsibility and commitment to D&I.”
EngageRocket also highlighted this in their report, saying employees, particularly millennials and Gen Z, value D&I as a key determiner of where they want to work.
In Team Lewis, Wu shared that they have removed university education requirements, which allowed them to open up an untapped pool of quality talent.
This pool of best talents can also be retained through D&I policies, according to Mercer Singapore’s Partner and Career Business Leader, Lewis Garrad.
“Given the tight labour markets in Singapore and around the world, it’s more important than ever to keep employees engaged, which results in higher productivity and better financial performance for the company. Cognitively, diverse teams that have strong managerial practices tend to perform better on difficult problem-solving tasks, leading to enhanced performance,” Garrad told Singapore Business Review.
D&I policies are not only critical in ensuring that brands can attract employees but customers, as well, Garrad added.
“Clients want to buy products and services from companies who share similar values and purposes as them and having strong D&I policies give companies that competitive edge in an already challenging business landscape,” Garrad said.
How to develop D&I policies
According to Wu, employee engagement and communication are important in crafting D&I policies.
Rather than just forming such policies at a board level, which Wu said can be limiting, companies should listen to their employees to gain a better understanding of the gaps and opportunities within.
“Regular employee-related feedback through engagement surveys, individual feedback sessions, or exit interviews help companies understand what areas of focus are needed,” the analyst said.
“Importantly, regular training across areas of unconscious bias and improving cultural intelligence allows for a more open-minded approach,” she added.
However, Wu said commitment from the board is important for improving D&I in a company.
“For real change to come into effect within an organisation, it is critical that buy-in and leadership come from the top,” Wu said.
The analyst said creating C-level diversity roles will help “evolve programs for relevancy in real-time.”
Citing research from PwC, EngageRocket said only 25% of organisations have D&I goals for leadership, only 17% have a C-Suite level diversity role in place, and nearly 31% still have no D&I leader based on a PwC.
Garrad, for his part, suggested that companies improve their D&I policies in its tangible areas first, citing a clear pay equity strategy and addressing gaps in their reward strategy as examples.
“It’s equally important to have a clear point of view about how to develop and progress a diverse group of people into management and leadership positions. This often means having flexible benefits and support structures to ensure that people with diverse needs are given a fair shot,” Garrad said.