Engaging the C-Suite

Relatively few organizations provide financial incentives for executives to promote inclusion in the workplace, according to a new survey.

Wednesday, November 20, 2013
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When it comes to understanding the importance of having a diverse and inclusive workforce, executives at global companies are all in: 96 percent of them believe it can improve employee engagement and business performance, according to a first-of-its-kind survey by the Korn/Ferry Institute, part of Los Angeles-based talent-management firm Korn/Ferry International.

But, despite this strong support, relatively few of the organizations these executives work for provide financial incentives for executives to promote inclusion. While 72 percent of executives polled said their organizations have diversity and inclusion programs, only 23 percent said executives are held accountable via financial incentives for promoting D&I.

Oris Stuart, a senior partner at Korn/Ferry, says he was surprised by the high percentage of respondents who said they understood the value of having an inclusive workforce.

"We would expect those numbers to be high, but the commitment of organizations around the country and the world to diversity and inclusiveness is higher than I expected," he says.

However, the relatively small number of firms that offer financial incentives to encourage C-suite support for diversity should be a wake-up call, says Stuart.

"There's work to do in holding managers and leaders accountable and creating incentives," he says.

Simply having an appreciation for diversity's importance isn't enough, says Stuart."It's interesting that although 52 percent of those surveyed said management performance appraisals include a component for effectively managing diversity, it is only influencing executive compensation in 23 percent of their organizations," he says. "That's a problem.

"Incentives are a key lever for making change happen. The things that matter tend to have metrics and financial incentives attached to them."

Attorney John Daniels, a former chairman of Chicago-based law firm Quarles & Brady, says he considered diversity to be part of the talent-development strategy for all employees during his six-year tenure as head of the firm.

"You've got to have a consistent view from the top that diversity is important to the business, because if employees don't sincerely believe it's important then it merely becomes a stepchild to other things," he says.  

At Froedtert Health in Wauwatosa, Wis., Chief Diversity Officer Joseph Hill has focused on helping the organization's executives understand and support diversity and inclusion at the 9,000-employee healthcare provider, which includes a medical center, two community hospitals and a chain of clinics run in partnership with the Medical College of Wisconsin.

As its metropolitan Milwaukee coverage area has grown ever-more diverse, so too has the importance of diversity to Froedtert Health's business strategy, says Hill.

"We recognize that if we want to stay relevant in our community, we have to be a diverse and inclusive organization where patients know they can come to us for culturally competent care," he says.

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Upon arriving at Froedtert more than three years ago, Hill conducted so-called "armchair diversity audits" with the organization's executives to determine their views on the importance of diversity.

"It gave me the opportunity to find out which executives understood the importance of diversity and which didn't," says Hill.

Hill also convened a "diversity summit" of diversity leaders from large, well-known employers such as GE Healthcare and MillerCoors, who donated their own time to travel to Wauwatosa (with Froedtert paying their lodging expenses) to review the organization's diversity policies and the results of Hill's armchair audits and offer suggestions.

"The feedback really helped us enhance our diversity and inclusion strategy and leaders got some guidance on what they needed to do next," says Hill.

Today, executive ratings at Froedtert Health -- which help determine bonuses and merit pay -- are based in part on executive's performance in furthering the organization's strategy for diversity and inclusiveness, he says.

"Because diversity is part of the fabric of our organization, everyone's held accountable," says Hill.

Companies simply can't afford to assume that managers and executives fully support diversity and inclusion, says Audra Jenkins, who leads the Diversity Center of Expertise at Boston-based global talent solutions provider Randstad Sourceright.

"Incentives are absolutely necessary -- HR leaders have known for many years that while executives may understand the 'why' of diversity, it's hard for them to support it if it's not impactful for them," she says.


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