Diversity and Inclusion Pulse: A Leader's Guide to Europe

The evidence for the value of diversity is growing. Russell Reynolds Associates research finds firms with advanced D&I strategies are roughly 30 percent more likely to have executives who report high levels of loyalty, innovation and performance.1

Increasingly, we see this message starting to resonate at an individual level for leaders. In our 2019 D&I Pulse survey, we asked 573 executives in Europe about their perceptions and experiences of diversity and inclusion in the workplace. A full 70 percent of executives in Europe say it is clear to them personally how diversity and inclusion will improve the performance of their organizations.

BUT…

Despite this positive momentum, many organizations need to make further investments– both financial and cultural– in their diversity and inclusion efforts to realize full value from them.

Many organizations still lack a coordinated approach to diversity and inclusion:

• 33% have no diversity and inclusion strategy
• 63% of companies in Europe have a diversity and inclusion strategy
• 4% Don't know

Dedicated diversity and inclusion leadership is important yet rare:

• Lack of a chief diversity officer is one of the top five barriers to effective D&I strategy in Europe
• Yet, just 34% of the S&P Europe 3502 have a chief diversity officer or equivalent

Building meaningful diversity continues to be a challenge in Europe:

• 28% of European executives acknowledge diverse talent has le their organization due to lack of inclusion
• Women are 42% more likely to report this problem than men – one of many indications that underrepresented groups are more likely to feel excluded than others
• Companies in Europe generally agree on the importance of diversity and inclusion, but they are failing to sufficiently invest in it.

This report offers a data-driven view of the experiences and perceptions of executives in Europe. It gives leaders:

1. A snapshot of current diversity and inclusion efforts in Europe
2. A lens on where organizations fall short in tying diversity and inclusion to business strategy
3. A roadmap on how to advance in their diversity and inclusion efforts

A snapshot of current diversity and inclusion efforts in Europe

PREVALENCE OF DIVERSITY AND INCLUSION STRATEGY IN EUROPE

Committing to a diversity and inclusion strategy, rather than relying on scattered, one-off efforts, is critical to enduring success. Equally important, the diversity and inclusion strategy should clearly connect with the business strategy rather than being a separate effort.

While 63 percent of executives in Europe say their organization has a diversity and inclusion strategy, many organizations are still in the early stages of this journey, and more than a third have not yet begun. Fifteen percent are advanced in their efforts, treating diversity and inclusion as business issues. We consider this group best in class.

WHERE ORGANIZATIONS IN EUROPE DEVOTE THEIR EFFORTS

Diversity and inclusion are complementary efforts. Improving the diversity of employee populations is an important first step, but leaders must also create inclusive cultures in which every voice is valued. Currently, most organizations focus on hiring, developing and retaining diverse talent; fewer invest in building inclusive cultures and leaders to maximize the value of diverse talent.

TOP BARRIERS TO EFFECTIVE DIVERSITY AND INCLUSION STRATEGY

Creating diverse and inclusive work environments requires a certain level of financial investment, but equally important are cultural investments such as leadership commitment and accountability. Executives say these five factors are most likely to inhibit diversity and inclusion.

• Organization culture that is resistant to change
• No leadership accountability for diversity and inclusion goals
• No diversity and inclusion goals set by leadership
• Business strategy does not emphasize diversity and inclusion
• Lack of a chief diversity officer

Tying diversity and inclusion to business strategy in Europe: Where do companies fall short?

The top two barriers– resistant organizational cultures and a lack of leadership accountability– are what most organizations need to change for diversity and inclusion to take root. Successful organizations position diversity and inclusion as a holistic journey toward a new way of working, where the status quo is questioned and improved. In line with this, our recent study of chief diversity officers in Europe found only one in five has change management experience. Such transformations cannot occur without leaders who are fully committed to changing themselves and inspiring their colleagues to do the same.

Tactically speaking, however, the way to enable leaders and cultures to transform is to focus on the elements mentioned in the other three barriers. To put them in the positive, organizations need to ensure that the link between diversity and business performance is clear, set defined goals and measure progress against them, and put in place dedicated internal resources like chief diversity officers to ensure that the strategy moves forward.

As our Diversity and Inclusion Pulse data shows, many organizations lack these three critical elements:

Organizations that treat diversity and inclusion as a business issue clearly understand how it affects business performance, including their ability to innovate, serve customers and compete for talent. Yet, as previously noted, only 15 percent of organizations fall into this best-in-class category. Not surprisingly, they are about twice as likely to invest in diversity and inclusion for these reasons than the average European organization.

A failure to measure and benchmark relevant demographic information and the extent to which employees feel accepted within their workplaces means leaders are unaware of where their organizations are in their D&I journey.

Many organizations do not have enough infrastructure to support the large-scale changes that diversity and inclusion strategies require.

What can leaders do to improve their diversity and inclusion efforts?

HIRE, RETAIN AND DEVELOP DIVERSE TALENT

1. What current efforts does the organization make to hire, retain and develop diverse talent?
2. How effective are these efforts?
3. Are there metrics and accountability for these efforts?

BUILD INCLUSIVE CULTURES

1. Does the organization currently measure inclusivity through employee surveys?
2. Does the organization know which employee groups feel less included in the workplace, and why?
3. Are there strategies in place to mitigate these inclusion gaps, and are they effective?

DEVELOP INCLUSIVE LEADERS

1. Is the importance of inclusive leadership communicated broadly in your organization?
2. Are executives trained on how to lead inclusively, including how to mitigate their biases?
3. Are executives incentivized and rewarded for leading inclusively? Do they hold themselves and others accountable to do so?

CREATE INCLUSIVE TALENT MANAGEMENT PROCESSES

1. Is the organization aware of specific D&I pain points or biases in talent recruiting, promotion, compensation and retention?
2. Does the organization know where it loses diverse talent, and why?
3. Are there strategies in place to mitigate this talent loss, and how effective are they?

CREATE A SUSTAINABLE D&I OPERATING MODEL

1. Does the organization have a chief diversity officer? If so, is the role adequately resourced to achieve and sustain D&I objectives, and is it senior enough to engage and influence the CEO?
2. Does the organization have a D&I governance structure, like a D&I committee or council?
3. Does the organization have a holistic, long-term approach to D&I along with short-term metrics and accountability mechanisms in place to ensure leaders are meeting key milestones along the way?

Methodology

Russell Reynolds Associates surveyed nearly 850 executives around the world about their perceptions and experiences of diversity and inclusion at work through its 2019 D&I Pulse survey. In this paper, we focus specifically on the responses of 573 executives from Europe who completed the survey. As part of the survey, we asked executives to classify their organization’s efforts into one of the three maturity categories:

EARLY STAGE

• D&I is treated primarily as a compliance issue and D&I strategy is largely reactive.

INTERMEDIATE

• D&I is treated as a talent issue and focuses on diverse employees.

ADVANCED

• D&I is treated as a business and organizational issue and engages all employees. We consider these organizations to be best in class.

Twenty percent considered their firms early stage, 28 percent chose intermediate and 15 percent considered themselves advanced. Thirty-three percent said their firms had no D&I strategy, and about 4 percent were not sure if their organization had one or not.

Authors

ALESSANDRA ABATE co-leads Russell Reynolds Associates’ Diversity & Inclusion Practice in Europe, the Middle East and Africa and leads the Global Biotech and Pharmaceuticals Practice. She is based in Amsterdam.

HARSONAL SACHAR leads Knowledge for Russell Reynolds Associates’ Diversity & Inclusion Practice and is responsible for thought leadership and insight development along with internal strategy and operations. She is based in Toronto.

ALIX STUART is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in Boston.

ULRIKE WIEDUWILT co-leads Russell Reynolds Associates’ Diversity & Inclusion Practice in Europe, the Middle East and Africa and is a member of its Consumer sector. She is based in Hamburg.

Acknowledgements

The authors would like to thank their colleague Chetna Valecha for her helpful contributions to the creation of this study.