Is There a Fast Track to DE&I Maturity?
DEITransformation InnovationSustainabilityDiversity, Equity, and Inclusion Advisory
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December 08, 2020
22 mins min read
DEITransformation InnovationSustainabilityDiversity, Equity, and Inclusion Advisory
To make quick improvements in DE&I, organizations need to seek honest employee feedback to assess the current challenges to inform meaningful action plans.
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Many organizations are trying to make up for lost time in their diversity, equity and inclusion (DE&I) efforts. While these topics are not new, the May 2020 murder of George Floyd catalyzed a fresh urgency for leaders to make meaningful progress on them by appointing and promoting more people of color and adapting their cultures to be truly inclusive. In line with this urgency, leaders are looking at what it will take to quickly establish or reinvigorate their DE&I functions without compromising quality or integrity.

How can organizations move quickly from nominal efforts to meaningful progress? Our recent survey of more than 150 senior DE&I leaders found that organizations traditionally take a linear and lengthy route to building up their DE&I functions, adding elements of strategy, structure and governance slowly over 5 to 10 years. However, a small group of organizations in our study have taken a fast track approach, investing heavily upfront to establish a DE&I function that looks more mature. These fast track companies quickly outpace traditional ones, establishing their DE&I operating infrastructures in about half of the time.

PATHS TO A SUSTAINABLE DE&I FUNCTION

SEGMENTATION ANALYSIS OF DE&I OPERATING MODELS

  • Start Up
    Less than 5 years
    Operating without a strategic plan or outlined objectives
  • Evolving
    5 to 9 years
    Defined DE&I basics but objective is primarily compliance driven
  • Entrenched
    10+ years
    Full-fledged DE&I structure with objective of cultural transformation
  • Fast Track
    Less than 5 years
    DE&I strategy, structure, governance and accountability are built from the start

Fast track organizations hit the ground running with impressive momentum. However, as our past research shows, it is not enough to simply design structure and governance mechanisms; it is also essential to define the focus of DE&I strategy and link it to business results. Organizations that successfully capitalize on their DE&I investments understand DE&I as a critical enabler of business strategy, rather than an isolated effort to address compliance or HR concerns. Typically, this highest level of maturity has been more aspirational than reality, with only about 15 percent of organizations believing they achieve it.

What does it take to make the fast track journey successful—and what are the obstacles?

To understand more about what the DE&I fast track journey looks like and what it takes to be successful, we recently interviewed four senior DE&I leaders who have helped their organizations make rapid progress in this space. (We also learn how well-established DE&I functions at Microsoft, Disney, and Salesforce have strategically responded to the current momentum around racial justice in the case studies that follow.) It is notable that there is not just one onramp to the fast track; several of these leaders joined organizations with established commitments to DE&I that they wanted to reinvigorate. Their reflections and advice focused on five key areas:

No matter how much urgency there is, take time to take stock

  1. Passion is not a substitute for budget
  2. DE&I needs leadership support as well as broad organizational support
  3. Leaders need to ensure employees have voice and influence
  4. Accountability is essential for intentions to become reality

No matter how much urgency there is, take time to take stock

Every DE&I leader we spoke with emphasized the importance of understanding the organization and its history before
trying to catalyze change. Analyzing the specific current needs and strengths of the organization through employee
surveys and focus groups will not only lay the groundwork for more relevant initiatives, it will also increase the
likelihood of organizational buy-in by focusing on what people care about most. “There is no static mandate in terms
of DE&I, it is always about what the needs of the staff and the community are at this moment in time,” said Nicole
Cozier, senior vice president for diversity, equity & inclusion for the Human Rights Campaign.

FAST TRACK ORGANIZATIONS SEEK EMPLOYEE FEEDBACK TO ASSESS THE STATE OF DE&I

How do you assess the state of DE&I in your organization?

 % of Organizations
Start UpEvolvingEntrenchedFast Track
Employeee Surveys43%50%56%77%
Focus Groups14%20%28%31%
Online Dashboards10%38%50%38%

Source: Russell Reynolds Associates DE&I Operating Model Survey, July 2020, N=158 organizations

"We emphasized the importance of being inclusive of all the diversity that makes up our company." -Jorge Quezada, vice president of inclusive diversity, Granite

This fact-finding is important even in organizations that are ostensibly creating a DE&I function for the first time. At Granite, a large publicly traded construction company, Jorge Quezada was hired in 2019 as the organization’s first dedicated diversity and inclusion leader with a mandate for quick change. However, he found that there was already “a lot of passion in some pockets,” particularly in the company’s efforts to recruit, hire and develop women in a traditionally maledominated industry. These became building blocks for a more integrated strategy that prioritized inclusion as well as diversity. “We emphasized the importance of being inclusive of all the diversity that makes up our company, and employees were able to see the multitude of diversity dimensions they couldn’t see before,” said Quezada. “It has been a game-changer.”

An important starting point in all situations is to clearly define key terms such as diversity, equity, inclusion and belonging for the organization in its current context. It is critical to create agreement among different stakeholders on what these terms mean to avoid confusion on an emotionally charged topic. This has been an ongoing focus for Amber Hikes, chief equity and inclusion officer for the American Civil Liberties Union since 2019. She joined in large part to help the 100-year-old organization adapt its culture to its increasingly diverse groups of employees and external constituents. “If you ask five different ACLU employees about their definition of DE&I, you’ll get eight different answers,” she noted. Peeling back assumptions and making definitions clear to all has been a key part of her work in her first year on the job.

Passion is not a substitute for budget

A financial commitment is table stakes for building a mature and successful DE&I function. “A lot of times, DE&I is run on pure passion. Passion is really good, but it can only take you so far,” said Smita Pillai, global vice president and head of diversity, equity and inclusion for Zendesk. “As with any business initiative, it requires investment.”

"Passion is really good, but it can only take you so far." -Smita Pillai, global vice president and head of diversity, equity and inclusion for Zendesk

While the precise level of investment required will vary with size and complexity, organizations following a traditional trajectory tend to start with less than they need. Not including D&I staff salaries, 56 percent of start-up budgets are below $100,000, which makes it difficult to gain traction quickly. Budgets tend to increase over time, though fast-track organizations are more likely to start with larger annual budgets of up to $500,000, our survey shows.

Without an allocated budget, many DE&I activities, particularly those led by employees, end up depending on scraps from local or functional leaders’ budgets, or on funding from employees themselves. This shoestring approach is not sustainable over time and does not support a DE&I operating model that obtains measurable results. It is also not an inclusive approach, since it favors business units with bigger budgets and people with more disposable income.

At a minimum, organizations need to provide adequate resources to the leaders and staff who are dedicated to overseeing DE&I efforts, allowing them to support the organization with training and education, and the necessary tools to measure and track progress. These elements are particularly important to creating equitable talent management systems and coaching inclusive leadership, both of which require specialized knowledge and strategic perspective to succeed.

3. DE&I needs leadership support as well as broad organizational support

While a reasonable budget can buy the structure and resources needed for a successful DE&I function, it can’t buy culture change. A core part of a DE&I function’s role is to engage other leaders and employees in DE&I work; gaining their buy-in and support to change the culture from the inside out. This is particularly true for an organization to acknowledge when hiring a chief diversity officer. “DE&I needs to be an organization-wide priority,” said the ACLU’s Hikes. “If you’re bringing in one person to fix things, you’re setting them up for failure.” One way of creating broad engagement is to build the function as a hybrid centralized-decentralized model. Across all stages, this hybrid approach is the most popular way of managing DE&I, blending specialist support and oversight centralized at the corporate center with broad-based engagement in which businesses or functions own the delivery of the DE&I programs.

“If you're bringing in one person to fix things, you're setting them up for failure." -Amber Hikes, chief equity and inclusion officer, American Civil Liberties Union

A common way to involve leaders across the organization in DE&I work is through an advisory council that helps define strategy and bridge gaps between leaders and employees. Fast track companies are more likely to have these in place than others—92 percent set up DE&I councils, compared to 72 percent of entrenched, 43 percent of evolving, and 25 percent of start-up organizations. They are typically led by the DE&I leader, CHRO or CEO. However, it is also important to consider the specific dynamics of the organization. In some cases, an alternate model of embedding DE&I responsibilities into the whole leadership team through clear metrics, targets, and accountabilities, is superior to creating a separate council. This is particularly true when a business-oriented CDO reports directly to the CEO.

DE&I COUNCIL INCLUDE LEADERS ACROSS THE ORGANIZATION, ESPECIALLY ON THE FAST TRACK

What roles do DE&I council members hold?

 % of Organizations
Average of Start Up/Evolving/EntrenchedFast Track
CEO22%42%
CHRO47%83%
CDO17%50%
Business Unit Head40%58%
Functional Head50%67%

Source: Russell Reynolds Associates DE&I Operating Model Survey, July 2020. N=158

Another common way to involve top leaders in DE&I work is to ask them to sponsor employee resource groups (ERGs). Our data shows that about 80 percent of the companies in our study have ERGs, with about 40 percent sponsored by a top executive. Understanding that the executives’ time is a precious commodity, it is important to clearly define roles and responsibilities to avoid overtaxing them. When done well, however, ERG sponsorship can be a powerful point of connection that gives the executive new perspectives on the business and makes the group as a whole more likely to catalyze change in the organization.

4. Leaders need to ensure employees have voice and influence

A common pitfall when trying to accelerate diversity, equity and inclusion efforts is to inadvertently equate inclusion with conformity to the existing culture. “Organizations tend to hire for diversity but then onboard for sameness,” said Cozier, DE&I head for the Human Rights Council. “Diverse talent come in eager to make a difference and then are told “that’s not how we do it here.”

"Organizations tend to hire for diversity but then onboard for sameness." -Nicole Cozier,senior vice president for diversity, equity & inclusion, Human Rights Council

A first step in avoiding this pitfall is to scrutinize talent management processes for tendencies to normalize, such as hiring for culture fit or onboarding to homogenize. These should be reviewed and replaced with more equitable hiring, development, promotion and retention practices.

Leaders also need to actively encourage employees to embrace their diversity and make it count. Forums for underrepresented communities, such as ERGs, offer an important vehicle for leaders to hear from employees. They can also help create common ground for people from different demographic groups. Survey respondents reported a wide variety of focus areas in their employee groups, including those related to age, disabilities, veteran status, parent or caregiver status, location, and personality differences.

As previously noted, executive ERG sponsorship is a key component in elevating employee voices. To the extent that ERGs operate without executive sponsorship – as more than 50 percent do -- it is important to realize they may function more as affinity groups than megaphones. While affinity groups can also be valuable, our research shows that without adequate executive sponsor they are unlikely to create change.

EMPLOYEE RESOURCE GROUPS ARE COMMON, BUT LEADERSHIP INVOLVEMENT IS A FAST TRACK HALLMARK

How are the ERGs organized?

 % of Organizations
Start UpEvolvingEntrenchedFast Track
A member of the top team is the executive sponsor31%50%63%67%
Someone within the ERG is appointed ERG President21%38%50%42%
There are leaders appointed by location or business unit6%2%31%33%
ERGs are not formally organized13%9%0%0%

Source: Russell Reynolds Associates DE&I Operating Model Survey, July 2020, N=158 organizations

5. Accountability is essential for intentions to become reality

To generate DE&I results and create sustainable change, leaders are unanimous on the need to set clear goals that have direct impact on people’s performance and compensation. In line with its renewed fast-track efforts, for example, Zendesk began tracking DE&I metrics as part of its enterprise wide objectives and key results (OKRs) as of the third quarter of 2020. It also helps make budget negotiations easier. “If you’re putting money there, then you have to look for results,” said Pillai, Zendesk’s DE&I leader.

While many organizations track DE&I success in some form – ranging from recruiting and retention statistics to employee surveys to representation metrics – surprisingly few embed it into performance management or bonuses. Still, fast track companies are the most likely to do so, in line with their advanced approach to all other aspects of the operating model.

FAST TRACK ORGANIZATIONS ARE MORE LIKELY TO TRACK DE&I PROGRESS...

What metrics are used to track DE&I progress in the organization?

 % of Organizations
Start UpEvolvingEntrenchedFast Track
Outcome metrics: diversity representation18%5%56%92%
Leading indicators demographics differentials (recruiting, retention, promotion, compensation)14%28%50%77%
Survey data (inclusion, engagement, intent to remain, employment brand)18%33%0%85%

Source: Russell Reynolds Associates DE&I Operating Model Survey, July 2020, N=158 organizations

… BUT FEW HOLD EXECUTIVES ACCOUNTABLE FOR ACHIEVING DE&I GOALS

What accountability measures are in place to ensure DE&I goals are met?

 % of Organizations
Start UpEvolvingEntrenchedFast Track
Embedded into Performance Management for Individuals22%28%28%39%
Executive Bonuses4%8%11%15%
Business Unit Incentives3%0%0%0%

Source: Russell Reynolds Associates DE&I Operating Model Survey, July 2020, N=158 organizations

Leaders also spoke about the importance of informally acknowledging wins within the organization, including the behavior changes that often go unnoticed or unrewarded. “We realized that a large part of the white male population did not feel they had a place in the conversation, though many of them were doing exactly what we were asking them to do,” said Quezada, vice president of inclusive diversity for Granite. “We have to think about what they are becoming, and how we can celebrate that.”

Lessons Learned

As these fast track organizations show, it is possible to create a full-grown DE&I function very quickly, and make remarkable progress within the space of a year. However, true DE&I maturity requires a number of tangible and intangible factors, including workforce diversity, equitable talent management systems, inclusive leadership skills, and a culture that is willing to change.

Just as COVID has forced leaders to create new playbooks very quickly, a heightened investor focus on the social factors of ESG may result in accelerated DE&I change. Yet most organizations still need to reckon with how DE&I contributes to their business success – rather than their HR or compliance strategies – and hold leaders accountable for making progress.

Historically, this cultural transformation from denial to inclusion has been a multi-year journey. Our research and our conversations with senior DE&I leaders illuminate the fact that a strong operating model is an essential -- though not sufficient -- start to DE&I sustainability.

Case Studies from Leading Companies

As our research highlights, DE&I strategies must constantly evolve to meet changing needs. We profile three established DE&I organizations that have leveraged their existing infrastructures to respond to current events.

Microsoft: Catalyzing Change in an Established DE&I Organization

Microsoft Corp. has an established DE&I organization, with both centralized and decentralized resources to help engage more than 160,000 global employees across its company. Like many mature companies, however, it renewed its commitment to racial justice in June 2020 in response to the killing of George Floyd and systemic racism that it brought to light.

A cornerstone of the program is a $150 million investment in racial justice involving employees, suppliers and communities. “We will build on our diversity and inclusion (D&I) momentum from the past five years,” said Microsoft CEO Satya Nadella in a blog announcing the program. Plans include doubling the number of Black and African American leaders in the US by 2025, shifting spending and investing to Black- and African American-owned businesses, and advocating for justice in communities.

“This initiative has helped leaders across the organization to see diversity, equity and inclusion in new ways,” said Microsoft chief diversity officer Lindsay Rae McIntyre. To support the investment, her team will increase staff to oversee new programming, training and partnership opportunities.

Microsoft’s legal department has already put some of that investment to work by expanding an existing effort that incentivizes outside law firms to staff Microsoft projects with diverse teams and to diversify their own leadership ranks. “We’ve seen significant progress on both facets of diversity,” said Microsoft general counsel Dev Stahlkopf, “so this year, we’re increasing our investment by providing a higher financial award for program participants and opening the program to nearly triple the number of firms.”

Disney: Seeing DE&I Through the Customer’s Eyes

While many companies begin their diversity, equity and inclusion journeys by focusing on internal employee issues, consumer companies with diverse and global customers have always had to understand them from a business perspective as well. At The Walt Disney Company, this dual focus has recently translated into two new DE&I-related councils that are re-energizing an established operating model: one led by CEO Bob Chapek to address the people and culture components of DE&I and the other led by executive chairman and chairman of the board Robert Iger to address the content Disney creates as a major media and entertainment producer.

“At Disney we consider the work of DE&I an important part of keeping our business relevant, and we are going to manage it with the same care as we would manage intellectual property,” said Disney chief diversity officer Latondra Newton.

As Disney approaches 100 years in business, part of the work of these councils is to acknowledge the company’s past mistakes to allow for future transformation. “We want to own our history and learn from it,” said Newton. “This will allow us to move forward together to create a more inclusive future that reflects the rich diversity of the human experience around the globe.”

Disney recently began reviewing its content library and adding advisories to content that includes negative depictions or mistreatment of people or cultures. The advisories, which are described at www.disney.com/StoriesMatter, include input from experts from outside the company to help assess content and ensure it accurately represents global audiences.

To maximize the power of each council, Disney uses a DE&I center of excellence model as well as a roundtable of senior HR and Diversity & Inclusion leaders across its businesses to develop resources that are tailored and distributed to Disney’s 200,000 global employees around the world. The roundtable members meet weekly and, along with their direct reports and internal partners, leverage the enterprisewide strategy and best practices from the group for their organizations.

“It’s really important to have broad participation across the organization to make progress,” said Newton. With frequent collaboration among all the DE&I councils, staff and practitioners, she sees Disney as headed for “transformative cultural change.”

Salesforce: Moving Beyond the Business Case

Developing a shared understanding of how diversity, equity and inclusion affect business outcomes is often a key milestone in DE&I maturity. Yet Salesforce – along with a number of other leading companies with established DE&I operations – is moving beyond the business case in response to the events of the summer of 2020. To that end, Salesforce has assembled a Racial Equality and Justice task force led by its Equality, Recruiting, Philanthropy, Procurement and Government Affairs teams. “The task force will help inform us how best to drive racial equality in the workplace and our communities,” said Tony Prophet, chief equality and recruiting officer for Salesforce. “As part of this, we set ambitious representation goals to accelerate progress and report on our progress quarterly for transparency.” This change in philosophy is reflected in Prophet’s new dual role, which includes recruiting to help the tech giant meet its stated goals to double the representation of Black employees in leadership roles and at all levels by the end of 2023.

Authors

Jemi Crookes is a member of Russell Reynolds Associates’ Center for Leadership Insight. She is based in Washington, DC.

Ruben Hillar is a member of Russell Reynolds Associates’ Leadership & Succession practice and leads the Organizational Strategy Service line. He is based in Washington, DC.

Tina Shah Paikeday is Global Head of Diversity, Equity and Inclusion Advisory Services at Russell Reynolds Associates. She is based in San Francisco.

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