Companies with inclusive leaders perform better
The Hill published a bylined article, “Companies with inclusive leaders perform better,” authored by Russell Reynolds Associates Consultant
Anthony Abbatiello on why inclusive leadership is crucial and the best strategy for companies. The article is excerpted below.
The crossroads between senior leadership and inclusion has never been as critical as it is today. On a seemingly weekly basis, organizations are receiving negative press and pressure to take action due to behaviors by senior leadership related to topics of diversity and inclusion (D&I), such as harassment, discrimination and bias.
The impact of taking a reactive approach to D&I is swift and significant. Studies examining CEO indiscretions related to harassment and discrimination estimate that the average shareholder value companies stand to lose is 4.1 percent overnight, which translates to, on average, $226 million in market capitalization.
The stakes are even higher in recent years, with single cases of sexual harassment or inappropriate language leading to as much as $4 billion
lost in market capitalization, or 7 percent of market value on average.
Organizations likely undervalue specific senior leadership competencies around D&I. As a comparison, take the current organizational investment in mitigating other corporate risks, such as
cyberattacks and data fraud.
A recent study by Verizon suggests that the average loss in market capitalization following a
cyberattack is only about 1 percent. Why, then, does organizational risk associated with D&I
not receive the same level of attention?
We are encouraging our clients to think more proactively about selecting and developing inclusive leaders, which must consist of providing clear feedback and a roadmap around inclusive leadership behaviors.
We recognize that most cautionary tales on D&I only serve as a lesson in “what not to do,” but there is little clarity on “what to do.” Our second annual Diversity and Inclusion Pulse study, which captures feedback on leadership styles from over 1,800 senior leaders worldwide, finds that a specific collection of leadership traits come together to define inclusive leadership.
To read the full article,