An Uncontroversial Imperative For American Business

It’s been just over a month since the Office of Management and Budget announced a new Executive Order prohibiting federal agencies from conducting race-related training for their employees. When that memo failed to make the controversial splash that typifies the current administration’s activities, it was only a matter of time until subsequent guidance extended that ban to federal contractors. Likely by design, this later action represented a far greater provocation: some of the world’s biggest companies, many of whom have led the way in driving diversity and inclusion-related learning and understanding for hundreds of thousands of workers around the world, are also some of the U.S. government’s largest suppliers. The order creates a false dichotomy between these organizations’ desire to earn revenue and serve Americans via federal contracting and their desire to earn revenue and serve Americans – including their employees, customers, shareholders and communities – via great workplace practices. 

Many will argue and, indeed, already have argued the case about the moral imperative of workplace diversity training, but the administration has made no bones about its distaste for identity-related dialogue, particularly that which fosters understanding of and opportunity for underrepresented individuals and economically marginalized communities. But contrary to the implication of the September Executive Order, workplace diversity training isn’t anti-American ideological indoctrination; it’s just plain good business, reflecting what industry leaders and their key stakeholders care about most. 

According to a Conference Board survey conducted earlier this year, the number one concern of Chief Executive Officers within their organizations remained the attraction and retention of top talent, followed closely by driving innovation and developing leaders for the future. Add that to collective anxiety about broader economic uncertainty, and the business rationale for inclusion and diversity training is clear. Firms are focused on securing and maintaining the best employees, preparing for tomorrow by staying at the cutting edge of technology and building great next-chapter leaders, and fostering close connection with customers amid more selective consumer spending. 

How can companies rapidly achieve these seemingly unrelated business goals? By building more diverse, inclusive, and equitable organizations. A 2020 report from Boston Consulting Group indicated that 90% of individuals from underrepresented groups would consider leaving their job for one at a more inclusive organization. A second BCG study, this one from 2017, showed that new innovations from companies with diverse management teams increased revenues by 38%. And as for sales, a 2013 study published in the Harvard Business Review demonstrated that teams with a member of the group related to a segment of their target market increased customer acquisition by more than 150%. 

On the surface, those improvements might seem like they’re more about diversity in representation than training per se. That might imply a preference for appointing racially and gender-diverse Boards and executive teams but avoiding ostensibly controversial training on race, gender, and other identity differences. But nearly two decades of research in the field – demonstrates time and again that diverse groups create more conflict and perform worse than homogenous groups except when they build understanding of their differences and align to desired results. There’s no shortcut: clarity of roles and alignment of purpose are essential but insufficient unless they are also accompanied by respectful challenge and team cohesion. Employees and leadership teams don’t get there without genuine understanding of one another, and none of us build genuine understanding without learning the language and skills to do so in a way that brings people together, rather than driving us further apart. And how do we build that shared language and related skills? Through training. 

That leaves two alternatives. The first is to avoid diversity-related strife by maintaining largely monolithic teams. But that’s no longer an option considering investor demands about diversity. (For instance, a January 2020 announcement from Goldman Sachs indicated that the firm will no longer take companies public without any women on the Board.)  The second is for American businesses to avail ourselves of the legitimate and well-documented benefits of diverse, inclusive leadership teams and organizational cultures. First, we need to prioritize cognitive and identity diversity in hiring, advancement, and team development; then we need to improve the likely success of these diverse teams by conducting skill-based training on race, gender, religion, veteran status, sexual orientation, ability, and other identity differences to foster the kind of understanding that delivers differentiated performance. 

That’s not just great human relations, and it’s not just great leadership. It’s great business.

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