The murder of George Floyd in May 2020, coupled with the COVID-19 pandemic, sparked a global wave of awareness of the systemic inequalities that permeate virtually every aspect of society. But has this awareness translated into tangible progress in the workplace? As the field of Diversity, Equity and Inclusion (DCI) – comprising both consulting and technology companies – has grown in leaps and bounds over the past year, the evidence still lacking on the material impact in terms of representation and participation of under-represented groups in the workplace.
A number of companies have made significant financial commitments to DCI initiatives, although it appears that a majority of funds are spent on external efforts, such as supporting minority-owned businesses or businesses. educational initiatives aimed at increasing the representation of traditionally under-represented groups in disciplines. To the extent that companies have made internal efforts, some of DCI’s initiatives appear to be primarily performative in nature and unlikely to lead to significant change.
The most common DEI approach focuses on various types of unconscious bias training, the validity of which has recently been questioned. More disturbing is the observation that unconscious bias training, along with various other types of sensitivity training, requires individuals to become aware of and correct their alleged shortcomings. Essentially, this exempts companies from taking responsibility for the processes and systems that support or perpetuate systemic biases.
In this somewhat bleak backdrop, some companies are standing out in their commitment to DCI by putting their money where they say it, in a way. Recently, I had the pleasure of speaking with three companies, representing a wide range of sizes and industries, that tie compensation to DCI’s goals. Specifically, I spoke with executives at digital healthcare platform Ovia Health (recently acquired by Labcorp), electric utility company FirstEnergy Corp and fast food giant McDonald’s, to find out how and how they do it, and the benefits they anticipate. .
As a co-founder of Ovia, Paris Wallace is keenly aware that supporting DCI in the workplace is a business imperative, and not just the right thing to do from a societal perspective. He believes that like everything that matters in business, companies should be prepared to invest money in DEI. “DCI is essential to our success. It is an integral part of our strategy. So, as we would with any other strategic initiative, we put money, people and time into it. “
Concretely, each Ovia department has set objectives for at least one key performance indicator (KPI) linked to the DEI. For example, the marketing team strives to increase author and content diversity each quarter; the clinical team uses data and research to drive inclusive change in healthcare; while the HR and Operations team targets diversity-focused job sites, tracks candidate demographics, and monitors annual compensation to ensure pay equity.
Ovia regularly reviews DCI division and company performance and uses the goals to determine 10% bonuses for everyone in the organization. In Wallace’s words, “if you’re not prepared to pay for it, it’s not a real commitment.”
Wallace also understands that you cannot have responsibility without agency and authority. To this end, Ovia avoids external consultants, focusing primarily on the internal efforts of its best employees to develop strategic recommendations and attack plans.
FirstEnergy is an Ohio-based electric utility that serves more than six million customers in six states. In his role as Senior Vice President, Chief Human Resources Officer & Corporate Services, Chris Walker shared his passion for DCI and the central role DCI plays throughout his organization: “We have been on our DCI journey for several years and our focus is to weave the DEI into the fabric and culture of our organization. DCI is one of the five core values of our company, and although the function falls under HR, it is not an HR initiative. This is a company-wide priority in which every employee owns and is involved.
To support their commitment to DCI, FirstEnergy introduced in 2018 a Diversity and Inclusion KPI (D&I KPI) in its Short Term Incentive Program (STIP) to increase leadership accountability for DCI efforts. . The D&I key performance indicator, which was weighted at 10% of the STIP in 2018 and increased to 15% in 2019, takes into account three factors: the number of various professional hires, the number of candidates for the various succession plan and improvements to some key metrics from their annual D&I employee survey.
Initially, the D&I KPI was applied to anyone with a managerial title and above, with the aim of creating accountability at a broad level of leadership. This choice also recognized that those whose compensation is impacted by the D&I KPI must have the ability to influence and monitor D&I performance, and they must be able to see how their actions and behaviors directly impact results. This year, FirstEnergy expanded the D&I KPI to include anyone with the title of Supervisor or above, albeit with a lower weight (5%) for those additional employees.
Walker views the D&I KPI program as the key to supporting business strategies, mission, goals, values and behaviors. Additionally, she recognizes that leadership buy-in is critical to the success of any DCI initiative and believes that “leaders will more easily support the goals if they understand the big picture and the benefits of a more diverse organization and inclusive ”.
McDonald’s is a more recent entrant in the field of companies that tie compensation to DEI metrics. In February, McDonald’s announced that the compensation of its ten executive vice presidents will be tied to human capital management measures starting this year (2021). This announcement was linked to the introduction by McDonald’s of their Alliance through responsibility which recognizes that “McDonald’s has both a business obligation and a social responsibility to do more to make our world a fairer place.
As part of this initiative, McDonald’s released data on the current levels of representation of women and historically under-represented groups in the United States, and released ambitious goals, with the ultimate goal of achieving parity between women and men. gender in leadership roles in the United States and globally by 2030, and to increase the representation of historically under-represented groups in the United States to 35% by 2025.
While the total number of individuals whose compensation is tied to DCI may appear modest, holding the highest levels of the organization accountable for DCI goals is crucial to McDonald’s ability to meet its goals.
In the words of Reginal J. Miller, Vice President and Global Head of Diversity, Equity and Inclusion at McDonald’s, “Our commitment to fostering accountability for DCI is rooted in our responsibility to live our values. . We initially focused on culture and representation metrics, but now aligning DCI’s goals with our business strategy allows us not only to empower leaders, but also to ensure that everyone in our company plays a role. active in promoting diversity, equity and inclusion.
It is also encouraging to see that while DCI’s goals are framed in terms of representation, McDonald’s management clearly understands the importance of considering all aspects of the workplace experience, rather than focusing primarily on on recruiting, as other companies do. In fact, in a recent communication, McDonald’s stated that “functional work will need to focus on retention, development and succession planning efforts.”
The start of a trend?
While the details differ, it is encouraging to see three companies of such different sizes and in different industries realize that unless DEI is tied to compensation, progress will be slow or nonexistent. It is significant that all three companies see IEI as a core business benefit, and not just a matter of corporate social responsibility.
Another positive sign is that these three companies recognize the importance of empowering leaders. The initial focus on senior management as a strategy aligns with my team’s research findings, demonstrating that managers and leaders are the most common sources of exclusionary experiences in virtually any business. Additionally, those in leadership positions are best placed to understand and shape the processes and systems that allow stigma to creep into the workplace.
These practices are in stark contrast to the common approach of hiring Chief Diversity Officers or CEOs who are held accountable for diversity goals, but rarely have a large budget and often do not report directly to the CEO. Giving these people a tough set of problems without the right resources and authority is a recipe for failure.
I hope Ovia, FirstEnergy and McDonald’s are warning signs of a more significant change in corporate attitudes towards DCI. I also hope that their efforts will lead to superior measurable results and that by leading by example, they will start a trend that many other organizations will follow.