Measuring the Value of Both Types of Diversity

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Oct 10, 2016

In 1979, a Korn Ferry International survey of Fortune 1000 firms found that females and African-Americans comprised less than 0.5% and 0.2% respectively of the list’s 1,708 senior executives.

In the subsequent 37 years, progress has been forthcoming, but slow. Although not a direct comparison to the Korn Ferry survey, Heidrick & Struggles reported in 2015 that women constituted 29.2% of all new board-level directors, while African-American representation among those joining corporate boards had plateaued at 8.3%.

Clearly, there is much more that needs to be done to create senior leadership teams representative of the diversity within our societies. However, as the composition of boardrooms has changed, so too has the definition of “diversity” itself.

This was brought home to me at two recent conferences, where workforce analytics leaders at financial services companies spoke of measuring “inherent” versus “acquired” diversity as a form of inclusion. I wrote about one of these examples here, and how we are redefining traditional HR concepts.

Seeking out the history of inherent/acquired diversity, Rob Balmer’s March 2016 blog pointed to a Harvard Business Review article by Hewlett, Marshall & Sherbin entitled “How Diversity Can Drive Innovation.” Via a survey of 1,800 professionals, 40 case studies, and numerous focus groups and interviews, the trio found a self-reported correlation among companies whose leaders exhibit inherent and acquired diversity and year-over-year growth in market share.

Inherent and acquired defined

But let’s go back to the definitions of these two traits. As written in the article:

  • Inherent diversity involves traits you are born with, such as gender, ethnicity, and sexual orientation.
  • Acquired diversity involves traits you gain from experience: Working in another country can help you appreciate cultural differences, for example, while selling to female consumers can give you gender smarts.

Anesa Diaz-Uda, Carmen Medina, Beth Schill (in their 2013 Deloitte article “Diversity of Thought and the Future of the Workforce”) and others have written that possessing a combination of inherent AND acquired diversity affords organizations the opportunity to spur innovation and avoid groupthink through cultures that welcome out of the box ideas.

Measuring the two types of diversity

When it comes to measuring diversity, organizations typically begin with data that illustrates progress with inherent diversity – recruiting slates comprised of minority candidates, ratios of females-to-males in leadership roles, diversity within sales/customer service teams, etc.

Measuring acquired diversity opens up a much broader – and more interesting – set of analytics, especially those that relate to organizational agility. The unparalleled pace of change facing many global organizations requires fresh thinking about creating a workforce that can move swiftly into new business models, regions, and markets. Nowhere is acquired diversity more important than in these environments of constant change. Whether that is publishing firms shifting from hard copy texts to digital content, or utilities adapting to innovations in battery-powered cars that will change how power is delivered to consumers – the workforce must transform its skillset accordingly.

So how should firms measure acquired diversity and organizational agility? I think we are just scratching the surface here, but here are some ideas:

  • Calculating degrees of experience (based on the number of unique roles an employee has held, rather than the more mundane “cumulative tenure”).
  • Speed-to-productivity.
  • Frequency of internal movement to regions/businesses with very different cultures.
  • Success with stretch projects.

Capturing and studying data such as this can quantify the extent to which employees have acquired diverse experiences necessary to improve your organization’s overall level of agility – the ability to quickly adapt to new circumstances.

This is just another way that workforce analytics can influence how HR reacts to the new diversity paradigm. We’ve come a long way since Korn Ferry’s 1979 survey, but there is still much work to be done to embrace and promote inherent and acquired diversity in leadership, in HR practices and across the entire organization.