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Business Journal

To Leverage Diversity, Think Inclusively

Inclusiveness is good for the corporate balance sheet as well as the corporate soul

by Jack Ludwig and Vijay S. Talluri

White men were once a majority in America's workforce, but for decades their numbers have been dwindling. According to the Bureau of Labor Statistics, by 2005, white males will make up only 38% of the workforce and, by 2008, women and people of color will account for about 70% of new workers. In other words, knowing how to manage diversity gains more importance with each passing year. Yet most corporate diversity programs simply shield companies from legal penalties under federal nondiscrimination statutes, when what's really needed is a way to move beyond the defensive goal of expunging discrimination toward the next step -- inclusiveness.

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Inclusiveness is a strategy to unleash the power of diversity to generate business value. It involves creating opportunities throughout an organization so that the talents of all employees can be fully realized. And it extends beyond strictly embracing legal dictates associated with the "protected categories" of discrimination law, which include race, gender, religion, age, and disability.

Of course the issues surrounding protected categories are important. Gallup surveys show that many members of these categories, particularly African-Americans, feel discriminated against in the workplace. In the fall of 2001, for example, we conducted a poll of 2,004 randomly selected adults in the U.S., which revealed that 44% of blacks but only 10% of whites feel that blacks are treated unfairly on the job.

But protected categories represent a relatively narrow subset of differences between workers; diversity covers the entire spectrum of human differences, including physical characteristics, educational backgrounds, experiences, and preferences. As a tool to leverage diversity, inclusiveness focuses on using the unique strengths of each employee to increase the productivity and profitability of an organization.

ILLUSTRATION

How does an executive exercise the power that comes from these strengths? As the old business adage has it, "If you don't measure it, you can't manage it." In 2000 a mid-size health-care services company asked us to design a survey to measure inclusiveness. Analysis of the results showed that attitudes about inclusiveness varied across the company, and that workgroups with the lowest inclusiveness scores had lower productivity and retention scores than those with higher inclusiveness scores.

Our research in this case and in other surveys conducted since then is laying the foundation for a system to measure an organization's success at creating and maintaining inclusive environments. Based on thousands of employee interviews, we identified a list of 10 questions that, when asked of employees, indicate how inclusive a company is and how effective it is at managing diversity. The questions that constitute Gallup's Inclusiveness10, or I10, are:

  1. Do you always trust your company to be fair to all employees?
  2. At work, are all employees always treated with respect?
  3. Does your supervisor keep all employees well informed?
  4. Do you feel free to express your views at work?
  5. Does your company treasure diverse opinions and ideas?
  6. At work, are you encouraged to use your unique talents?
  7. Do you always feel valued in your company?
  8. Is your supervisor open to new ideas and suggestions?
  9. Does your supervisor always make the best use of employees' skills?
  10. Does your company delight in making the best use of employees' backgrounds and talents?

By regularly auditing employees' answers to these questions, an organization can assess the degree to which employees feel included. It can also garner valuable information about legal compliance issues, even though the I10 does not address such issues directly. The research shows that answers to the I10 correlate strongly with perceptions of fairness in hiring and promotion.

More to the point: Once such regular audits are in place, organizations can begin to study their progress in inclusiveness and how it relates to positive business outcomes. And that's the key. Studying the measurable links between inclusiveness and positive business outcomes (such as retention, profitability, and productivity) is the secret to harnessing the business value of workforce diversity.

To further explore these links, we recently conducted a poll using the I10 in a random nationwide survey of 2,014 working Americans. Employees who felt most included, those in the actively inclusive category, were nearly three times as likely as those in the not inclusive category to strongly agree with the statement that they "planned to be with their current company one year from now." What's more, while only 3% of not inclusive respondents gave strong endorsement to the statement "I would recommend my company as a place to work to friends and family," 86% of those who worked in actively inclusive workplaces strongly agreed.

INCLUSIVENESS INDEX
THE MOST INCLUSIVE WORKPLACES GENERATE THE MOST LOYAL EMPLOYEES
BUT ONLY 20% OF AMERICAN EMPLOYEES CONSIDER THEIR WORKPLACES AMONG THE MOST INCLUSIVE
CHART CHART

Corroborating these powerful links between individual feelings of workplace inclusiveness and important business outcomes is the finding that 85% of actively inclusive respondents are engaged in their job. (Gallup measures engagement, a feeling of being fully involved in one's job, through responses to the questions that make up the Q12. See "Feedback for Real" and "Taking Feedback to the Bottom Line" in the "See Also" area on this page.) More than a decade of Gallup research demonstrates that engagement leads to measurable improvement in business outcomes, including lower turnover, stronger customer loyalty, higher sales and better profit margins. So the strong link between inclusiveness and engagement makes the story simple: The bottom line stands to gain when an organization turns its attention to leveraging diversity.

In the business environment of the 21st century, companies that rely on defensive antidiscrimination programs to handle differences, or worse, ignore them, will lose opportunities for growth. With periodic inclusiveness audits, corporate executives can leverage for business success what the global economy is teaching us to appreciate as a valuable end in itself: the diversity of the workforce and our population at large.

Results of Gallup's National Survey of Workplace Inclusiveness are based on 2,014 telephone interviews conducted July 26-August 23, 2001, in English, with a randomly selected sample of employed adults (except the exclusively self-employed) in the continental United States. Results were aligned to relevant U.S. Department of Commerce estimates of demographic characteristics. For results based on a sample of this size, one can say with 95% confidence that the margin of sampling error for percentage estimates is not greater than plus or minus three percentage points.

Jack Ludwig is a Senior Methodologist and Director of Research for Gallup's Poll Social Audits.
Vijay S. Talluri, D.B.A., was a Research Director for Gallup.
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