Differentiating ‘Diversity’ and ‘Inclusion’ Helps Address Both

Art by Karlotta Freier

An analysis published earlier this year by a trio of experts at McKinsey and Co. argues that, in order for a diverse workforce to flourish, companies must also enhance inclusion.

As the experts explain, research overwhelmingly supports the conclusion that successful companies benefit from a diverse workforce. They note how, both inspired and compelled by stronger norms on social justice, more and more companies are focused on recruiting and promoting a workforce composed of individuals from differing backgrounds, experiences and identities.

The McKinsey experts say this is an important development for the financial services industry and one that should result in a more equitable and representative industry. However, when it comes to long-term change and the durability of such efforts, “diversity” alone is not the full story.

To make their point, the McKinsey experts use the example of an anonymous U.S.-based biotech company that was elated with its steadily increasing representation of underrepresented groups, including Black and Latino professionals. But, despite exceeding industry benchmarks and nearing a percentage that was representative of the U.S. population, the company was not seeing the expected improvements in company performance.

What was it missing? According to the McKinsey experts, the company failed to meaningfully address the concept of “inclusion,” which they define as the degree to which employees are embraced and enabled to make meaningful contributions.

“When we comprehensively measured inclusion at the same biotech company, we found a large gap in the experiences of inclusion between underrepresented minority employees and their white counterparts,” the analysts explain. “This was the missing piece to the puzzle. Once the company implemented targeted interventions to enhance feelings of inclusion for their employees, they started to see the performance benefits of a more diverse workforce.”

According to the McKinsey experts, the story of this biotech company is far from unique.

“Seeing so many companies ignore inclusion or struggle to measure it inspired us to embark on a robust research journey to create a scientifically valid inclusion framework and assessment,” they explain. “The result is a tool that can be used to reveal actionable insights to help organizations drive targeted changes in an impactful way for employees. Indeed, we find that employees in organizations with higher (versus lower) scores on our inclusion assessment are 45% more likely to stay at their organization and 90% more likely to go out of their way to help a colleague.”

The experts’ inclusion model is not overwhelmingly complex, covering two key employee elements. The metric of “personal experience” captures how employees individually experience belonging—that is, whether they feel encouraged to bring their full, authentic selves to work and how empowered they are to make meaningful contributions. The second metric of “enterprise perception” captures how employees view the strength of acceptance, camaraderie and fairness across the full enterprise.

“Comparing these two elements can highlight discrepancies that may occur between them,” the experts note. “For example, an employee may perceive that an organization broadly has the systems in place to facilitate inclusion (e.g., fair and unbiased performance evaluations) while simultaneously feeling that they are not personally included (e.g., not having a voice in team decisions).”

A related analysis published by Talent Management discusses the negative effects of a “toxic workplace,” as well as the positive results that can an employer can derive from building a truly inclusive environment for its employees.

As the analysis explains, building a supportive culture is key to creating a diverse, equitable and inclusive work environment.

“While everyone is harmed when exposed to a negative workplace, people from underrepresented or marginalized groups are particularly at risk,” the analysis warns. “Providing them with support means committing to education, training and other initiatives that engage everyone in the organization. It also includes self-reflection [by management] on what it means to provide meaningful support.”

According to the Talent Management experts, in practice, shaping a diverse, equitable and inclusive environment requires individuals and organizations to advance the interests of others, speak up for marginalized groups, commit to improving circumstances for everyone—and follow up on those commitments with actions.

“Anyone in the organization can and should do this, regardless of their background or identity,” the analysis suggests. “It’s worth mentioning that there’s been much debate on the terms ‘ally’ and ‘advocate,’ with varying definitions. At the heart of it, both concepts involve moving forward with supportive actions. As you look at this framework, consider, where do your employees lie on this spectrum and where do you want them to be?”

A second analysis from Talent Management asks, if a company doesn’t have the resources to implement an elaborate allyship/advocacy program, can it still make solid progress advancing inclusion through education and incremental change? The answer is yes, according to the experts, especially if the following questions are considered and addressed in turn:

• Do you have support from leadership to elevate your diversity, equity and inclusion (DE&I) program?
• What kind of ongoing DE&I education and training are you offering employees?
• Is your education and training effective at a higher level, in that it’s nuanced, believable, relatable and applicable for all employees?
• Does your training address microaggressions and offer guidance for understanding people with different identities?
• Is training provided in a safe space where people feel comfortable learning at their own pace?
• Are you giving enough time for employees to reflect on what they have learned?
• Are you providing concrete steps and the ongoing support they’ll need to be conscientious observers, supportive allies and appropriate advocates?
• Do your employees know where to get clarification if they’re faced with uncomfortable situations?
• Do you have a clearly understood and easily accessible system for reporting harassment or bullying?
• Have you assessed a baseline for your program and determined how you will measure success?