I’ve spoken to many clients and colleagues recently who are lamenting that much of the progress for women, diversity and inclusion will be eroded by the imminent recession following the COVID-19 pandemic. Looking back to the last global recession of 2008-9 (the Global Financial Crisis) is like looking backwards into a crystal ball. What did happen? And how can we prevent the erosion of the advances that have been made for women, for minorities, and for diversity and inclusion in the workplace?
In a fascinating study by US-based researchers from Great Place to Work, it was found that the companies that thrived post GFC were those that doubled down on their commitment to a diverse workforce, and ensured that a positive culture of inclusion was extended to all employees throughout the downturn. Companies that continued to employ and include diverse workers from historically marginalised groups such as women and ethnic minorities, experienced an incredible 14.4% gain whilst the S&P500 suffered a 35.5% decline in stock market performance.
With these kinds of metrics readily available, why then, are my HR colleagues predicting a backward step in the diversity stakes? There seems to be two assumptions that relate to negative expectations and underlying bias about managing risk. The first is based on assumptions about what organisations should look like, and the second relates to the age-old assumption that diversity is a cost to the business, not a producer of organisational value and profit.
In order to manage risk, our imaginations must project into the future what we think will be a safe way for our business to operate. Quite unconsciously, our imaginations fill this unknown future with the least “risky-looking” employees. When my colleagues and clients lament in advance that their diversity strides will be eroded through a recession, what they are unconsciously expressing is a bias that the default ‘safe’ way for a business to operate is without diversity in the employee group. The unconscious, but working hypothesis, seems to be that, the most risk-averse organisations are not diverse, when in fact, we know that the riskiest organisations are full of people who look the same and think the same. The prevalence of this largely unconscious bias means that for most organisations to manage this risk, any staff cutting exercises must be vigorously checked against disproportionate impact on women and minority groups across all levels, in case unconscious bias has crept into the process. With appropriate due diligence, re-structuring can present a chance both to preserve and improve equity across the board.
The second view point that I keep tripping over, is that in an era when companies anticipate that they will be cutting costs, D&I initiatives are assumed to be vulnerable. With hundreds of studies that show over and over again that D&I initiatives add to, not detract from the company bottom line, it’s evident that a strategic approach to D&I is a solid investment in the company future. Who can afford to lose the diverse thinking required for innovation and problem solving to get through business instability or a downturn? We know we can’t afford to lose this thinking, and yet, the assumption creeps in that the D&I budget will be cut first. This kind of assumption creates a self-fulfilling prophecy when the inevitable budget-cutting horse trading takes place across the senior HR executive tables; and D&I roll over first because it’s just assumed from the outset that they will.
When we stop viewing D&I as a “nice to have” and instead a strategic way to generate employee innovation, problem solving, and company survival; then we can preserve the progress we have made for marginalised groups in the workplace. This will require leaders to check their thinking, and rigorously defend their D&I budgets and diverse employee groups with backbone, for the foreseeable future. Looking back, companies that survived the GFC with 3 to 4 times better results than those that did not were committed and meticulous about creating inclusion and boosting their drive towards diversity. Without rigorous defence of the D&I budget and practices as we approach a downturn this time around, company-wide financial outcomes will be put at peril. It will be inspiring to watch those companies who will use D&I as the key to thrive through their post COVID-19 recovery.