Waiter, Is That Inclusion in My Soup? a New Recipe to Improve Business Performance

Waiter, is that inclusion in my soup? A new recipe to improve business performance Research report Sydney launch: May 2013 Joint foreword Contents Deloitte Australia (Deloitte) and the Victorian Equal Opportunity and Human Rights Commission are Opening up the cookbook to the first page 1 proud to launch Waiter, is that inclusion in my soup? A new recipe to improve business performance. Cooking up a storm 5 This joint initiative reflects our shared view that a Inclusion – the missing ingredient 11 focus on diversity and inclusion is both a business and fairness issue. I want some soup too 14 A few practical ideas 20 We wish to thank the three diverse Australian businesses that participated in this research project, Final words 24 and of course the 1,550 employees who responded Methodology and contacts 26 to Deloitte’s Diversity, Inclusion and Business Performance survey. Their generosity means that Australian organisations, both private and public, can accelerate their own business performance through diversity and inclusion. Our innovative research charts new territory and hence, to some degree, it is a work in progress. Our aim in releasing it now is to help re-orient businesses away from their greater level of attention to diversity compared with inclusion, not realising that both are equally critical for business success. In addition to the bias towards diversity, we also see a lack of certainty about the concept of inclusion (hence the question: Waiter, is that inclusion in my soup?). Our research identifies the key indicators and drivers of inclusion, and thus helps pave the way for practical changes. Giam Swiegers (CEO, Deloitte Australia) Karen Toohey (Victorian Equal Opportunity and Human Rights Acting Commissioner) Opening up the cookbook to the first page Waiter, is that inclusion in my soup? 1 Setting the scene The pressure is on Taking a step back…then moving forward Doing more with less, fiscal pressure and constraint, In order to contextualise this research, we first need uncertainty, volatility… still common themes for to take a step back. Of course the starting point for a organisations across the globe in 2012/2013. It has general diversity and inclusion story is open to robust shaken our confidence1 and clarity of response. debate (turn of the century? The 60s?), so let’s just Unexpectedly diversity and inclusion are emerging stick with what we have observed over the past three as beacons of hope. A little farfetched? Our ground- years of significant change. breaking research in three diverse workplaces (manufacturing, retail and healthcare) demonstrates Around 2010, a host of countries started introducing the tangible uplift in business performance when measures (e.g. legislation) to increase female employees think that their workplace is highly representation on boards2. Contemporaneously, committed to, and supportive of, diversity and business leaders were reflecting on the Global they feel highly included. Financial Crisis and business failures, both in terms of antecedents and preventative measures. Decision- If you are still sceptical, then here is the ultimate punch making and bias was a common area of discussion line. When Deloitte modelled the relationship between across both domains. The impact of the simultaneous diversity and inclusion and business performance, exploration of these complex issues by brilliant we identified an ‘uplift’ of 80% when both conditions minds from diverse disciplines, and the demand from were high. More specifically, employees who perceive business for immediate effective interventions, has their organisation is committed to, and supportive of, been a catalyst for deep insights and change. diversity and who feel included, are 80% more likely to believe they work in a high performing organisation, Deloitte captured some of these insights in previous in comparison to a workplace perceived as having low thought leadership articles3. These analyses not only commitment and support for diversity and employees helped Deloitte to understand and synthesise the not feeling included. Even when there is high diversity plethora of new ideas, but also to identify knowledge and low inclusion, or low diversity and high inclusion, and practice gaps. the business outcomes are never as impressive as the high diversity and high inclusion combination. Firstly, we observed that organisations gave much more weight to diversity than inclusion, and yet the We knew we were onto something, but this result research pointed to diversity + inclusion = improved stopped us in our tracks. So we modelled customer business performance. Secondly we observed that service, innovation and engagement. Same deal, academics and workplace experts struggled to perceptions of business outcomes are always articulate a clear definition of inclusion. Our hunch 1 Deloitte Australia, The CFO significantly higher with high diversity and high was that if organisations failed to get the diversity and Survey Q3 2012: Proceed with caution inclusion. Clearly the relationship is not a wildcard. inclusion balance right, and to increase their focus on 2 Deloitte Touche Tohmatsu inclusion, then the game-changing potential of this (2011) Women in the These data lead us to argue that a greater focus on ‘moment in time’ would be lost. Boardroom: A global diversity and inclusion – and knowing what this perspective really means from a practical point of view – is the 3 Leadership: Do men and way forward. women do it differently? (2011); Working in an ideological echo chamber? Our hunch was that if organisations failed to get the Diversity of thought as a breakthrough strategy diversity and inclusion balance right, and to increase (2011); Only skin deep? Re-examining the business their focus on inclusion, then the game-changing case for diversity (2011) and Inclusive leadership: Will a potential of this ‘moment in time’ would be lost hug do? (2012) 2 So to move forward, we suggest a new recipe for success in which there is an equal focus on diversity and inclusion, facilitated by a clear understanding of the concept of inclusion and its drivers. That’s what this report, Waiter, is that inclusion in my soup? A new recipe to improve business performance, is all about. Rebalancing the overweighting of attention Improved Providing Diversity Inclusion business speciﬁcity of outcomes outcomes Providing clarity of understanding Waiter, is that inclusion in my soup? 3 Key findings Diversity + inclusion Organisations need Inclusion is tangible Work-life balance Data directs an = improved business to increase their is a key signal organisation’s biggest performance focus on inclusion bang for buck When employees think Rebalancing the The concept of inclusion An employee’s ability to Data can help their organisation is focus on diversity and incorporates both an balance their work-life organisations direct their committed to, and inclusion, rather than active process of change commitments is a key efforts to unleash the supportive of diversity prioritising diversity, (verb: to include) and an driver of an employee’s diversity and inclusion and they feel included, will enable organisations emotional outcome feeling of inclusion. potential with greater employees report better to unleash their diversity (I feel included). It signals that an precision and confidence. business performance potential. employee is seen as The starting point is in terms of ability to More specifically, a whole person with collecting organisation innovate, (83% uplift) This means that if feelings of inclusion are a life within and specific data to identify responsiveness to an organisation has driven by perceptions of outside the workplace. the change interventions changing customer overweighted their (i) fairness and respect Work-life balance is also which will deliver the needs (31% uplift) attention to diversity, and (ii) value and read as a signal of the biggest bang for buck. and team collaboration additional effort is belonging. These two organisation’s support (42% uplift). needed to focus on elements build upon one for diversity. inclusion. another sequentially. 4 Cooking up a storm Waiter, is that inclusion in my soup? 5 Charting a new direction As noted in the foreword, this research is exploratory Figure 1 and to some degree a work in progress. That means Q: ‘I work in a high performing organisation’ that whilst we have a long wish list of outcomes and indicators of business performance, this research High performing organisation covers only some and is weighted towards employee perceptions. Nevertheless, these employee insights are High compelling as it is reasonable to assume that they have a clear view of workplace operations from the inside. The end goal In terms of perceptual indicators, we asked 1.49x 1.80x employees about their views on the end goal, namely business performance (Q: I work in a high performing organisation). Diversity A picture tells a thousand words: when employees The uplift think that their organisation is highly committed to, and supportive of diversity, and they feel highly included, Low 1x 1.27x then they are 80% more likely to agree that they work in a high performing organisation than if they Low Inclusion High perceive low support and commitment for diversity and low inclusion. Compare the statistically significant difference between the bottom left quadrant (the baseline of low diversity and low inclusion, which we have named 1x) with the top right quadrant (high diversity and high inclusion). This outcome is coming from

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