Korn Ferry released a survey last week that it conducted among 400 executives on the importance of diversity and inclusion.
Ninety six percent of respondents said that “having a diverse and inclusive workforce can lead to higher employee engagement and improved business results” and 72 percent said that their company has a program in place to promote diversity and inclusion in the organization. Just over half indicated that they have a performance appraisal system in place that includes a component for successfully managing diversity. However, only 23 percent of respondents answered that leader compensation is tied to diversity results.
What does this mean? Diversity and inclusion are important but not important enough to be linked to leader compensation? If organizations really believe that a diverse and inclusive workforce can lead to higher employee engagement and improved business results, would it not make sense to hold leaders accountable as is commonly done for other “bottom line” outcomes.
There are enough studies that demonstrate how diversity and inclusion positively impact the bottom line. One such study was conducted by Quinetta Roberson of Cornell University and Hyeon Jeong Park of Georgia State University using longitudinal data with 100 firms to test the effects of diversity reputation and racial diversity in leadership on company performance. The results shows a positive relationship between diversity reputation and company performance and a curvilinear relationship to racial diversity, meaning that the positive impact on company performance only occurs when the firm achieves greater diversity in its leadership ranks.
Most major companies today espouse that diversity and inclusion are critical to their business and organizational success. If they really believe this to be true and the research supports the claim, why then are companies not more aggressive in formalizing compensation plans that are linked to diversity and inclusion outcomes? What do you think is the reason?
