Diverse and inclusive workplaces help companies retain and attract employees; better relate to a changing customer demographic and to colleagues; generate a positive return on investment; and, over time, might even be necessary to business survival, according to a pair of Puget Sound consultants in human resources and workplace culture.
“One thing we’ve learned from a business standpoint is a diversity in perspective makes an organization stronger,” said Jason Jocson, a senior human resources consultant in Kent with BBSI, a professional employer organization that partners with small- and medium-size businesses to provide payroll, risk, risk management, and business consulting.
“The diversity and perspectives within the organization help the livelihood of a company, small or large, and I think a lot of small-business owners have yet to tap into that notion,” Jocson said, noting the issue’s increasing importance as Puget Sound’s population continues to get more diverse.
“One of the things that we’ve seen is that if your employee makeup is similar to your customer base, your customers tend to hang on to you as a provider and basically feel welcomed, and feel at home, because they know that you are representing him or her,” Jocson said.
Diversity and inclusion (D&I) comprise an up-and-coming trend, and the topic will continue to evolve in the next five to 10 years as new generations come into play, Jocson said, calling D&I a pillar of workplace culture. “It is one of those things that we as HR practitioners need to look at … from a business mindset and as a business need for survival.”
Dane Wolfrom, a consultant who helps companies wanting to establish D&I programs, said data support the benefits of diverse and inclusive workplaces.
“The science is you’re going to be more productive, you’re going to have better outcomes, whatever your business is, we can even show that to you,” said Wolfrom, senior manager at Tacoma-based startup Truclusion, which is expected to formally launch first quarter 2020 to help companies create more diverse and inclusive workplaces. He and Truclusion’s other principals have individually and collaboratively consulted companies in the tech, education, and nonprofit industries over the last year, ahead of forming their new company and melding their expertise in diversity, equity, and inclusion (DEI).
Wolfrom, who entered the DEI space several years ago and received an executive certificate in strategic diversity and inclusion management from Georgetown University, also leads the Seattle chapter of the Culture Collective, a roughly year-old global ecosystem for professionals — especially those in culture, diversity, or inclusion — for workshops, discussions, and idea-sharing on lessons learned on transforming and building great cultures in the workplace. So far, the Seattle group has about 60 members representing about 30 to 40 companies, he estimated.
There’s a return on investment for issues like employee retention, Wolfrom noted. Creating an atmosphere of inclusion — which he called both a sense of belonging and being valued, and one of the three pillars of retention — companies can reduce the cost of onboarding new people. The other pillars are enjoyment (a person likes what he or she does), and opportunity, such as for promotion or doing significant work. Ideally, a company has all three elements.
In a 2018 report by McKinsey & Co. expanding on its 2015 report researching the impact of diversity in the workplace, McKinsey confirmed, “Gender, ethnic, and cultural diversity, particularly within executive teams, continue to be correlated to financial performance across multiple countries worldwide.” It said it believes its 2015 hypotheses about what drives this correlation remain relevant: that more diverse companies are better able to attract top talent; to improve their customer orientation, employee satisfaction, and decision-making; and to secure their license to operate.
Aside from ROI, Wolfrom said D&I is the right thing to do.
Molly Moon Neitzel doesn’t need to be persuaded of that. Overseeing eight (soon to be nine) Molly Moon’s Homemade Ice Cream stores in the metro area — including one each in Bellevue and Redmond, and a third Eastside location planned this year — Neitzel has made diversity and inclusion a priority in her 11-year-old business since day one.
As a woman running a company with almost $10 million in annual revenue, she takes to heart the many business articles she reads that say, the more diverse a leadership team is in a for-profit company, the more profitable that company is.
“Work on equity and inclusion is slow work, and you can’t be hoping for instant-gratification results,” which can be hard for entrepreneurs running companies who give direction and expect results on specific timeframes,” Neitzel said. “That is not the way that this work works. You have to be patient, you have to include a lot more people in the decision-making processes to get it right, and you kind of have to wait for your results to show up.”
That’s challenging and a different way of thinking from most parts of running the business, she said.
But her efforts are working. Molly Moon’s — which has about 110 employees year-round and hires about 100 more for summer — set out to have a more diverse “Mooncrew,” as employees refer to themselves, than the City of Seattle and succeeded in the last three years, she said, putting her nonwhite staff at about 38 percent.
“We want our shops to be welcoming and inclusive for all — Mooncrew and customers alike — and we know that when any team is diverse in life experiences and perspectives, that team is healthier and stronger,” the company’s website reads.
The crew also is 67 percent female and includes gender nonbinary and gender nonconforming folks.
“I also am trying to be the absolute best employer in the food and beverage industry in Seattle,” Neitzel said, adding the company has focused on recruiting in communities that are marginalized from getting good jobs with good benefits.
The company’s starting wage is $18 per hour. According to its website, it offers free health insurance to all employees working 20 or more hours per week, it offers vested vacation, retirement, 12 weeks of paid family leave, subsidized ORCA passes, and secure schedules posted in advance, adding that, “Happy, healthy workers make our business stronger than most!”
Word is apparently out.
For seasonal hiring, it will get about 600 applications and do more than 200 interviews for the 100 positions, she said. Also, employee turnover is very low, another benefit to an inclusive environment where people feel welcome.
“We don’t have a problem with hiring, and that is, I think, unheard of in today’s restaurant industry in Seattle,” she said. “Everybody I know complains about not being able to find enough people, and we don’t have that problem.”
Some employees are sensitive to Molly Moon’s discussing its racial and demographic makeup, she said of them not wanting the company to think it’s checked all the racial boxes and that its diversity work is done. They want to know they’re valuable to the company on their own right and that the company understands diversity is good for business, she said.
“They want to make sure that we’re focused on what we do with that diversity and how we treat everyone and are we treating folks equitably, and that is hard work,” Neitzel said.
“Even when you think you’re doing the absolute most equitable job, there are always ways you can be better,” she added. “I think that’s something … we care a lot about, and we all sort of have that mindset that we can all be doing a little bit better than we are at being an inclusive, diverse, equitable workplace.”
It’s a work in progress, and learning continues, she agreed.
But she sees the results and says others can, too.
“I wanted to … see if I could run a business with the progressive values that I’d like to see in the government and in American society as a whole,” she said, calling her company a challenge to herself to see if she could do that and still be profitable. “Because if I can do it, then everyone can do it. And if everyone can do it, then we should be doing it as a society.”
Molly Moon’s has been profitable every year since it started, and has grown to its current size on an almost exclusively cash flow-funded basis, Neitzel said.
Wolfrom said diversity and inclusion have to be authentic, where different voices are truly heard and understood, and it has to start at the top, he said, noting it can be hard for bosses to ask how they can be better.
Subtle comments or actions that may seem innocent can make people feel unwelcome, or marginalized, he said of what’s called a microaggression, which Webster defines as, “a comment or action that subtly and often unconsciously or unintentionally expresses a prejudiced attitude toward a member of a marginalized group (such as a racial minority).”
“That kind of stuff really can bog down the culture and … just the energy level of that team,” Wolfrom said.
But managers and employees can’t be afraid to say things, either, in finding the space where each side is willing to be open and learn from what’s said.
Employee Resource Groups — affinity or social identity groups, for example, LGBTQ or racial groups, where people can meet, cohort, and caucus as a group and bring ideas or concerns to leadership — are good resources when an organization is ready for them, he said.
BBSI’s Jocson also noted the importance of mitigating risk in workplaces by helping people better understand colleagues and creating an atmosphere that’s not threatening to either side.
“Part of our role as an employer and as an HR practitioner and a business leader is to make sure our employee population knows and understands how to work with different types of people from all walks of life and be able to manage through the psychological and emotional aspect of that because we all will have some positive or negative reactions to certain things that we don’t account for until we get there,” he said. “And one of the things that we want to do is mitigate that before it becomes a safety issue.”
In an article last August, Josh Bersin, founder of Bersin by Deloitte and the Josh Bersin Academy, a research and professional development academy for HR and business leaders, wrote, “I don’t need to remind you of the importance of diversity, inclusion, and fair treatment at work. Not only has the #metoo movement made HR and business leaders take notice; the problem seems to be increasing. The EEOC saw a 50 percent increase in workplace harassment suits last year, and 2019 is looking like a record.”
Bersin said it is possible to build a safe, inclusive, and respectful environment at work. “Unlike the public sphere, where almost anything seems to be OK, we can set standards, enforce rules, and expect leaders to set a good example. But you need data and standards, and many new tools are making this easier,” he said, noting myriad companies offering diversity, bias-identification, and harassment-technology solutions.
Truclusion is developing a self-assessment toolkit, which will allow companies and organizations to self-assess where they are on their journey to inclusion, and suggest “next steps,” Wolfrom said. The assessment toolkit will empower companies to do the work themselves and be confident they’re on the right path. It also will support the company’s DEI director with data, “so challenging discussions with leadership can be data-driven and not about perceptions.” The toolkit is in beta-testing now.
Said Bersin in another article, “Diversity and inclusion is one of the most powerful business tools you have; take it seriously, and you’ll see the needle move.”
The Importance of Diversity
Sense of community
Small- and medium-size businesses are part of any community, from Main Street to Wall Street. If the makeup of the company reflects that of the community — a connection is created.
Diverse and inclusive teams are more innovative and creative, leading to improved outcomes. It is difficult to predict business problems, but having employees with differing experiences sometimes helps businesses look around the corner a little easier.
There is empirical proof that diversity and inclusion programs translate to positive impact on a business’ profitability. A diverse business simply attracts and creates repeat business.
An established diverse workforce and inclusive culture attracts stronger candidates.
Diverse and inclusive culture increases engagement, which the Gallup Q12 projects will increase productivity by 16 percent.
With the replacement cost of an employee at about 20 percent of annual compensation, improved retention from creating an inclusive culture produces significant cost savings. About half of the workforce will be millennials in 2020 and will continue to grow. Diversity matters to them. It makes sense that diversity should be a business priority to retain talent.
(Sources: Dane Wolfrom, Truclusion; Jason Jocson, BBSI)