Waiter, Is That Inclusion In My Soup? A New Recipe To .
Waiter, is thatinclusion in my soup?A new recipe to improvebusiness performanceResearch reportSydney launch: May 2013
Joint forewordDeloitte Australia (Deloitte) and the Victorian EqualOpportunity and Human Rights Commission areproud to launch Waiter, is that inclusion in my soup?A new recipe to improve business performance.This joint initiative reflects our shared view that afocus on diversity and inclusion is both a businessand fairness issue.We wish to thank the three diverse Australianbusinesses that participated in this research project,and of course the 1,550 employees who respondedto Deloitte’s Diversity, Inclusion and BusinessPerformance survey. Their generosity means thatAustralian organisations, both private and public,can accelerate their own business performancethrough diversity and inclusion.Our innovative research charts new territory andhence, to some degree, it is a work in progress.Our aim in releasing it now is to help re-orientbusinesses away from their greater level of attentionto diversity compared with inclusion, not realisingthat both are equally critical for business success.In addition to the bias towards diversity, we also seea lack of certainty about the concept of inclusion(hence the question: Waiter, is that inclusion inmy soup?). Our research identifies the key indicatorsand drivers of inclusion, and thus helps pave the wayfor practical changes.Giam Swiegers(CEO, Deloitte Australia)Karen Toohey(Victorian EqualOpportunity andHuman Rights ActingCommissioner)ContentsOpening up the cookbook to the first page1Cooking up a storm5Inclusion – the missing ingredient11I want some soup too14A few practical ideas20Final words24Methodology and contacts26
Opening upthe cookbookto the first pageWaiter, is that inclusion in my soup?1
Setting the sceneThe pressure is onDoing more with less, fiscal pressure and constraint,uncertainty, volatility still common themes fororganisations across the globe in 2012/2013. It hasshaken our confidence1 and clarity of response.Unexpectedly diversity and inclusion are emergingas beacons of hope. A little farfetched? Our groundbreaking research in three diverse workplaces(manufacturing, retail and healthcare) demonstratesthe tangible uplift in business performance whenemployees think that their workplace is highlycommitted to, and supportive of, diversity andthey feel highly included.If you are still sceptical, then here is the ultimate punchline. When Deloitte modelled the relationship betweendiversity and inclusion and business performance,we identified an ‘uplift’ of 80% when both conditionswere high. More specifically, employees who perceivetheir organisation is committed to, and supportive of,diversity and who feel included, are 80% more likelyto believe they work in a high performing organisation,in comparison to a workplace perceived as having lowcommitment and support for diversity and employeesnot feeling included. Even when there is high diversityand low inclusion, or low diversity and high inclusion,the business outcomes are never as impressive as thehigh diversity and high inclusion combination.1 Deloitte Australia, The CFOSurvey Q3 2012: Proceedwith caution2 Deloitte Touche Tohmatsu(2011) Women in theBoardroom: A globalperspective3 Leadership: Do men andwomen do it differently?(2011); Working in anideological echo chamber?Diversity of thought asa breakthrough strategy(2011); Only skin deep?Re-examining the businesscase for diversity (2011) andInclusive leadership: Will ahug do? (2012)2We knew we were onto something, but this resultstopped us in our tracks. So we modelled customerservice, innovation and engagement. Same deal,perceptions of business outcomes are alwayssignificantly higher with high diversity and highinclusion. Clearly the relationship is not a wildcard.These data lead us to argue that a greater focus ondiversity and inclusion – and knowing what thisreally means from a practical point of view – is theway forward.Taking a step back then moving forwardIn order to contextualise this research, we first needto take a step back. Of course the starting point for ageneral diversity and inclusion story is open to robustdebate (turn of the century? The 60s?), so let’s juststick with what we have observed over the past threeyears of significant change.Around 2010, a host of countries started introducingmeasures (e.g. legislation) to increase femalerepresentation on boards2. Contemporaneously,business leaders were reflecting on the GlobalFinancial Crisis and business failures, both in termsof antecedents and preventative measures. Decisionmaking and bias was a common area of discussionacross both domains. The impact of the simultaneousexploration of these complex issues by brilliantminds from diverse disciplines, and the demand frombusiness for immediate effective interventions, hasbeen a catalyst for deep insights and change.Deloitte captured some of these insights in previousthought leadership articles3. These analyses not onlyhelped Deloitte to understand and synthesise theplethora of new ideas, but also to identify knowledgeand practice gaps.Firstly, we observed that organisations gave muchmore weight to diversity than inclusion, and yet theresearch pointed to diversity inclusion improvedbusiness performance. Secondly we observed thatacademics and workplace experts struggled toarticulate a clear definition of inclusion. Our hunchwas that if organisations failed to get the diversity andinclusion balance right, and to increase their focus oninclusion, then the game-changing potential of this‘moment in time’ would be lost.Our hunch was that if organisations failed to get thediversity and inclusion balance right, and to increasetheir focus on inclusion, then the game-changingpotential of this ‘moment in time’ would be lost
So to move forward, we suggest a new recipe forsuccess in which there is an equal focus on diversityand inclusion, facilitated by a clear understanding ofthe concept of inclusion and its drivers. That’s whatthis report, Waiter, is that inclusion in my soup? A newrecipe to improve business performance, is all about.Rebalancing theoverweightingof sProvidingspecificity ofoutcomesProvidingclarity ofunderstandingWaiter, is that inclusion in my soup?3
Key findingsDiversity inclusion improved businessperformanceOrganisations needto increase theirfocus on inclusionInclusion is tangibleWork-life balanceis a key signalData directs anorganisation’s biggestbang for buckWhen employees thinktheir organisation iscommitted to, andsupportive of diversityand they feel included,employees report betterbusiness performancein terms of ability toinnovate, (83% uplift)responsiveness tochanging customerneeds (31% uplift)and team collaboration(42% uplift).Rebalancing thefocus on diversity andinclusion, rather thanprioritising diversity,will enable organisationsto unleash their diversitypotential.The concept of inclusionincorporates both anactive process of change(verb: to include) and anemotional outcome(I feel included).An employee’s ability tobalance their work-lifecommitments is a keydriver of an employee’sfeeling of inclusion.It signals that anemployee is seen asa whole person witha life within andoutside the workplace.Work-life balance is alsoread as a signal of theorganisation’s supportfor diversity.Data can helporganisations direct theirefforts to unleash thediversity and inclusionpotential with greaterprecision and confidence.The starting point iscollecting organisationspecific data to identifythe change interventionswhich will deliver thebiggest bang for buck.4This means that ifan organisation hasoverweighted theirattention to diversity,additional effort isneeded to focus oninclusion.More specifically,feelings of inclusion aredriven by perceptions of(i) fairness and respectand (ii) value andbelonging. These twoelements build upon oneanother sequentially.
Cookingup a stormWaiter, is that inclusion in my soup?5
Charting a new directionIn terms of perceptual indicators, we askedemployees about their views on the end goal,namely business performance (Q: I work in a highperforming organisation).A picture tells a thousand words: when employeesthink that their organisation is highly committed to,and supportive of diversity, and they feel highly included,then they are 80% more likely to agree that theywork in a high performing organisation than if theyperceive low support and commitment for diversityand low inclusion.Figure 1Q: ‘I work in a high performing organisation’High performing organisationHighThe end goal1.80x1.49xDiversityAs noted in the foreword, this research is exploratoryand to some degree a work in progress. That meansthat whilst we have a long wish list of outcomesand indicators of business performance, this researchcovers only some and is weighted towards employeeperceptions. Nevertheless, these employee insights arecompelling as it is reasonable to assume that they havea clear view of workplace operations from the inside.The uplift1.27x1xLowLowInclusionCompare the statistically significant differencebetween the bottom left quadrant (the baselineof low diversity and low inclusion, which we havenamed 1x) with the top right quadrant (high diversityand high inclusion). This outcome is coming froma low base, but what if an organisation is alreadydemonstrably committed to diversity? Performancecould still improve, and in these circumstances theuplift potential of a dual diversity inclusion focus is31% (compare the top left and top right quadrants).“A picture tells a thousand words: when employeesthink their organisation is highly committed to, andsupportive of diversity, and they feel highly included,then they are 80% more likely to agree that theywork in a high performing organisation ”6High
Looking at businessperformance from the insideSo what were employee’s thinking about whenthey evaluated their organisation’s performance?Understanding their frames of reference gives usmore confidence in their appraisal, especially whenwe found that they were looking at performanceindicators in their direct line of sight, namely:Figure 3Q: ‘We share diverse ideas to develop innovativesolutions’InnovationHigh1. Customer service2. Innovation3. Team collaboration.DiversityEach time these indicators told the same story: whenemployees perceive that the organisation is highlycommitted to, and supportive of diversity, and theyfeel highly included, then they will also give a big tickto these three indicators. Moreover, the consistentstory is also that, whatever the indicator, a greaterfocus on diversity, or a greater focus on inclusion,will never deliver to the level of a combined focus(compare the top left and bottom right quadrants).1.83x1.50xThe uplift1.31x1xLowInclusionLowHighFigure 2Q1: ‘My work group constantly meets the needs of itsclients/customers’Q2: ‘We are responsive to the changing needs of ourclients/customers’Figure 4Q: ‘My team works collaboratively to achieveour objectives’Customer serviceTeam collaborationHighHigh1.26x1.31xThe uplift1xLowLow1.42x1.29xDiversityDiversity1.16x 1.16xThe ionHighWaiter, is that inclusion in my soup?7
Inclusion and engagement:same dish, different name?We tested this idea by looking at the key indicators ofengagement, namely whether an employee is likely tostay with their employer, advocate for their employerand go the extra mile (the discretionary effort factor).We found that engagement and inclusion are infact separate but related concepts. In particular,we found that engagement is an outcome of diversityand inclusion. Whilst those who feel highly includedin a workplace with a low commitment to diversityare more engaged (67%) compared to those ina workplace with high diversity and low levels ofinclusion (20%), it is the combined focus on diversityand inclusion which delivers the highest levels ofengagement (101%).Figure 6Employee engagementHigh2.01x1.20xDiversityCould it be said that we are just talking about‘engagement’ but giving it another name?The uplift1.67x1xLowLowInclusionHighFor those organisations which have embracedthe idea that improving levels of engagement is apathway to business performance, but have reachedan engagement plateau, these findings provide a newavenue of action.“For those organisations which have embraced the ideathat improving levels of engagement is a pathway tobusiness performance, but have reached an engagementplateau, these findings provide a new avenue of action”8
What about the hardbusiness data?Individually and holistically the results of our analysisbetween diversity, inclusion and perceived businessperformance tell a powerful story. But, of course,the collection of even more ‘hard’ data wouldstrengthen the case even further. And this isexactly what we sought.Our research found that inclusion not only influencesperceptions of business performance but is correlatedto actual business performance as well. Analysingthe relationship between inclusion and ‘hard’ dataon absenteeism and employee performance ratings,we found that the more included an employee feels,the more likely they are to be at work (i.e. reducingthe cost of absenteeism) and to receive a higherperformance rating. Making this a little more specific,the data from one organisation demonstrated that ifjust 10% more employees feel included, the companywill increase work attendance by almost one day peryear (6.5 hours) per employee.Absenteeism(average hours per employee per year)Figure 790807060Re-iterating again the ‘work-in-progress’ nature of thisresearch, the next steps are to look at more outcomedata, such as profitability and sales.Figure 8Members who feel included (%)“If just 10% more employees feel included,the company will increase work attendanceby almost one day per year per employee”Correlations beg further exploration to establishcausation, but the story makes intuitive sense.We already know that when employees feel highlyincluded they feel more engaged in their work.This means that employees are motivated to turnup to work and to do their best work. On theother hand, the more an employee feels excluded(e.g. that they are not being treated respectfully orthat they do not belong to the team), the less likelythey are to want to participate or bring their fullcapabilities to the table. Regardless of the detail,these two ends of the behavioural spectrum(turning up to work and doing your best work),seem connected to inclusion and both are vitalfor business performance.100908070605040302010063%60%52%27%Far exceeds ExceedsMeetsexpectations expectations expectations25%PartiallyDoes notmeetsmeetexpectations expectationsIndividual performance ratings50403020100010 20 30 40 50 60 70 80 90 100Members who feel included (%)Waiter, is that inclusion in my soup?9
Diversity inclusion revisitedFrom whichever angle you look, the logic of ‘diversity inclusion improved business performance’ stands up.But more than just pointing to the importance ofboth diversity and inclusion to reach the highest levelof performance, these findings demonstrate a moresophisticated story about the comparative balancebetween those two factors in terms of the desiredbusiness outcomes.Looking at innovation (Figure 3), collaboration(Figure 4) and customer service (Figure 2) as specifics,and comparing the top left and bottom rightquadrants, there is a statistically significant differencebetween high diversity/low inclusion and low diversity/high inclusion (top left, bottom right quadrants),and a focus on diversity seems to pay a higher bangfor buck on the way to high diversity/high inclusion.The engagement story is quite different. Once againcomparing these quadrants, inclusion seems to pay ahigher bang for buck on the way to high diversity/highinclusion.10So while the bottom line always proves true, namelyhigh levels of support for, and commitment to,diversity and high levels of inclusion are neededfor top performance, disentangling the factors maylead organisations to focus separately on diversity orinclusion in the short term. But before we can takeanother step forward, we need to be clear about theconcept of inclusion and the drivers. And this mightalso cause us to double think whether a separatefocus on diversity and inclusion is sensible orindeed possible.
Inclusion –the missingingredientWaiter, is that inclusion in my soup?11
Inclusion – what arewe really looking for?In comparison to diversity, there is a lack of academicliterature about the concept of inclusion, and if it iswritten about, the indicators or the elements anddrivers tend to be confused. Little wonder then,that there is a lack of clarity and focus inorganisational practice.We define inclusion as an active process of changeor integration, as well an outcome, such as a feelingof belonging. In essence, when organisations orindividuals adapt their practices or behaviours torespond to people, then people feel included.By exploring a broad range of possible indicators,our research has identified that feelings of inclusionare comprised of perceptions of (i) fairness andrespect; and (ii) value and belonging. Moreover wecan confidently say that these are separate conceptsand build upon each other sequentially. This meansthat to feel highly included, a person would not onlysay that they are treated fairly and respectfully,but that their unique value is known and appreciated,and they belong to the group.Figure 9.1Deloitte inclusion maturity modelStep 2Step d12To build this out a little further, the concept of fairnessand respect is underpinned by ideas about equalityof treatment. Employees look to whether theirexperiences are similar to comparable others in termsof opportunities, pay, and evaluation, and there is astrong emphasis on demographic groups as a frameof reference (e.g. male vs. female ). Essentially, thisfirst level of inclusion is really just about participation,being in the game.In contrast, the concept of value and belongingfocusses more on the uniqueness of each personbeing known and appreciated by the team, not as anisolated subject matter expert, but one who is integral.Employees look to whether they are seen as a threedimensional person (and not at a superficial level),whether they are part of formal and informal networksand whether they have a voice in decision-making.Essentially, this second level of inclusion is about havinga voice and being connected.“This means that to feelhighly included, a personwould not only say thatthey are treated fairly andrespectfully, but that theirunique value is knownand appreciated, and theybelong to the group”
Introducing the X factor– confidence and inspirationIt’s abeautifulstory ofcollectiveintelligence,driven bydiverse ideaswhich are setfree throughinclusivebehavioursHaving identified the perceived performance upliftwhen diversity and inclusion are high, what if wewere to tell you that another element had thecapacity to lift perceived business performanceeven further?Our research found a strong relationship betweenfeeling confident and safe to speak up (particularlyif the view differs from the majority) and feelinginspired to do ‘my best work’. In essence, this is astory of a high performing team, in which the groupbecomes so much more than the sum of its parts,a story of trust and empowerment, in whichpeople feel confident to contribute without fear orembarrassment, and in which the mutual sharing ofideas is both stimulating and energising. And this isa story of spiralling benefits, because we also foundthat confidence and inspiration drives innovation,customer service, collaboration and engagement.So this X factor of ‘confidence and inspiration’ has thecapacity to lift business performance even beyondour fundamental findings of significant increases inbusiness per
engagement, namely whether an employee is likely to stay with their employer, advocate for their employer and go the extra mile (the discretionary effort factor). We found that engagement and inclusion are in fact separate but related concepts. In particular, we found that engagement is an outcome of diversity and inclusion.
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