Over a century ago, American retailer Frank Baum published The Art of Decorating Dry Goods Windows and Interiors, which, as an early manual on how to trim public-facing retail displays, helped usher in both the golden age of department stores and the modern age of advertising. Baum was also an actor, which might be why he saw customers as an audience to be entertained. As profiler Max Mosher noted in the magazine article “Window Dressing: The Art and Artists,” anyone passing Baum’s Bazaar in Aberdeen, South Dakota, was treated to illusion displays featuring “the latest technologies: electrical revolving stars, incandescent globes, fluttering mechanical butterflies.” And yet, despite his flair for marketing, Baum respected customers and strived to separate himself from the snake-oil crowd. His distaste for people who abused the power of smoke and mirrors comes across in his better-known book, The Wizard of Oz, which warns readers to watch out for “the man behind the curtain.”
Unfortunately, not everyone shares Baum’s respect for the public, which is why window dressing has come to mean a form of creative deception. Being dishonest, of course, is a choice. And when it comes to things that really matter, nobody likes being fooled. That’s something corporate leaders and brand managers really need to think about today as they focus on the market’s latest attempt to recover from the impact of COVID-19. After all, we still need to address the other pandemic.
The BlackNorth Initiative was launched last year to combat systemic racism in corporate Canada by Wes Hall, executive chairman and founder of Toronto-based Kingsdale Advisors. In a recent conversation with Ivey Business Journal, the Bay Street power broker was asked about organizations that have been waiting for the coronavirus crisis to end before moving to address equity, diversity, and inclusion (EDI) issues. This was his response:
My message would be that there are two pandemics that need our immediate focus. The COVID-19 outbreak just highlighted social injustices that have existed for far too long without being recognized by everyone because they don’t impact everyone. Being stuck at home watching George Floyd being murdered changed that. Everyone knows the law says you’re innocent until proven guilty. And people saw what happened to Floyd and knew it wasn’t right. But not everyone was surprised. Some people were just made aware of how wrong things are because they don’t face racism on a daily basis. It’s been happening all along, but they just didn’t see it pre-COVID. But now everybody can see the injustice. This calls for immediate action, especially from business leaders. It is easy to say, “It’s really bad, but we’re going to wait until the COVID crisis is over to deal with it.” But that’s not leadership. Leadership is recognizing racism is a pandemic that must be addressed with the same urgency as the ongoing health crisis.
Following Floyd’s tragic murder by police, plenty of organizations responded to passionate public calls for change by speaking out against bias, prejudice, and systemic racism while promising real and lasting reforms. But the jury is still out on whether most of the woke corporate messaging was authentic. More than a few doubters point out that U.S. companies collectively pledged about US$65 billion to support racial equality during the tension of 2020, but only US$500 million appears to have been spent a year later. Meanwhile, in Canada, following what was billed by many as a weak corporate showing during Black History Month, a HuffPost blog noted: “It begs the question, was this a movement or a moment?”
According to Hall, corporate Canada’s response to the BlackNorth Initiative has him optimistic that we are on track to witness monumental change within his lifetime, provided the momentum behind EDI programs that exists today can be maintained. “I wouldn’t judge the current level of commitment to lasting change by what we would like to see happening during Black History Month,” Hall says. “Corporate Canada could have done a better job participating. But it’s not like International Women’s Day because relatively speaking there are a lot of women within Canadian organizations that can be spotlighted. So, while I would have liked to see more done to recognize Black History Month, I still think the enthusiasm for real organizational change on the diversity and inclusion front remains strong. Keep in mind that initiating change takes time, especially if you want to make generational changes. Think about what’s going on today as a submarine missile. It is not going to go boom right away. It’s got to break water, then travel a distance before impact can be seen.”
And yet, even if momentum for change remains strong, meeting the expectations that have been set won’t be easy. After all, organizations have no roadmap for making things right and the EDI programs of yesteryear have a poor record of success.
Leadership is another issue. How many times have you heard some organizational head say something like, “The COVID-19 pandemic exposed just how deeply systemic racism is embedded in our society”? Well, that’s privilege speaking. Nothing new whatsoever was exposed to the people who have long faced bias, discrimination, and systemic racism in our communities, schools, and workplaces, not to mention our hospitals and courts. In other words, as noted in the IBJ editorial “Fighting Privilege Blindness,” most of the individuals in charge of making things right failed to see the need to seriously address the problem before Floyd’s death. And since they are mostly unaware of what it is like to navigate the world without privilege, they don’t fully appreciate everything that needs to change.
Meanwhile, the victims of bias, discrimination, and systemic racism are not just tired of facing injustices—they are exhausted by the seemingly endless stream of disappointments created every time the corporate world issues empty promises to reform. As a result, organizations should expect to be held accountable for failing to authentically walk the woke talk.
Simply put, given Nike’s support for civil rights activist Colin Kaepernick, along with its relatively diverse leadership team, the sporting goods company can authentically speak out against intolerance and discrimination using creative slogans like “Don’t Do It.” But woke messaging from most other organizations risks doing more harm than good unless backed by meaningful actions. And yet, even the most progressive organizations will be challenged to meet the great expectations for real and lasting change that were set last year as we transition to a post-COVID world and the media spotlight on workplace issues fades.
This article aims to help business leaders chart a path forward that takes them beyond the realm of window dressing and half-measures. This requires much more than setting diversity targets and having a few difficult conversations. It requires recognizing your own privilege and taking an active role in addressing equity, diversity, and inclusion issues—and doing it now, while still managing the other pandemic.
Why Leaders Must Act Now
On the surface, it might seem easy to justify waiting to act on EDI during a global health crisis that has created unprecedented economic and operational challenges, especially now that vaccination rates appear to be opening the door for businesses to return to a more normal operating environment. But putting off addressing bias and racism in the workplace isn’t a legitimate option.
The corporate world has finally and loudly admitted that it has long ignored injustices in the workplace created by bias, discrimination, and systemic racism. And as Boston University historian Ibram X. Kendi noted during a discussion about racism with future business leaders, sponsored last year by the Ivey Business School’s Ian O. Ihnatowycz Institute for Leadership, you can’t legitimately ask people being mistreated to patiently wait for justice. In this environment, talk is cheap. As Ohio State University engineering professor Monica Cox recently tweeted: “Instead of showing me your diversity statement, show me your hiring data, your discrimination claim stats, your salary tables, your retention numbers, your diversity policies, and your leaders’ public actions against racism.”
“Instead of showing me your diversity statement, show me your hiring data, your discrimination claim stats, your salary tables, your retention numbers, your diversity policies, and your leaders’ public actions against racism.”
Furthermore, as highlighted in the IBJ Insight “Understanding the Link Between Crisis and Innovation,” the COVID-19 outbreak provided businesses with one significant benefit—opening the door like never before to innovation and change. With everyone’s standard operating environment disrupted, organizations managed to do things that were not previously considered possible. That door remains open, but it won’t stay open forever, so there will probably never be a better opportunity to make things right and gain the significant benefits that stem from embracing equity, diversity, and inclusion in the workplace.
As Hall noted about systemic racism: “There seems to be a reckoning that takes place every 30 years that opens the door for real generational change, and historically our society has failed to seize it. And so, if we lose steam today, another opportunity probably won’t appear for another few decades.”
Public outrage over Floyd’s death spread well beyond the streets of Minneapolis—where he spent his last conscious minutes pleading for air, handcuffed and pinned to the ground, as a so-called officer of the law choked life out of him with a knee. In the wake of the global protests that followed, The Economist identified Floyd’s legacy as a “rich promise of social reform” that “is too precious to waste.” At the time, U.S. President Joe Biden optimistically stated that Floyd’s brutal murder delivered a “great inflection point in American history” that would “change the world.” But that was before Biden’s election clearly showed that not all Americans are open to equality and justice for all. And whether Canadians like to admit it or not, the same can be said about our citizens.
Inflection points mark significant change, and Floyd’s death did not deliver one on systemic injustice. What it delivered was an international spike in demand for leaders across all sectors of society to finally step up and do what is required to ensure everyone shares the freedoms and opportunities that our liberal democracy is supposed to equally provide. And while the business community was quick to say all the right things in response to this loud and inspirational call for social justice, the corporate world clearly has what it takes to waste an opportunity to really change for the better.
A poll of Canadian board members conducted during the COVID crisis by the Institute of Corporate Directors found that only 31 per cent of respondents strongly felt that their organizations should play a bigger role in improving inequities in society. Just over half felt responsible for the social impact of their own organizations. As Hall put it, these are “bad numbers that reflect the need for better leadership in our boardrooms.” They also reflect the need for the C-suite to lead the charge on EDI.
If corporate Canada drags its feet and momentum for real change is lost, all the corporate messaging about supporting equity, diversity, and inclusion will go down in history as just another round of window dressing. But this time, more than a few brands will be written off along with their empty words because broken promises will be tracked, and not just by the legions of Millennials and members of Gen Z who clearly want brands to share their beliefs and core values in alignment with the evolution of stakeholder capitalism. Journalists, governance groups, and social activists will also be watching.
A recent report on the BlackNorth Initiative published by The Globe and Mail found little progress to highlight amongst signatory organizations a year after they committed to change. It is, of course, too early to expect visible signs of progress in every organization actively working on EDI. Nevertheless, corporate reputations will be made or broken by how well businesses walk last year’s talk. In the United States, the Securities and Exchange Commission has already been petitioned to require companies to disclose how exactly they are living up to Black Lives Matter pledges. And according to Hall, who knows more than a thing or two about investor activism, Canadian companies that drag their feet on reforms can expect to have them held to the fire by social activists and investors who understand that equity, diversity, and inclusion improves profits.
According to a 2015 McKinsey study, companies in the top quartile for gender diversity are 15 per cent more likely to have financial returns above industry medians. And the reported benefits of gender diversity paled in comparison to what the study found cultural diversity can deliver. Companies in the top quartile for racial and ethnic diversity were found to be 35 per cent more likely to have financial returns above their respective national industry medians.
Another fascinating study that focused in on the U.S. venture capital industry—where 8 per cent of the investors are women, about 2 per cent Hispanic, and fewer than 1 per cent Black— highlighted the cost of homophily, meaning indulging the desire to associate with similar people. Along all dimensions measured, it found that the more similar the investment partners, the lower their investments’ performance. For example, as economist Paul Gompers and research associate Silpa Kovvali noted in a 2018 Harvard Business Review article on the financial dividends to be gained from diversity, “the success rate of acquisitions and IPOs was 11.5% lower, on average, for investments by partners with shared school backgrounds than for those by partners from different schools. The effect of shared ethnicity was even stronger, reducing an investment’s comparative success rate by 26.4% to 32.2%.”
Numbers don’t lie. So, even if you are an old-school capitalist who believes Milton Friedman had it right about the purpose of business being all about generating profits, now is the time to act on EDI because not doing so leaves money on the table and represents both reputational and investment risk as a result.
Not a Pipeline Supply Problem
When all is said and done, business managers are essentially in the explanation business, as John McCallum, a finance professor with the I. H. Asper School of Business, put it in an IBJ Insight entitled “The Nietzsche School of Management.” And so, “If they can accurately identify and explain problems—such as declining market share, deteriorating employee morale, or a falling share price—they are well on their way to figuring out if the issue can be fixed.” Unfortunately, as McCallum also noted, executives often struggle to be effective problem solvers when it really matters because of what Nietzsche described as our natural gravitation toward quick and easy explanations when seeking to understand something causing them distress. And because managers especially like simple explanations that appear to serve up immediate solutions that will free up time and energy to work on other issues, a lot of business problems don’t get fixed.
What does this have to do with making the workplace fair and equitable? Simple. Many people looking for an easy solution to the complex problem of injustice in the workplace focus on talent pipelines.
During a newspaper interview last year, Mark Machin, then president and chief executive officer of the Canada Pension Plan Investment Board (CPPIB), raised the alarm over how the COVID-19 pandemic was threatening “the pipeline of emerging female leaders and risks thwarting the progress corporate Canada has made in diversity and inclusion efforts.”
Our nation’s largest pension fund certainly deserves a lot of credit for pushing gender diversity on Canada’s business community, which has long resisted diversity targets, at least publicly (a CPPIB white paper on accelerating gender diversity can be found here). After all, while Canada ranks relatively high internationally for female leadership within corporations, according to the latest Female Opportunity Index published by Germany’s N26, a digital bank, the proportion of Canadian women in senior and middle management positions clearly doesn’t reflect society. And the numbers were trending downward even before the COVID-19 outbreak, falling from 35.6 per cent in 2011 to 35.1 per cent in 2019.
But while talent pipelines have an important role to play in making Canadian workplaces diverse, highlighting them as the primary driver of future progress can be counterproductive because the major obstacle we face when it comes to workplace EDI issues is not a pipeline supply problem. The big challenge organizations face when looking to embrace diversity are entry and advancement barriers based on bias, prejudice, and systemic racism.
As a StatsCan report on labour market outcomes noted, employment gaps between groups persist even after accounting for socioeconomic factors. And this fact supports the findings of research that shows that our human resources departments have been significantly less likely to interview racialized individuals than other candidates with the same levels of qualification and equivalent experience. As a result of this systemic racism, even groups with high education rates remain underrepresented. For example, while almost 70 per cent of Black adults in this country held a postsecondary diploma in 2016, the employment rate of Black people aged 25 to 59 in 2016 was 78.1 per cent for Black men and 71 per cent for Black women, compared with 82.6 per cent and 75.5 per cent, respectively, for their counterparts in the rest of the population. According to a Corporate Knights analysis of the 686 directors serving S&P/TSX 60 companies, just four were Black.
Furthermore, when championing diversity today, it is not enough to talk in terms of gender and race. As McKinsey noted when publishing its research on the economic benefits of gender and racial diversity, “other kinds of diversity—for example, in age, sexual orientation, and experience (such as a global mind-set and cultural fluency)—are also likely to bring some level of competitive advantage for companies that can attract and retain such diverse talent.” The heterogeneity that exists in our society entails variation in ability, mental health, race, appearance, gender identity, gender expression, age, language, sexual preference, marital status, fertility, physical health, nationality, hobbies, occupation, religion, economic wellbeing, ethnicity, education, location, and culture. And if this list comes as a surprise, you are not fully attuned to the benefits of real diversity.
Simply put, while recruiting to meet diversity goals will no doubt be problematic in some cases, there is no question that the talent required for the Canadian workplace to better reflect society from top to bottom exists today; our organizations just haven’t been seriously looking for diversity or looking in the right places. In the past, blind hiring practices were held up as an effective way to advance diversity, but they do nothing to address the impact of bias, prejudice, and systemic racism beyond organizational gates. And increasing diversity without supporting it by building a truly inclusive culture won’t meet the expectations of consumers, employees, and other stakeholders. It also doesn’t serve social justice or achieve the significant performance benefits that authentically embracing EDI delivers. In fact, it risks doing more harm than good.
That’s why organizations need to work on increasing diversity and empowering it with equity and inclusion at the same time. This involves proactively moving to eliminate the need for blind hiring and recognizing that different people sometimes need different things to help organizations succeed. And doing that requires EDI initiatives that go well beyond setting diversity targets and checking boxes to include programs that drive cultural and behavioural change.
Moving Forward Requires New Approaches
In order to move beyond the realm of window dressing on EDI, it is critical for leaders to understand that the goal is an organization that authentically values EDI because it values social justice and genuinely wants to benefit from diversity by offering fair treatment, access, opportunity, and advancement in a culture in which everyone’s views and participation are welcome.
It is also critical to understand that there are no quick and easy solutions because there is no set roadmap for moving forward. Much of what was done in the past was done by managers more interested in improving optics than creating truly inclusive cultures, which is one of the reasons that past EDI efforts get mixed reviews, especially when it comes to inclusion. But history clearly shows that even well-meaning initiatives have backfired by reinforcing stereotypes and creating more bias, so look for fresh ideas and be prepared to shift gears.
“To really move the needle, we don’t just need companies to be willing to change—we need them to be willing to work with outsiders in order to successfully identify and address internal problems.”
On a positive note, research into past EDI initiatives has identified some keys to success. EDI training, for example, appears to be most impactful when complemented by other initiatives; targeted to both awareness and skill development; and conducted over a significant period of time, while being championed across all levels of an organization.
The big lesson from EDI research, as pointed out in the IBJ feature “Rethinking EDI Training Amid Today’s Changing Social Consciousness,” is that EDI goals can be achieved through programs that have other purposes. And that’s why EDI consultants at the TRACOM Group advise organizations to look beyond bias training focused on race and gender and to leverage social intelligence to help individuals measure behaviours based on how others view them.
Some EDI initiatives concentrate on middle management. But selectively targeting programs aimed at fostering inclusion is a mistake because bias, prejudice, and racism exist from organization top to organization bottom, not to mention within partnerships and supply networks. Like any other cultural change initiative, leadership must be actively involved. If not, EDI initiatives can easily go awry and focus on building a list of statistics instead of a culture of inclusion. This creates disillusionment, and in the absence of true representation, the benefits that come from truly embracing diversity are left on the table.
When working with clients on EDI programs, the U.S. Center for Creative Leadership (CCL) deploys a four-part framework that elevates equity in order to build a solid foundation for lasting change. This requires openly identifying and seriously moving to eliminate the barriers that prevent some individuals from being presented with fair opportunities to attain their full potential. The CCL framework also strives to “activate diversity” by defining metrics and setting goals while teaching leaders to lead in a way that promotes “the full participation and sense of belonging of every employee, customer, and strategic partner.” But to get buy-in at the highest levels, CCL starts by taking clients on a deep dive into how they innovate and uncover growth opportunities.
Abigail Dunne-Moses, an EDI strategist with CCL, notes that it is much harder for organizations to think outside the box if everyone it employs lives in the same cultural one. That’s why diversity improves innovation and decision making. And it is even harder to recognize market opportunities to serve consumers that you don’t understand. As ridiculous as it sounds to anyone who understands demographics, the EDI expert notes that Hispanic-staffed call centres were once considered a bad investment in Southern California, which shows how a lack of diversity creates costly blind spots.
Over at the BlackNorth Initiative, Hall makes the same point when he points out that it took an outsider to make Abercrombie & Fitch realize the stupidity of having a board mostly comprised of directors in their sixties govern a business based on selling to teenagers. And because blind spots created by privilege make it difficult for non-diverse organizations to effectively address systemic issues related to bias, prejudice, and racism that they have failed to identify as a burning problem for years, Hall advises organizations not to go it alone when deciding what data to collect, targets to set, and training programs to implement.
“When it comes to addressing the various issues related to diversity, equity, and inclusion, nobody has all the answers,” Hall says. “And since nobody really wants to admit that they don’t know what to do, reluctance to seek external help becomes another issue. As things stand, there are a lot of organizations doing a good job. But there are also a lot with internal people working in silos to make things right despite obviously not having all the answers. That’s a recipe for frustration, not progress. To really move the needle, we don’t just need companies to be willing to change—we need them to be willing to work with outsiders in order to successfully identify and address internal problems.”
Hall also advises hesitant companies not to let what other employers are doing prevent them from taking action now. “As far as I am concerned, some immediate progress is always better than none,” he says. That said, the founder of the BlackNorth Initiative recommends that you show real leadership like Enbridge CEO Al Monaco by setting industry-leading diversity targets and linking them to executive compensation (the energy company has committed to having 20 per cent of its board members and 28 per cent of employees be Black, Indigenous, or people of colour by 2025). And to get the ball rolling, he suggests being courageous about collecting data and not worrying too much about optics or consensus building. “You’ll rarely get full consensus on diversity and equity programs because different factions disagree on what to do and where to start,” he says. “That’s why true leadership is critical. Playing it safe is easy, but it won’t move the needle.”
Leading the Charge
When commenting on the numerous appalling leadership failures that have occurred in the fight to defeat COVID-19, German Chancellor Angela Merkel said it best: “The virus punishes half-heartedness.” The same can be said about failing to seriously address our other pandemic.
Unfortunately, as highlighted in “The application of leader character to building cultures of equity, diversity, and inclusion”—a recent paper by Gerard Seijts, Executive Director of Ivey’s leadership institute, and Associate Director Kimberley Milani—too many organizations still approach EDI purely from a public relations perspective. This often results in “what is akin to window dressing” because the goal is a superficial attempt to manufacture a “woke” reputation. And “once one looks beyond the diverse mannequins in the window, so to speak, the running of the shop remains the same; there is no impactful, structural change wrought within the organization.”
As noted earlier, part of the problem is the attitude of the governance community, which has long struggled to push EDI because it doesn’t reflect society and remains largely blinded by groupthink, not to mention privilege. But while weak board-level support for implementing serious EDI initiatives is a problem, it is not an excuse for executive teams to take a half-hearted approach.
Corporate directors and managers alike must recognize the major role that business leaders need to play in making things right inside and outside their organizations—and not just for the good of society. After all, the history of business is riddled with stories of missed opportunities that toppled once-dominant industry players that got complacent about maintaining competitiveness—and that was before the so-called Age of Disruption dramatically increased the speed with which competitive advantage can be lost.
Simply put, since effective EDI programs are key to organizational resilience, innovation, productivity, talent acquisition, employee satisfaction and retention, reputation maintenance, and investment risk management, you can argue that corporate leaders have a fiduciary duty to deliver.
But delivering on EDI won’t be easy because it involves laying bare systemic problems, not dressing them up. As things stand, most organizations can expect significant resistance because discrimination isn’t just deeply rooted in systems. Shifting business priorities will also make maintaining the internal support required to achieve real reforms a real challenge, especially when we return to a more normal operating environment and memories of the divisive Trump years fade.
Furthermore, since individuals of privilege can’t rely on their experiences in the workplace to fully comprehend how unjust the workplace can be, making things right also won’t come naturally for most leaders. As a result, championing justice in the workplace will require a combination of immediate actions and longer-term vision, along with some serious humility and a willingness to accept outside help and do a lot of listening. For most leaders, it also requires a significant amount of reflection on privilege and why it took so long to recognize the need for change.
As Kendi noted in his discussion with Ivey students, reading up on something we want to accomplish in order to gain a better understanding of it is one of the things we all tend to do when “seriously attempting” other things in life—so leaders of privilege who really want to champion change also need to do some homework reading. A good place to start, of course, is Kendi’s How to Be an Antiracist and Stamped from the Beginning: The Definitive History of Racist Ideas in America. Hall recommends Caste: The Origins of Our Discontents by Isabel Wilkerson, which explores the pillars that underlie caste systems across civilizations, including divine will, bloodlines, and stigma.
Like corporate commitments to stakeholder capitalism, not all promises to eliminate bias and racism in the workplace come from an authentic place. But regardless of how many of the promises made last year were sincere, the expectations for change that they collectively set are real. And if all you have to offer is window dressing on EDI, then you will be exposed like the charlatan behind the curtain in The Wizard of Oz.
The post Moving Beyond Window Dressing on EDI appeared first on Ivey Business Journal.
