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Q&A Week 16

Chief Diversity Officers Are Making Hard Choices that Compromise Results. What Can Companies Do?

How do Chief Diversity Officers succeed? Why do they fail? Hint: It's about resources and executive support. The author of Russell Reynolds' report on CDOs talks about how companies can help CDOs do what they were hired to do.

Chief diversity officers are over-worked and under-resourced. This was one of the main takeaways when, several weeks ago, I wrote about Russell Reynolds' thought-provoking report: A Leader's Guide: Finding and Keeping Your Next Chief Diversity Officer.

I wanted to learn more. So I reached out to Tina Shah Paikeday,  leader of Russell Reynolds' global D&I Consulting Services, and an author of the report. She shared more of her insights about what makes or breaks the success of a diversity leader.

TT: I saw your report on the state of the Chief Diversity Officer, which I thought was fascinating for a lot of reasons. Could you give me a little background on why you decided to explore this important role?

TSP: Diversity and inclusion is a pressing topic for many companies right now. A big reason is that their investors are demanding that their cultures are healthy, intact and represent their diverse and global populations. Inclusion is a core part of that.

At the same time, it’s a challenge. Among all the values organizations hold—things such as strategic orientation, innovation, relationship orientation—diversity and inclusion is one of the most aspired to, but least likely to be achieved.

So, the Chief Diversity Officer plays a critical role in helping the organization to achieve healthy cultures that lead to healthy financial returns. That's part of the reason we're seeing a lot of investment in this area and the reason that we have made it a strategic priority at the firm.

Ironically,  we found that even though the CDO role is so important, it's being under-resourced. People are making hard choices—whether to invest in data analytics, or communications, or leadership and development strategy, or D&I programs. And of course, you need all of these. When too many hard choices have to be made, impact doesn’t happen.

TT: To me, this is related to your finding that only 27% of CDOs say that business strategy is a driver of D&I strategy. So, if business strategy isn't driving the D&I strategy, what is?

TSP: I think that, often, there's a theoretical understanding that diversity and inclusion is important. We've all seen the studies that demonstrate that diverse teams or boards lead to higher financial performance. But in the work that I do in advising companies, the translation back to how it matters for that specific company is missing.

When we survey Chief Diversity Officers, we find there's fatigue around the fact that many companies invest in D&I programs without considering their business strategy. So, leaders are not investing their time in diversity programs because they’re not tied back to, at the end of the day, what they're compensated for.

"...most executives don't even know how to define inclusion in the first place...The engagement surveys will get at engagement or intent to remain but not at inclusion, or a sense of belonging."

TT: Do you think this is a tension between the inherent long-term nature of D&I and the often necessarily short-term focus of business? It's hard to move the needle on some of these numbers.

TSP: It's a good question and I laugh, because in a company's D&I journey, it can take a decade or more to see the kind of change that would be desired. Yet nearly every public organization – and private organization, quite frankly – feels the pinch of short-term financial pressures. So, there's this tension of how do you make enough progress to continue to invest more, knowing that it's a long-term game.

This is why we often see short tenures for Chief Diversity Officers — two or three years and then they move on — because progress wasn't made fast enough. It does take a long time to see the kind of change that one would hope to see. But at the same time, if resources aren’t being invested in the right places, that's another reason you don't see changes in a shorter time frame.

TT: This ties into another finding, that only 28% of the CDOs think that their employee engagement surveys drive D&I strategy.

TSP: Yes. So, what happens often with the employee engagement survey is that most executives don't even know how to define inclusion in the first place. We've made progress on that front, but very few organizations have a way to quantify it. The engagement surveys will get at engagement or intent to remain but not at inclusion, or a sense of belonging.

So, we've developed a tool to enable companies to quantify the construct of inclusion, which is a nebulous term to begin with, and very few people can actually define.

TT:  Another finding I thought was intriguing is that such a low percentage—35%—say that they are measuring demographic data as part of their job. `

TSP: This one blows me away, too. Part of the challenge with global organizations is that it's hard to measure race and ethnicity globally. How we measure it in the US is very different from Asia-Pac, from EMEA and then the countries within. So, it's a big investment to actually measure it correctly and to be able to look at benchmarks internally.

But even for companies that are primarily US-based, sometimes they have survey data, sometimes they have representation data, but they rarely have both. And in order to be able to identify the best places to invest if you have limited dollars, it's critical to know whether it's a retention problem or a promotion problem–or which population is most in need of resources—before you decide how to make these investments.

TT: Do you think this lack of data is that the company doesn't have the data, or is it that the Chief Diversity Officer isn't authorized to get the data?

TSP: It's sometimes both. Some companies, especially in Silicon Valley, have just grown up so quickly that they never collected the data in the first place. They might have a first-time Chief Diversity Officer, and now they’re going through an exercise of figuring out how to and where to collect the data. Sometimes there's a reporting problem even in large-scale companies where that data hasn't been collected and now we're looking at running D&I like a business for the first time. The first thing anyone will do is go to look for, “Why don't we have this, and is this a self-report problem?” Very seldom do we see that with EEOC type data, of course, but with certainly with LGBTQ data and other types of data that are not necessarily legally required.

TT:  In your work, did you explore reporting structure? Where do Chief Diversity Officers report into, and does that make a difference in terms of their effectiveness?

TSP: We've seen the pendulum swing back and forth on that. When the role was first created many, many years ago, it often did report into very high levels. Recently, most CDOs have been reporting into the CHRO. But in companies where we've read stories about billions of dollars in shareholder value being destroyed because risks (like harassment) weren’t managed well, we now see the CDO reporting into the CEO or president again. The second case where we see that happen is if diversity and inclusion is mission-critical to the business in terms of market expansion or other types of business strategy. That's the other case in which we'll see it reporting to the CEO.

"It's just disappointing, frankly, how low D&I sits in many technology companies."

TT: It's interesting, this tendency of D&I to drift lower down in the organization. I’ve even seen D&I report into L&D, or into recruiting, or increasingly, into employer brand.

TSP: Especially in Silicon Valley, I’ve seen a lot of reporting into L&D and recruiting. It's just disappointing, frankly, how low D&I sits in many technology companies.

There are so many parts to the role. A successful CDO has to not only be good at the org change and the L&D piece, but also good at recruiting, and the strategy, and the other functions. I think that if you look at our data in terms of where CDOs are hired from, there have been some misfires because we're recruiting from just one functional slice of HR instead of thinking about all of the different aspects of the role.

TT: Absolutely. Well, I wanted to circle back to something you said about high turnover in the role, perhaps partly because companies have ambitious goals for metrics which then aren't met. What metrics are appropriate for the CDO? Because while it is a highly influential role, the CDO is not able to actually control hiring or promotions, right?

TSP: They have to achieve it through influence, right? A different way of answering your question is to say that influence is a key skill of the successful CDO. I like to compare it to the brand management role--being the hub of the wheel. So, I think all of those metrics that you were just alluding are fair but I also think that there's an unrealistic expectation in terms of how fast outcome metrics can really change.

At the beginning of the journey, I like to look at behavioral metrics. And then, as we move forward, move towards leading indicators such as change in employee survey scores between different demographics. I’d do that before I would look at changes in outcome metrics in terms of percentage representation, because that type of change just takes much longer than most companies would like to think. Since many companies are at the beginning of their journey on this, they don't have the historical experience to know that, just by stating, “We're going to get to X by Y year,” you're putting a lot of pressure to achieve a goal that is completely unrealistic.

TT: Well, and you can also spark backlash, which we're increasingly seeing.

TSP: Yes, and the backlash you refer to…Leaders are assigned a goal that's just really hard to achieve. And they end up not only doing nothing about it but just disengaging from the D&I journey with the CDO, right?

TT: Absolutely. So, you'd mentioned earlier this question of global experience. That's been on my mind a lot. How important do you see international competency and international experience in Chief Diversity Officers these days?

TSP: It depends. Some of the companies we work with operate across more than 100 countries, so it’s important to be able to manage that kind of scale and scope. A lot of the work that's being done in large corporations is US-centric because the problems are different here given the nature of racial and ethnic demographics.

TT: Do you see companies wrestling with this question of how to localize their D&I strategies?

TSP: It's hard to develop the global umbrella with the regional and local strategy associated with that. You see the struggles with even just how to organize employee resource groups. You want to be one company globally, but the needs of each regional constituency is going to be very different. And the way ERGs can align with corporate goals are going to be different from locality to locality. There's a lot of complexity to managing all of that.

TT: Increasingly, I see companies talking about geographic location, or remote versus home office, as an element of diversity. How do you create a sense of inclusion for people who don't have physical proximity to each other or who maybe are away from headquarters?

TSP: The headquarters, this is a big one, right? How do you make sure that those who aren't at the corporate core or center feel equally engaged and included? The remote workforce creates different kinds of challenges. But interestingly enough, it almost levels the playing field in some ways. Because engaging with a distributed workforce can be empowering, as long as they don't feel alienated from those who are in the office.

TT: Anything else that you think was particularly interesting or exciting from the report?

TSP: I think that the successful Chief Diversity Officer is one who lives in a world of dualities. They can toggle—being authentic in their communications yet carrying the corporate message where necessary. Or alternating between setting strategy and practically implementing in a way that will be received well. Having influence without authority. I think all these characteristics make a successful CDO, regardless of background and experience.

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