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3 Questions Leaders Should Answer during Critical, Historic Times | Putting a Focus on People & Communities
In these unprecedented times, Americans face a combination of a global health pandemic and an economic downturn. This crisis is worsened by the systemic racial and gender inequalities that have always existed in the United States, as people of color and women have been disproportionately affected by COVID-19.
Organizations, and their leadership, are now serving as innovators on these important issues. This moment represents an opportunity for reflection on organizational mission and goals—and as part of this reflection, a vital chance to correct course and chart a new path toward substantive change.
Here are three questions leaders should answer as they strive to lead at the highest levels during a critical time:
1. Have you made commitments to advance underrepresented populations at your organization and elevate diverse voices?
The business case for diversity and inclusion is clear: A 2018 McKinsey study of 1,000 companies found that organizations in the top quartile for gender diversity on their leadership teams were 21% more likely to experience high profitability. Ethnic and cultural diversity resulted in a 33% increase in profitability performance.
Increased levels of diversity within workforce and leadership ranks leads to better business outcomes. Acknowledging both the moral imperative and business benefit, organizations have made bold statements and commitments related to diversity and inclusion.
A formal commitment, communicated within the organization and to the world, is an important first step toward achieving transformative, sustained change. But, we can’t stop here.
2. If you made a commitment to championing diversity and inclusion, have you measured your progress against goals and evaluated your performance over time?
Making a bold statement about diversity and inclusion isn’t enough. The most effective D&I strategies lay out clear goals and establish benchmark data to measure against, which allow organizations to understand what’s working—and what isn’t.
Organizations seeking to make real, meaningful change when it comes to representation within their workforce and in their leadership must look to predictive indicators to get ahead of the issue. Linkage’s research on the advancement of women leaders draws a clear line between overall success of the initiative and an organization’s ability to access leading indicators.
When organizations rely on lagging indicators, like turnover, retention, and promotion rates, the data comes too late to allow organizations to act to prevent the loss of high-performing employees in underrepresented groups.
Leading indicators, like a person’s organizational values fit, engagement levels, and belief in future promotion opportunities, as well as their aspiration to lead, serve as predictive data points that organizations can use to get ahead of the issue and develop more meaningful, effective initiatives. Don’t wait for a downward trend in hiring or promotion rates to inform your strategy.
3. Are you focused on people to achieve business outcomes?
Now is the time to examine your organization’s mission and vision and determine whether it needs a critically important adjustment.
Since Nobel Prize–winning economist Milton Friedman declared in 1970 that the social responsibility of business is to increase its profits, organizations have focused on the interests of shareholders. In 2011, Michael Porter and Mark Kramer introduced stakeholders into this conversation, arguing in Harvard Business Review that we must create shared value. Their point? Addressing societal needs allows companies to expand into markets in ways that benefit the company and the shareholders, while creating value for everyone else.
In recent years, we have seen a shift: In 2019, the Business Roundtable, which is made up of America’s leading companies, wrote a brand-new purpose statement, shifting their focus toward the needs of all stakeholders, rather than focusing on shareholders. Earlier this year, Larry Fink of BlackRock, the world’s largest investor, sent his annual letter to CEOs placing long-term sustainability at the center of his investment approach, a shift from the stakeholder profit-first approach of the past.
During this time of uncertainty, as the United States confronts a public health crisis, an economic crisis, and a social crisis due to persistent inequities and inequality, the shift to stakeholder capitalism has taken on even greater meaning.
Is your business focused on return for a few shareholders—or many stakeholders? To survive—or perhaps even thrive—in 2020 and beyond, leaders must be innovative and quickly respond to the needs of their customers. These same customers are demanding higher accountability and increased value from organizations. The only way to successfully meet their expectations is to fundamentally change the way we do business, focusing on our people and being champions for diversity and inclusion.
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