Mitigating the reputational risks of diversity & inclusion in 2021
Businesses that take purposeful action to address inequality within their companies today will be the ones to succeed tomorrow.
This year, social inequality and injustice have come to the forefront of many conversations. Sparked by unified outrage following George Floyd’s death at the hands of the Minneapolis police, we saw people across race, class and cultural boundaries take action for change. With this increased public awareness, businesses — now more than ever — are driven to reflect on, engage and take purposeful action to address inequality within their companies and communities.
At The Ohio State University Risk Institute’s November 10, 2020, webinar, “How the Fresh Surge in Inequality Impacts Your Business,” speakers addressed this issue and highlighted initiatives their respective companies have undertaken to mitigate reputational and business risk and other best practices as they relate to diversity, equity and inclusion.
Ryan Trierweiler, executive vice president, people & leadership (CHRO) at Safelite Group, discussed how Safelite conducted a pay equity analysis. The results of this study prompted policy reviews to identify and address processes that may unintentionally create divides and perpetuate issues surrounding inequality. The company took an in-depth look at factors such as the percentage of minority representation by job level and rate of diverse promotions compared to overall employee numbers.
For employees who are generally not granted a seat at the table, Safelite organized diversity, equity and inclusion (DEI) surveys to help identify issues that don’t bubble up from the shop floor to the C-suites. Safelite utilized this information as an impetus for a call to action, to open the door to conversation and explore ways for employees to collaborate and promote actionable change from within.
Fran Wahrman, vice president/diversity, equity, and inclusion manager at Huntington National Bank, discussed how her company developed a social equity guide for colleagues and formed eight business research council groups (comprised of about 30% of the company’s employees) whose mission was to engage and collaborate on the topic of inclusion. In connection, the company formulated “Let’s Talk” guides with conversation starters, knowing that not all employees have a real understanding of the history of racism in America or the lexicon to talk to one another in a culturally-sensitive way.
Companies are introducing scorecards to their leaders to determine the percentage of diversity in new hires, promotions and the overall workforce. From an applicant standpoint, in middle and upper management, where there is the least amount of ethnic diversity, organizations require that women and people of color (POC) represent 50% of candidates per job opening. Many report already seeing more diverse candidates being promoted more rapidly as the topics of inclusion and diversity take center stage.
Research indicates that high turnover and absenteeism are often associated with working environments where POC feel undervalued, and equity and equality are not prioritized. Consider the infuriating example of viral videos of delivery drivers being harassed because of their race and perceived as a threat in certain communities. This type of behavior and misguided perception clearly affect an individual’s sense of well-being and self-worth within the company and the larger community.
The coronavirus pandemic has only served to elevate these conversations. Essential workers are being applauded and more of a focus is being put on how much they are paid and how they are treated. Take into account what the financial implications are if a company loses a valuable employee because of how they are treated, such as, but not limited to, onboarding and training. “Focus on the empowerment enabled by a climate of inclusion,” says Terry Esper, associate professor of logistics at OSU’s Fisher College of Business. “Help people understand that organizations want them to stay, grow and advance.” Employees who feel a stronger connection with their organization execute their daily roles more effectively, leading to more robust business performance.
Research supports the fact that diversity creates value. The best practice is reflected in companies that tie diversity, equity and inclusion to business performance. Organizations need to help people see that value includes inclusivity by creating expectations and fostering conversations to help open people up to this value. Beverly Vandiver, interim executive director at the Kirwan Institute for the Study of Race and Ethnicity, professor at OSU’s Department of Human Services, stressed that these initiatives cannot just be mid-management level and up, following the assumption that lower-ranked employees will come and go.
Diversity and inclusion will continue to be a critical priority for insurance professionals in the interest of protecting their organizations’ operational continuity, talent acquisition and bottom lines. In some cases, companies may see risks yet lean away from change because they are either comfortable with the status quo or change may appear overwhelming. But sometimes, the risks of not changing are greater than the risks of staying the same. Risk is not just a process or procedure; it is a value. Those businesses who get it right will be the ones who succeed.
Phil Renaud, CPCU, (renaud.19@osu.edu) is executive director of The Risk Institute at The Ohio State University. With over 25 years of experience creating and managing several large multilocation, international risk management departments, Renaud has extensive expertise in the practice of risk management, direct insurance, and safety and health. The opinions expressed here are the author’s own.
Related: