Why merit is key to more diversity in the workplace: Inclusive leadership is not a Stalinist labour market intervention

Average performers need to understand that a diverse workplace will mean they face more competition
Let's start with a point that nearly everyone can agree on: organisations in competitive markets need the very best talent. And we should recruit, promote and retain that talent on the basis of merit, and merit alone. We can generally agree that, if someone is selected or promoted on the basis of their identity, rather than their merit, that is a process best avoided. No-one wants a token, or to be one.

Diversity is no bed of roses. It means more, not less, competition. But it can create more resilient organisations, more productive workforces (when led well), and less risky decision-making. Above all, diversity can be the enemy of mediocrity.

Labour markets are actually deeply inefficient. One of the reasons for this inefficiency is the prevalence of bias. We prefer sameness to difference. Using data and black and white numbers to point out the case for promotions or recruitment is essential in refuting allegations of positive discrimination – a term that is the weapon of choice to discredit any action that might be completely justified in combating an inefficient labour market, or an unjust hiring decision.

For example, there were 28 per cent women at one level in a company, yet at the next level up there were only 7 per cent women. Assuming talent and IQ were evenly distributed among the sexes (and we have no evidence to suggest otherwise), then more or less 28 per cent of promotions should be female. The fact that the promotion rate has historically been significantly less than this suggests an inefficiency (as well as an injustice).

We subject ourselves to danger when we reject diversity. Surrounding ourselves with people who are like us, which is entirely natural and understandable, is a sure-fire way to develop groupthink, and to avoid the necessary rigour and healthy conflict that are essential to good decision-making.

The elephant in the room is that the majority (or the minority in power) has to change their behaviour. In some cases they have to bear loss (real or perceived) – merit must trump loyalty and comfort when it comes to talent management.

Inclusion is the name of the game, and it’s not just about gender and race – important though they are.

The real business value of gender and race is that they are proxies for cognitive diversity. And it is different brains, led inclusively, that are the real prize.

KPMG is on the conscious diversity journey, like many other organisations. But there are three distinct elements to its inclusive leadership strategy that are worthy of particular focus.

1. Include everyone. This is not so much about “them” as about “us”. It’s not about fixing the women or ethnic minority folks so much as addressing the majority’s resistance to change.

2. Be honest about loss. Average performers will now face increased competition from hitherto comparatively ignored groups. They may well not get promoted as they assumed.

3. Have clear targets. What gets measured gets acted on and, if we are serious that inclusion is a business issue, then it should be treated as such and be a core part of management information and reporting.

Inclusive leadership may still be viewed by some as a Stalinist intervention in an otherwise perfectly functioning labour market. The facts, however, suggest that intelligent, data-informed interventions are an important step in correcting market failure, and making organisations more meritocratic.

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