Last week the SEC announced that Pamela A. Gibbs would become head of its new Office of Minority and Women Inclusion. The New York Times reported that the OMWI will oversee the creation of offices of diversity across several regulatory agencies, such as the Treasury Department, the FDIC, the CFPB, and each Fed bank. These offices will, in tern, monitor diversity at any private companies that have contracts with them (like law firms and investment banks).
Gibbs’ appointment comes under a provision of Dodd Frank which mandates that federal agencies and private companies contracting with them make a “good faith effort” toward the “fair inclusion and utilization” of women and minorities. The OMWI and related offices will work to clarify what that means.
The appointment coincides with a rising awareness of what diversity brings to the corporate workforce – better, more thorough decision-making, more creativity and innovation, and an increased ability to reach as-yet untapped market demographics. These factors contribute to the “business case” for diversity, which is beginning to gain acceptance at corporations around the globe.
Chief Diversity Officers
Even companies outside the financial sector are paying attention to diversity. For example, in a recent Wall Street Journal article, Leslie Kwoh described how many companies have recently implemented Chief Diversity Officers within their ranks. The job combines several corporate functions, she said, including “recruitment, HR, marketing, ethics and legal compliance.”
But those are the easy parts – implementing policies to improve diversity is only the first step.
What Chief Diversity Officers are really tasked with is changing the cultures of their workplaces. They must convince internal staff and management that there is something to the “business case,” and then generate consensus around implementing changes. If diversity initiatives are handled begrudgingly in the workplace, they won’t amount to much.
Kwoh quotes Ingersoll Rand’s CDO Neddy Perez. She said, “there’s always going to be a nonbeliever in the audience.”
That’s why CDOs must add another responsibility to their task lists – internal PR. But it’s more than engaging hearts and minds that diversity is a “good thing.” It’s also about convincing middle managers to dedicate already limited time and resources to initiatives toward which they may feel ambivalent or even antagonistic. That’s where the business case comes in.
New Study on Business Case for Diversity
Recently researchers at Ryerson University’s Ted Rogers School of Management produced a new study showing that diversity improves a company’s bottom line. The study, “The Diverse Organization: Finding Gold at the End of the Rainbow,” revealed though, that the commitment to diversity has to be sincere.
Lead author Kristin Scott told Physorg’s Suelan Toye, “There are organizations that are doing what research and popular practice tells them to do. They are showing pictures of diverse workers on their website and say they have a commitment to diversity, but they’re not really going beyond what people may see as simply window dressing.”
She continued, “That’s contrasted with an organization that has woven diversity into every fibre of its corporate culture and business practices.”
The research is a review of about 100 studies spanning almost 20 years, and was published in Human Resource Management, and confirms the importance of a corporate culture that truly values and works toward diversity. It also helps with the attraction and retention of top talent.
Scott commented, “When you have an inclusive corporate culture, recruiting top talent becomes easier, group processes will be enhanced, which means employees are more likely to stay, which, in turn, increases the company’s bottom line.”
“By weaving diversity into the very fabric of the company, not only does this embrace its employees, it makes for a happier and more productive workforce,” she added.