Better decision-making. More innovations. A wider customer-base . . . The evidence is overwhelming that diversity can be the agent of spectacular transformation. But only when it’s done right. Get it wrong and the consequence may also be transformative – just not in the way you’d want. Employees leave, revenues dip, business lines start engaging in unseemly squabbles…

But hang on a moment. How can you get diversity wrong? Isn’t it just an absolute good?

Well, not exactly. Most companies these days have a division called Diversity & Inclusion, but we think that’s putting the cart before the horse. At Wilbury Stratton we’ve developed the theory of Inclusive Diversity, or I.D. The fundamental idea is that in order to have a truly diverse workforce, you first need to have an inclusive culture. Otherwise, the diverse talent just ups and leaves.

Of course, this isn’t a wholly original concept. Social deprivation and identity theory states that “negative affect” (i.e. feeling a bit left out) is the result of the status of an individual’s social group relative to others. So, if diverse talent has a greater perceived social status then it will be more accepted and included, even if it only exists in relatively small numbers. Obvious, right? We probably didn’t even need to show off with that social theory bit.

Nevertheless, it’s astonishing how many companies fail to understand this. Rather than attending to any underlying culture, they throw all their efforts into inclusive shortlists, judging success by mere ‘point in time’ percentages. But what’s the merit in having fifty percent women in your business if they’re all miserable and likely to leave in the next six months?

When we refer to research in the field (yes, we’re showing off again), psychologists are increasingly focusing on establishing the moderators of diversity. Recent examples include the following:

  1. The ‘Leader-Member Exchange’ – “when a leader treats a follower as an important member of the organisation, other employees will be more likely to accept that individual as a valuable member of the group”1.
  2. Interdependence and cooperation – “more cooperative interdependence between group members may focus group members on the common group identity and distract from subgroup categorisations” 2.. In addition, interdependence may also facilitate intergroup contact and be conducive to more harmonious relations between different groups.
  3. Aligning diversity and growth strategy– “racial diversity as a knowledge-based resource needs to be set in an appropriate context to fully achieve the benefits it offers. Innovation strategy is one such variable.”3.. Interacted with business strategy, racial diversity determined firm performance in three different ways – productivity, return on equity, and market performance.
  4. Temporal factors – “extended tenure may lead group members to find out that initial stereotype-based impressions about fellow group members were wrong. Studies have found that associations between demographic diversity and outcomes may become less negative over time 4.

If the success of diversity is reliant on moderators such as these, surely they should be our focal point? Diversity and Inclusion? Scrap that. Inclusion must precede diversity.

ID stands for both a higher proportion of diverse employees and, crucially, a better quality of working environment. It celebrates the highest ideals of a company that wants to be greater than the sum of its parts. It recognises that diversity is our destination, but inclusion is our vehicle. Let’s keep it finely tuned and ensure we don’t end up on the hard shoulder.

At Wilbury Stratton, we believe in ID over D&I, this is because we believe that it is only through the catalytic power of an inclusive environment that the true potential of diversity will be released.

1Mor Barak, M.E., Lizano, E.L., Kim, A., Duan, L., Rhee, M.K., Hsiao, H.Y. and Brimhall, K.C., 2016. The promise of diversity management for climate of inclusion: A state-of-the-art review and meta-analysis. Human Service Organizations: Management, Leadership & Governance, 40(4), pp.305-333.

2Chatman, J.A. and Flynn, F.J., 2001. The influence of demographic heterogeneity on the emergence and consequences of cooperative norms in work teams. Academy of management journal, 44(5), pp.956-974.

3Guillaume, Y.R., Dawson, J.F., Otaye‐Ebede, L., Woods, S.A. and West, M.A., 2017. Harnessing demographic differences in organizations: What moderates the effects of workplace diversity?. Journal of Organizational Behavior, 38(2), pp.276-303.

4Sacco, J.M. and Schmitt, N., 2005. A dynamic multilevel model of demographic diversity and misfit effects. Journal of Applied Psychology, 90(2), p.203.