Managing the growth in workforce diversity through inclusive leadership

The companies that succeed in this decade and beyond will largely be those that foster and effectively manage diversity and seize upon the innovation that results from clashing assumptions.

Australian organisations in 2020 are fortunate to operate in one of the most diverse nations the world has ever known. Whilst this creates tremendous opportunities, capturing those opportunities is far from straightforward.

Today, most Australian businesses have set targets for gender equality. Many are years deep into strategies drafted to improve cultural balance. Yet the challenge of managing diversity does not end here.

Rising skills and emerging jobs, springing from the fourth industrial revolution, will also introduce a diversity of thought and approach. We are, for example, seeing data and technology experts embedded into organisations in rising numbers. These new roles will typically be occupied by people with quite different views and backgrounds than those emerging from traditional talent pools.

Managing all this diversity, and capturing its value, is now a core challenge of leadership. Australian business leaders are becoming increasingly aware of this challenge, as evidenced by KPMG’s most recent ‘Keeping Us Up At Night’ report of Australian leadership concerns, in which ‘leadership capability’ rose to Number Five.

Inclusive leadership: the key to unlocking diversity’s potential

The benefit of different backgrounds, perspectives, and experiences cannot be effectively leveraged unless an organisation has leaders capable of harnessing it.

This means leaders capable of stepping confidently into conversations with people who have different experiences, approaches, and ideas and extracting value.

Inclusive leadership is a complex idea and encompasses a range of approaches. At its core, however, is developing a capacity to listen effectively and be aware of your own inherent bias.

An inclusive leader recognises that good ideas, and effective leadership, come in many forms and these forms can be affected by the culture, professional background, and gender.

Inclusive leadership practice means constantly probing not just externalities, but internal biases. Are we overly sympathetic to voices that confirm our preconceived ideas? Are we actively seeking out alternate views to test the veracity of claims made? Are we falling into common traps like the halo effect or similarity attraction?

Successful inclusive leaders will recognise diversity must go hand-in-hand with inclusion. They will be conscious that different groups may be more subtle or nuanced, take longer to respond, or need to be welcomed into a discussion. They will recognise that these tendencies should not necessarily be confused with disinterest or ineptitude.

Why inclusive leadership matters at board level

Although inclusive leadership principles are typically discussed in the context of C-suite leaders, embracing inclusive leadership principles is every bit as relevant for Australian directors.

Good boards in this decade will need the capacity to effectively hear all relevant voices on issues in order to make the best decisions possible for an inevitably complex web of stakeholders.

Boards are charged with recognising and understanding risk. So directors need to hear the signals they are accountable to hear, which means being able to understand multiple styles of communication. The way a marketing executive might communicate, for example, may be very different to how a data scientist might communicate. Yet both are likely to have relevant information.

Furthermore, directors need to ensure a culture of inclusive leadership is embedded at all levels of an organisation to ensure diversity measures secure good return on investment. Significant resources will be necessary to identify and hire diverse talent, but these resources will likely be wasted without inclusive leadership flowing from the board down.

As organisations look to employ talent in emerging jobs, leaders should be mindful of that fact that outperformance and promotion paths may well look different within these fields. Not everyone aspires to graduate out of their specialty and into a generalist management role. Many of those with hard technical skills may require different incentive paths in order to extract their best efforts and retain them within the organisation.

Embracing inclusive leadership will help boards evolve their outlook

More broadly, embracing inclusive leadership principles will provide boards with the lens necessary to become more sophisticated in terms of how they define stakeholder value.

It is now well established that modern corporations should strive for a more rounded view of their place and purpose. A fascinating recent piece of research conducted last year by KPMG into the attitudes of Australian retail investors found that they are keenly aware of the importance of reputation, transparency, ethical behaviour, values alignment, and social responsibility. In fact, a majority (57 percent) of retail investors say they would accept lower financial returns if it meant companies they invested in always behaved ethically towards customers, employees and community.

What this underscores is that modern boards have deep responsibilities to a range of stakeholder groups, and not just ‘shareholder interest’ as traditionally defined. Given these groups are diverse, the discipline of creating and applying an inclusive leadership perspective will be invaluable.

This article was first published as part of the Australian Governance Summit.

Australian Institute of Company Directors, 2020, Australian Governance Summit 2020 Reader,

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