The business case for diversity and inclusion: Is there one?

Emersion can happen from safe spaces for tough conversations that leads to innovation

Aug 18, 2018 @ 5:00 am

By Lazetta Rainey Braxton

Is there a business case for diversity and inclusion?

As an African-American female, one might assume my response would be a resounding "Yes!" Let's set this assumption aside for a moment, knowing that assumptions without facts don't hold substance any better than a drinking cup full of holes.

Rather let's keep the merit of the question at the forefront.

The mere acknowledgement of this question opens the possibility for assessing its validity and the evidence either for or against. Interest in the question serves as a catalyst for research to test the formulated hypothesis.

There is much at stake for businesses in the answer. Consider, for example, resource allocation, market share, profitability and sustainability. As an entrepreneur and business owner, I can attest that the ears of any corporate executive driven by shareholder value will perk up at the mention of these factors.

With limited resources, businesses strive to get the best bang for each shareholder's buck. Corporate leaders pursue strategies to gain market dominance by tapping into consumer preference and buying power.

One market trend deserving acknowledgement pertains to the 2015 Census Bureau projection that by 2044, racial minority populations in the U.S. will be the majority. Major factors that are driving this forecasted change in racial composition include increasing birth rates among identified minority populations and immigrants. But there is a second, very intriguing factor: the triumphant power of love.

You, like Tina Turner, may be asking, "What's love got to do with it?"

Love has everything to do with it. Twenty-first century love increasingly produces the referenced second factor, biracial offspring, who will continue to populate the world and will comprise the next generation of nonwhite consumers. This brazen transcending of racial barriers compels businesses to pay close attention to the implications of new consumer profiles.

Let's consider a recent, prominent example: Prince Harry of Great Britain. He fell in love with the American actress Meghan Markle, a beautiful, self-identifying biracial (black and white) woman. Having married, the two are now the Duke and Duchess of Sussex. The royal couple's love pronouncement signals the blending of race (as a color construction), nationality, cultural appropriation and wealth distribution. Offspring could very well be on their horizon.

Integrating wealth

This once-inconceivable, consensual royal merger reflects a trend that defies historical American racial dogmas entrenched in slavery, Jim Crow and the era of segregation. These oppressive movements suppressed interracial unions as well as economic participation by racial minorities. Individuals now possess the freedom to legally marry, procreate and consume goods and services on their own terms. The opportunity to legally bind mutual attraction will continue to validate the acceptance and appreciation of cultural differences and the integration of lives, finances and wealth. It also will validate the purchasing power of a growing consumer base represented by different hues and preferences — populations currently overlooked and underserved.

Given the love between individuals of difference races and their collective buying power, among other factors, firms must decide whether they believe the shift in consumer racial demographics will lead to business innovation and profitability.

Everett Rogers' "diffusion of innovations" theory offers relevant and tested guidance regarding the adoption curve for diversity and inclusion (D&I) implementation and innovation. The adoption spectrum starts with a relatively minimal group of innovators, progresses to the largest segments — early and late majorities — and then finally closes with the resentful laggards.

Diffusion of innovations
Source: Everett Rogers

The adoption curve for D&I implementation depends heavily on the views of key business leaders and the influence of political and cultural climates within the workplace. The person wrestling with race-driven issues pertaining to immigration laws and police brutality, as well as overt racial epithets from political leaders, can seep into boardrooms and C-suites and wreak havoc. On the other hand, race-driven issues can inspire innovation if executives demonstrate courageous and moral leadership.

Starbucks, for example, seized opportunities for cultural engagement by launching the #RaceTogether campaign in 2015 and by swiftly responding this April to a trigger in the African-American community: the unnecessary police arrests of two African-American males at a Philadelphia Starbucks. CEO Kevin Johnson publicly denounced the handling of the incident by Starbucks, apologized for the customers' inhumane treatment (leading to an apology from the Philadelphia police commissioner) and subsequently closed all Starbucks establishments for companywide implicit racial bias training on May 29. Starbucks actualized its strong stance for diversity and inclusion, as supported by its mission statement: "To inspire and nurture the human spirit — one person, one cup and one neighborhood at a time."

Starbucks also has demonstrated its business prowess by facing the other aspect of what potentially is at stake with diversity and inclusion — the sharing of power, influence and wealth. The concentration of these three elements among homogeneous decision-makers perpetuates narrow perspectives and views on business and consumer interests. It interferes with understanding the business case for diversity and inclusion and preparing for the inevitable transition to a racially diverse workforce and consumer base.

Removing the barriers that may be blocking a firm from engaging early on the D&I adoption curve starts with confession and emersion.

Confession occurs when executives demonstrate vulnerability by acknowledging their fears of, biases concerning and/or disengagement with racial minority populations, and by expressing authenticity in pursuing changes in behaviors and outcomes.

Confession can be a good strategy for solidifying an entity's reputation, which can be a make-or-break business proposition in the marketplace for employees and consumers. Both segments use their discernment to assess an entity's culture — whether chilling or inviting — and determine whether they will enter into a capital exchange with it (human capital for employees and financial capital for consumers).

Confession, particularly in the financial services industry, also invokes public validation of research (including by the CFP Board of Standards Inc. and Ernst & Young) that shines a spotlight on the unconscious and conscious biases that exist in the workplace, the aging white male adviser majority, and the loss of productivity due to inhospitable and often hostile work environments.

Internal rejection of cultural change as a business imperative within a financial services firm can manifest as an external public crisis in the most common yet avoidable form: class-action settlements. Are these financial services firms signaling to the public the preference to incur legal costs rather than progress along the D&I implementation and innovation curve? It remains to be seen whether lessons will be learned from incurring or witnessing others incur the legal costs of mishandling a diverse workforce. These lessons may be the catalyst for future change.

It is often difficult for influential leaders to imagine sharing an influential space with only one or maybe two people who represent their race or gender. For most professionals, this scenario induces discomfort, fear, intimidation and even disgust. Immersion introduces an openness to experience the other through physical presence and engagement. Key leaders who show up in places that expose them to the experience of others suggest interest and courage to go beyond one's comfort zone.

Mutual interests

With segregation still operative in key communities (e.g., neighborhoods, schools, business environments, etc.), it may be difficult for white professionals to recall times at work or in college when they engaged regularly with a large racial minority, let alone were members of a minority in any situation. Having a mutual interest can diffuse discomfort and disengagement.

Environments marked by gender diversity can be an easier pill for men to swallow, particularly men who demonstrate appreciation and respect — and love — for the women in their lives as mothers, wives and children. Legacy planning eases the mental D&I transition through imagination of their wives and daughters as reflections and extensions of their own power and legacies.

With increases in interracial unions, white colleagues may develop a greater sense of urgency about equality (treating people the same) and equity (actively creating conditions for advancement) for their own future generations, and humanity overall.

Tactics to lessen the discomfort of white male colleagues as racial minorities in predominately African-American circles of influence typically takes more effort than gender-influenced discomfort. To ease the transition to a new and different reality, white colleagues should consider participating in their firm's corporate affinity group or employee resource group meetings, if they have them, or attend events such as the Association of African American Financial Advisors VISION conference to enhance confession, emersion and listening opportunities. (Full disclosure, I am chair of the AAAA Board.)

Expanding perspectives

As invited guests, white colleagues will benefit from witnessing the unraveling of negative stereotypes placed on minority populations, while also expanding their own business perspectives and experience of thought leadership. They also will be exposed to healthy doses of #BlackGirlMagic and #BlackLivesMatter.

Immersion, in the form of gracious invitations, also allows white professionals the opportunity to understand environments in which minorities thrive — in a mainstream setting. These opportunities offer safe spaces for tough and uncomfortable conversations that can lead to innovation.

Firms that position themselves earlier on the innovation spectrum will need to exercise vulnerability, increase their tolerance for discomfort and create constructive opportunities for confession and emersion — critical aspects of implementing an effective diversity and inclusion strategy. Starbucks' mission and actions attest to the value of embracing D&I and the positive impact on shareholder value.

To end where I began, is there a business case for diversity and inclusion? Permit me to answer with a response used frequently by financial professionals when engaging clients, and to add a very important caveat: It depends (on you).

Lazetta Rainey Braxton is founder and CEO of Financial Fountains.

0
Comments

What do you think?

View comments

Upcoming event

Nov 19

Conference

New York Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched

Events

Finding innovation in your firm

Adam Holt of AssetMap explains how advisers understand they need to grow, but great innovation may be lurking right under your nose.

Events

How life planning, coaching can arm your clients and help your practice

Advisers are hungry for ways to improve their practice, but how can life planning and coaching help your business? Massachusetts Adviser Abbey Henderson offers her insights

Latest news & opinion

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.

Cetera latest to be hit with data breach of personal information

Company is offering clients complimentary, two-year membership to an identity theft protection and credit monitoring service.

Morgan Stanley sees massive growth from giant teams of advisers

Andy Saperstein expects some teams to reach $100 million in annual revenue in the future.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print