Bottom up or top down?

Last week I was interested to read about a bit of a commotion in Germany regarding women in the workplace. It seems that women only make up 3.2% of the members of executive or advisory boards of Germany's top 200 companies. That's a bad number, what makes it even worse, and what the stories last week were about, is that it's a problem that German business has been trying to address for ten years.

Back in 2001 German companies introduced voluntary targets to raise the representation of women in executive or advisory roles. Chancellor Angela Merkel described the effect of these voluntary targets as "modest results" and said that more needs to be done. But really, if 3.2% represents "improvement" when a demographic number would suggest more in the range of 50% the situation really is quite bad.

An outcome of this is that the German Minister of Labour has threatened to impose mandatory quotas that businesses would have to achieve. The numbers being talked about are 30% by 2018, which would be a significant change. As expected, the threat to impose mandatory quotas is not without controversy of course, with companies who would be affected complaining about the possible interference in running strong businesses. In the end the government stated that businesses have 2 more years (till 2013) to triple the number of women in executive roles or the government would force business to address the issue.

It will be interesting to see how this plays out, tripling the number in three years sounds very aggressive until you consider that's still only about 9.5%. It's also interesting to note the excuses and reasons given by these companies. As per usual they claim the results of their strategy simply aren't paying off yet, that they are integrating women into their corporate culture and promotion structure but it takes time to see the results of this at the very top.

No question, bottom up strategies have the largest potential benefit for all those involved. Companies get employees who are invested in the process and are well acclimated with the culture, needs and strategies of the business. But does it actually work?

Historically the conclusion would have to be no. Implementing diversity strategies with only a bottom-up approach seems to time and again to fail and there are good reasons for this.

In the German example we can see one of the reasons why, it takes so long to see results that it's difficult to know if it's working... or not. Now common sense would say that with only 3% it almost certainly is not working, but the businesses make the case that it's impossibly to tell yet and apparently in this case the government agrees that that might be true. True or not the point of difficulty in measuring success in intermediate terms is a problem here and when the success of a strategy is measured in decade cycles that's a real issue.

A second problem, but one I believe just as bad if not worse is that bottom-up strategies don't shock the culture into the change that is needed in order to make the strategy a success. When diverse employees (women or otherwise) look up the corporate ladder and only see white males in the top roles what sort of message do you think that sends to them? How motivational do you think that is? What kind of trust in your diversity strategy will employees who see this have?

Right about as much as you think. And the problem of leadership not reflecting your diversity goals extends to more than just if diverse employees believe you, it's also about the vision and direction of your organization as a whole. Executives in leadership roles are, well, leaders. A company can't really have an inclusive vision without inclusivity in its visionaries.

Don't get me wrong, as I said earlier bottom-up strategies do have long term benefits for companies, investing in top talent will in the long haul bring results. But a bottom-up strategy when it comes to making a company more diverse just doesn't work, on it's own. It's not a question of bottom-up or top-down, but recognizing that to have an effective strategy when it comes to diversity, you need a little bit of both.

B2B, Pan Am Games and Diversity

This past week the 2015 Pan Am Games (to be held in Toronto) organizers announced that bidders for contracts for the games (from construction to concessions and everything in between) will be required to demonstrate that they will involve businesses and employees from traditionally under-represented ethnic communities. Read more about the story in the Globe and Mail here.

This isn't actually a new idea, although extending such a plan to all bidders is new. Following on the trend of such international events requiring bidders and contracts to be awarded with marks for environmental sustainability (such as those for the Vancouver Olympics) the trend of supporting "minorities" or other diverse groups is growing. The London Olympics has a diversity strategy when it comes to supply chain and now the next logical step is being taken by Toronto's Pan Am Games organizers.

But is this a good thing? Will the imposition of "quotas" on contract bidders actually support diversity or simply support less capable vendors/companies?

Ian Troop, CEO of the Toronto Pan Am Games made some comments addressing this which I found striking. He said,

We’re not showing any favouritism to anybody. We’re saying to employers, "Recognize the reality of the marketplace and community we live in... This is a level playing field and a meritocracy. The cream will rise to the top."

Hey, that sounds kind of familiar to me! As I have said many times before, "You should only hire the best candidate. But make sure you are looking at everyone". I am glad to see I am not the only one who thinks this way.

Diversity strategies aren't about doing what is "right" or what is "politically correct", they are about doing what is actually best from a pure business standpoint. Quotas aren't about promoting inferior candidates or in the Pan Am Games example inferior companies, past their competency. Quotas or requirements are about making sure that diverse candidates or organizations aren't being cut out of the process due to inherent biases in it. If all contracts are awarded and hires are made simply on the basis of who has done it before, who is best connected with my network or who I feel I personally relate to the most, you will be leaving large groups of possible candidates and companies out in the cold. The result of that being that what you are ending up with right now is inferior to what you could have.

Companies who "get it" when it comes to diversity already know this. It's why they are committed to a diversity strategy that embraces the full process, from employment branding, to candidate sourcing, to hiring and onboarding. But this story is about an even more immediate reward for companies still on the fence, namely that by increasing the diversity of your organization you can win more business.

As someone as familiar with the sales process as I am I can tell you that any advantage you have over your competition when it comes to selling your company is a good thing. The inverse is also true; lacking an advantage a competitor has can put you at a severe disadvantage. The growing amount of RFPs and bidding outlines with diversity as an integral component of the process mean that if you don't have a diversity strategy for your organization you're being left behind.