Transcript | ESG and Diversity, Equity, Inclusion and Belonging – with Andaye Hill-Espinoza and Alfredo Mendez Listen A core component of the ESG programme in any organisation is diversity, equity and inclusion. Different organisations take different approaches to DEI, or DEIB. There is no one way to be a leader. But what does matter is consistency and commitment, particularly the concepts around diversity, equity, inclusion and belonging, and how they continue to evolve. Such a commitment is especially vital given the ongoing war for talent and the need to attract and retain people to your organisation.In this episode, we talk with Andaye Hill-Espinoza and Alfredo Mendez, two leaders in our enterprise who offer some highly informative insights on DEIB and how board members and executives need to understand its long-term value.Andaye is an associate director with Protiviti and a leader in the firm's ESG Center of Excellence and DEI programmes. Alf is vice president, DEI and community for Robert Half, parent company of Protiviti.For more information on Protiviti’s ESG and Sustainability programmes, visit Protiviti.com/ESG.Contact Andaye at [email protected].Contact Alf at [email protected].For more board-focused thought leadership from Protiviti, visit www.protiviti.com/sg-en/board-leadership-collection. Listen Topics Board Matters ESG/Sustainability Kevin Donahue:A core component of the ESG programme in any organisation is diversity, equity and inclusion. Different organisations take different approaches to DEI or DEIB. There is no one way to be a leader. But what does matter is consistency and commitment, particularly the concepts around diversity, equity, inclusion and belonging and how they continue to evolve. Such a commitment is especially vital given the ongoing war for talent and the need to attract and retain people to your organisation.This is Kevin Donahue, a senior director with Protiviti, welcoming you to a new edition of Board Perspectives. I recently spoke to Andaye Hill Espinoza and Alfredo Mendez, two leaders in our enterprise who offered some highly informative insights on DEIB and how board members and executives need to understand its long-term value. Andaye is an associate director with Protiviti and a leader in the firm’s ESG Center of Excellence and DEI programmes. Alf is vice president of DEI and community for Robert Half, parent company of Protiviti. Alf, thanks for joining me today. Afredo Mendez:Thank you for having me. Kevin Donahue:Andaye, thanks for joining me as well. Great to speak with you. Andaye Hill-Espinoza:Great speaking with you. I’m excited to be here, and it’s wonderful to see you again, Alf. Afredo Mendez:Likewise, likewise. It’s good for us to be able to have this conversation, to say the least. Kevin Donahue:Andaye, let me ask you our first question. There seems to be many ways that refer to and even define the areas of DEI. What are the differences between DEI versus DEIB versus IDEA, and are there best practices when referring to these concepts? Andaye Hill-Espinoza:It’s important to level set here. And Alf, as always, feel free to jump in if I’m missing anything about diversity and inclusion; diversity, equity and inclusion and belonging; and inclusion, diversity, equity and access. Diversity is the act of creating a community that is made up of people with varying backgrounds, beliefs, ethnicity, etc. Inclusion is ensuring that everyone feels fully valued, and diversity without inclusion falls flat. They need to work in tandem, and then you add equity to the mix — equity is about providing people with what they need in order to be successful. The important aspect about this is that that’s centered in fairness and justice and focuses on the fair treatment, access, opportunity and advancement of people while identifying and removing any barriers that may have or will hinder their full participation. And then, finally, belonging is what an employee feels as a result of an organisation’s inclusion effort. That could be around policies, best practices, all those things. If your organisation isn’t inclusive, it will be very difficult for people to feel as though they belong. Understanding those nuances is important. Are there best practices when referring to these concepts? Obviously, policy is important.Ensuring that the programme is supported is important, from your CEO all the way through your people. But it also depends on what your organisation focuses on. Is it on just DEI? Is it on DEIB? Is it on DEIJ? Is it on IDEA? There are all these different components. When referencing these concepts, that’s what’s important to keep in mind. And Alf, I don’t know if you wanted to add anything onto that. Alfredo Mendez:You did such a great job illustrating the whole dynamic. And one of the other things that’s important to note in this is, the same way that the science and the behavior is evolving, so is the terminology. We didn’t used to talk about justice or accessibility or even belonging. In many instances, it used to just be DEI. That’s the other piece —we have to be cognizant of the fact that it is going to evolve.For some organisations, some of those terms don’t make sense based on the things that Andaye talked about with leadership support and what the organisational goals are. There’s a fine line around being able to do this work and referring to it in a way that feels authentic and genuine. The moment that you start using some of the terminology for the sake of being current, it negates that authenticity. And the whole point of authenticity is such an important component of the DEI equation that we don’t want people to feel like they have to keep up with the Joneses in that respect and how they’re calling themselves. Do what feels authentic where your organisation is, regardless of what the terminology is, and then evolve it based on the maturity of the work that you’re building within your organisation. Kevin Donahue:Alf, with that highly informative foundation that the two of you just set, what does a good DEIB programme look like, and how can organisations go about implementing it? Alfredo Mendez:It depends. It’s one of these things where the component of what a good programme looks like is dependent, on what are the challenges that you’re trying to address, what are the goals that the organisation has set out for itself and then, how does that turn into a programmatic perspective as well?The first thing an organisation needs to do to implement a strong DEI programme is to get that leadership buy-in. It has to start at the top. It has to feel like this is a connected part of the business strategy, that it’s integrated into the go-to market strategy, the way we take care of our people, the impact we’re going to have on our communities. It can’t feel like this independent thing that’s sticking on, because then we run the risk of it turning into a little bit tokenistic and a little bit flavor-of-the-month.You start at the top, and then, the second thing organisations can do is, get your employees involved in this. What we tend to find in the DEI space is, the stronger, more effective programmes are the ones that are advocated for and supported by your employees. A great example of this tends to be when organisations go and build employee-network groups (ENGs) or employee-resource groups or connection communities, whatever it is that you want to call them. Typically, employees will be the ones to raise their hands and say, “I would love an opportunity to create a group where black employees, where members of the LGBT-plus community and their allies can come together to educate, to communicate, to connect,” whatever that may be. What we tend to find is, people start to join, it becomes much more grassroots, the organisation takes notice and the organisation starts to empower them to be able to drive that education and connection accordingly. It doesn’t mean that every organisation has to go and launch an ENG. But what are your employees asking for? What are the things that matter to them, and what is the conversation that they’re looking to have in the DEI space? If organisations focused on getting that buy-in and empowering employees, it would then set them up on a strong foundation to then be able to say, “Here’s what that means as it relates to hiring, as it relates to retention, as it relates to development.” Without that, you run the risk of doing this work in a vacuum. Again, it leads to this idea where potentially, it feels inauthentic, and it might do more harm than good in that respect. Andaye, I don’t know if you have any thoughts on that as well based on your experience or what you’ve seen. Andaye Hill-Espinoza:You raised some good points. If you have an ENG, are organisations harnessing and listening to their ENGs and utilising the information and the feedback that they’re giving to executives, to the executive sponsors and so on? Or is it this nice-to-have? And if you take what Alf is saying and boiling it down, it’s being an organisation, being actionable and supporting these efforts, or being performative. And when the incident with George Floyd hit, we saw a lot of organisations commit to DEI, DEIB, DEIJ, IDEA. But now we’re seeing this trend where a lot of those commitments, a lot of those efforts, are starting to fall flat. Why? A lot of the CDOs weren’t supported. A lot of the work they said they were going to do wasn’t supported. And so that gets to that performative component Alf was talking about. And that’s important to highlight because it does get back to when a DEI programme or DEIB programme is fully supported and empowered to reach its full and optimised potential, it ties back into a business’s performance and financial performance. All of these things are super important. And it shouldn’t be something that is adjacent. It should be something that is fundamentally embedded and integrated into every aspect of the organisation. Kevin Donahue:You both brought up so many good points, and it’s the perfect segue to my question about listening and feedback and looking at the results. In thinking about metrics and understanding that what gets measured gets managed, how can DEIB be measured? Andaye Hill-Espinoza:A data-driven approach is key. It can be measured by gender and ethnicity, representation of groups at the manager level all the way up to the board, through turnover data, voluntary-attrition rates. Are certain employee demographics more likely to leave the company? If so, and if there’s a trend, this should lead people in the company to question why, and what needs to be addressed, and what processes and mechanisms are being put into place to address them. Put a goal around it — track it. Performance ratings — is there equal distribution of high and low ratings across all groups? If not, bias could be at play. And then how does that impact the organisation? Additionally, promotion rates — this can be segmented and evaluated by things like pay grade, race, gender, etc. and evaluated for balance between these different groups. Pay and benefits, employee satisfaction. And the A part of IDEA — accessibility. Are things within the organisation made accessible to folks who are differently abled? When having a conversation around how it can be measured, what is even more important is, are the quantitative and qualitative data being reviewed together? Is it being skewed more toward one way — more toward diversity demographics and not inclusion metrics? What are the red flags? If your engagement survey reads positively but employees don’t add any comments? And the quantitative data, does it match the fact that the company has high turnover? Those are things that need to be addressed. The data from what is being measured needs to have that important intersectional analysis. Alfredo Mendez:Andaye hit the nail on the head: It is the balance of qualitative and quantitative coming together and telling a more holistic story. What a lot of companies get into is, they’re trying to measure metrics that are going to help to prove the business case for DEI — the hard dollar cost, the impact to all of this. The reality is this: Every single study from every single think tank, consulting organisation, anyone who steps into the DEI space, is telling us the same thing about the business case for diversity. More diverse teams outperform less diverse teams on every single level. So now, we have to create this evolution around looking at our data to determine, what is the experience that we are creating for our people? Are we promoting them at the equal rates? Do we see a difference in engagement between black female talent and the rest of the organisation? This is where we’re going to make the difference. In order to be able to do that, if we keep fixating on data around “What’s the financial performance of my teams based on their composition?” we’ve already proven that that’s already going to be better. Let’s shift our thinking away from that and focus on the metrics that are going to make a difference for our people and create the experience that we’re looking to create as well. Kevin Donahue:That is interesting and insightful. Many board members, many CEOs, most CFOs are numbers people. With that in mind, how do you get that group to see the value in DEIB? Or, maybe asked another way, how does DEIB tie into business results? Andaye Hill-Espinoza:You’ve already hit the nail on the head, Alf. You mentioned that all the research demonstrates that those companies that fully embrace DEIB outperform those that don’t. This goes back to the comment earlier about performative versus actionable: The companies that have prioritised this and that are walking the walk and talking the talk, it has been proven that they have better recruitment and retention, employee loyalty. The companies perform better, which leads to higher financial profitability and innovation. Ultimately, these are all things that impact an organisation’s bottom line. If you have high turnover, we all know that it’s more expensive to go out and look for new employees to fill that space than it is to address the challenges and the issues of your employees through a DEIB programme. And if you do that, your employees are more apt to be loyal to your organisation, and that leads to better performance and that teaming and that innovation Alf also talked about. That is something that’s super important. So, while people are looking to, as Alf mentioned earlier, constantly justify why a DEIB programme should be supported, all the data is already there. All the research is already there. The impact to the bottom line is already there. It’s a matter of whether companies want to prioritise it and walk the walk and talk the talk. Alfredo Mendez:The other piece to that, Andaye, that is becoming so much becoming more critical at this point is, we all have heard of this generation coming into the workforce called Generation Z. This is where our talent is going to come from now. And when you look at the studies being done now around, what are the primary attractive mechanisms that bring talent to organisations now, 30 years ago, it was about paying benefits. That was the reason people were joining organisations. Now it’s about corporate social responsibility and DEI, and so this is not a nice-to-have anymore. This is not a fun little initiative that we can go and throw money into.This is another area — and Andaye started to touch on this from a turnover perspective — this is where we’re going to get boards and CEOs and CFOs to care. If we can’t compete for talent — and we know that this is the mechanism, this is the generation that’s coming into the workforce — we’re going to see the ramifications of that reflected in retention percentages in our turnover rates, in the costs to hire, in the overall brand awareness that happens externally when we start to be viewed as not a great company for diverse talent to be able to join. There are other factors at play, so that if we don’t get ahead of that, it creates a disadvantage across the board, and we’ll see senior leaders get with the programme very quickly once they start to see some of those ramifications from a talent-competitiveness perspective. Andaye Hill-Espinoza:In times when I have job-searched, one of the first things that I try and find is, is there segmented data around what are their demographics, what is their DEIB programme? What does that look like, and what does that look like externally versus talking to someone within the organisation and finding out what is going on behind the scenes? That is so important, and that touches on that Gen Z, that new generation coming up behind us, Alf, that you mentioned, because they are holding organisations accountable, and they have no interest. Alfredo Mendez:You’re bringing up a good point about this idea of transparency. Gen Z is a much more transparent generation than anything else we’ve seen. They openly talk about salaries, which is why we’re seeing things like pay transparency become a little bit more prevalent as well. As I’m looking at organisations, show me your demographics. Let me talk to someone who looks like me to get a perspective of, does the inside match the outside? And then let me use that data to determine what I want to do. We’re seeing more and more of that becoming the common, prevalent theme across the board. We have to take advantage of the opportunity accordingly, because it’s becoming more expected of us as people drive this need for information and transparency. Kevin Donahue:Alf, I want to talk about some of the changes we’ve seen in these programmes over the past few years. I imagine at least some of that was driven by this world-changing event we had in the form of the pandemic. How did that affect the focus of organisations on DEIB? Or, asked another way, how was that connection reimagined during this time? Alfredo Mendez:If anything, it got a lot of organisations to understand the purpose of connection and belonging in the grand scheme of things because of that blurring of the personal and the professional lives. We went into the pandemic not necessarily knowing how long we were going to be at home, what this was going to look like. It was something very foreign to many of us. And the first thing we quickly found was that there was no longer a separation of the work you and the personal you, because all of your work was now being done in your home, so you have to learn how to balance all these priorities. And one of the things that we did see many organisations shift to in the longer term is more of this idea of the flexible work model — these organisations that used to be much more heavily centered on in-person connection moving to this hybrid or to this remote-first model as well. The fact that it was more difficult for people to be able to create that separation got organisations to understand the importance of, how do you keep people connected? How are you bringing in new members of the organisation as they’re getting hired into the company and setting them up for success in that respect? But then, what are the implications that this has to things like mental health and well-being? All of these things became very important components, and then follow it up with summer 2020 and all these social-injustice events that happened across the U.S. It created a perfect storm, and organisations did pay attention, in trying to cement the right actions and in thinking about, how do we need to start getting a little bit more involved, and what do we need to do in this space? Now that we’ve come out of the pandemic and we’ve created this new work model, a lot of the principles are the same: We still need to find ways to connect people. We still need to compete for traditionally diverse talent and have them join our organisations. We still need to ensure that those people can find a sense of connection and community as they’re coming into the organisation as well. It all becomes critical.But the biggest thing that we heard throughout all this was the importance of listening to our people and being able to respond in a way that’s important for them. This was one thing that many companies did across the board, whether it was through focus groups, employee voice surveys, whatever it may be: There was a more intentional approach in getting feedback from employees that was then helping companies come up with the right responses and the right things to do. We can’t let go of that now. If we’re asking for feedback, we’ve got to continue to ask for feedback, whether we are back in person, whether we’re still fully remote. It goes back to that empowering of our employees. That’s the other big shift that we saw with this as well — the employee perspective became more powerful in all of this. Employees did feel more empowered to share and to bring up ideas and to push companies a little further in that respect. I’m a big fan of employee empowerment. Most companies would be as well. It’s a matter of finding a balance: How do we continue to create programmes and activities that bring in that employee input so that it feels like we’re doing things in partnership versus doing this work in a vacuum and pushing things out to employees where it might not necessarily be what they were looking for? Kevin Donahue:It sounds like you see this as organisations having gained a more holistic view of this intersection between our personal and professional lives. Is that accurate? Alfredo Mendez:Yeah. This is why this topic of authenticity has become so much more prevalent in our conversations over the last few years. Think about this: Even five years ago, on the rare occasion where you would work from home, if a child came in and interrupted your call, it seemed like it was the end of the world. And now we’re sitting on these virtual calls, and we see children in the background, and it’s OK for you to step away for five minutes to go and deal with something happening on the home front. Again, it’s more of that “This is a part of who I am. I never necessarily brought that into the office unless it was kind of an emergency.” But now, you’re getting that insight, and so we have to be respectful of that insight as well. We have to adjust our ways of working and our expectations accordingly to acknowledge the humanistic side of who our employees are and what they bring to the table. Kevin Donahue:That’s a great rundown, and this has been a fantastic discussion. Thank you both. Andaye, let me ask you our final question here as we close out our discussion. We’re talking to board members in this podcast. They’re our audience. With that in mind, if I’m a board member, what are some key takeaways you’d like me to bring to my next and future boardroom discussions? Andaye Hill-Espinoza:It goes back to the top of our conversation, that DEIB is no longer a nice-to-have, it is a must-have, and it’s not something that can be done adjacent to. It’s something that has to be embedded and integrated into the day-to-day operational practices of the organisation. It has to be a part of the organisational strategy. Your CDO or your executive director or your director, whatever the person’s title is within the organisation, it’s important for them to have the staff, the support, the budget, all the things that will ultimately help your organisation realise the actual benefits of having a DEI programme. Also, understand that generation that Alf referred to earlier: They are all about transparency. They are making decisions as to whether to join your organisation as an employee based on this information and this data. Your people are your engine, and if you can’t recruit people or retain people, that impacts your bottom line. And if you don’t have a robust and good DEIB programme, you’re not going to be able to innovate as effectively as you could. You’re not going to be able to reach the optimisation of your organisation, because you don’t have that diversity of thought, experience, perspectives, backgrounds, all of that — those things that ultimately impact how an organisation looks, feels, operates. That is important, and stakeholders, ranging from your investors to your consumers, want to see what companies are doing and that they’re walking the walk and talking the talk and they aren’t being performative, and that is super important. People are looking at CSR reports, people are looking at ESG reports and people are going to that DEI section, and they’re wanting to see, how robust is it? How diverse is your board? How diverse is your executive leadership team? How diverse is your management and upper-management team? Those things are important now. The key takeaway is, it’s beyond time that this gets supported in a way that enables organisations to do their best not only as it relates to performance today but also for tomorrow and the future. Kevin Donahue:My thanks to Andaye and Alf for joining me in what was another highly enlightening and informative conversation. The key takeaways for me — a focus on DEIB is more important than ever, especially amid today’s ongoing war for talent that, despite short-term economic uncertainties, is unlikely to end anytime soon. That is, unless you share the view of some who say the war is over and talent is won. This clearly is a critical issue on the minds of board members and executives today. According to the results of Protiviti’s latest Top Risks survey, succession challenges and the ability to attract and retain top talent represent major challenges today and over the next 10 years. DEIB programmes will play a critical role in these efforts. For more information about our insights on DEI and ESG matters, visit Protiviti.com/esg, and I invite you to please subscribe to our Board Perspectives podcast series and review us wherever you get your podcast content.