WAIMEA, Hawaii–Just as the only way to truly make authentic gumbo requires only the right ingredients with nothing left out, so too does effectively creating a culture of DEI and seeing the resulting bottom-line improvements, according to one person, who told an audience here that future audiences will need to look much different than them.
Speaking to Rochdale Paragon’s Volunteer Leadership Institute here, Ronaldo Hardy, owner and chief diversity and inclusion officer with CU Strategic Planning, outlined not just the steps credit unions are going to have to take when it comes to implementing a culture of diversity, equity and inclusion (DEI), but also the profitability and performance reasons those steps are necessary.
Hardy, who is also a preacher and who elicited numerous “amens” from his audience, stressed that he has served as CEO of two credit unions, including leading one turnaround, saying his remarks were based on experience, not some recommendations from a textbook. “These are actual things you can see in your bottom line and in your organization that will work,” said Hardy.
“In leading organizations, culture was something I always focused on first,” continued Hardy. “But the temptation we have in financial services when in strategic planning is to go to all the quantifiable goals first. When I joined a credit union as CEO I said the first thing we are going to do is we are going to emphasize what we want to do with our culture. We need to have a cross-generational team, and cross-gender team, and cross-racial things. All of these things were important to me.”
Hardy added that at his prior credit union it reported ROA of 126 basis points and did that by having the right culture first and building around DEI.
Two Common Mistakes
According to Hardy, while there is considerable discussion around DEI, there are two common mistakes made when attempting to implement: lack of understanding and a lack of measurements.
“People really don’t know what it is, how to do it, or how to go about it. So, it can be tempting to say ‘I’m just going to push that to the side’,” he explained. “Then there is the lack of measurements and not knowing how it’s affecting the bottom line, even though it does have a positive impact on the bottom line. You will find consumers and employees are expecting work around this now. We don’t have the luxury of not focusing on it. You could be losing the war on talent and your ability to draw in new members.”
Hardy told his audience that by nature, “We don’t know how history is going to view us until history does it. We are living in what I believe is the second civil rights era. Multiple groups are elevating their voices around the things that matter to them. It’s economic empowerment again. It’s people understanding how their dollars affect decision-making. What you have seen is consumers are making decisions on whether to engage with your organization based upon how well you have done this. It is creating new pressures for people who run businesses.”
It’s All About the Gumbo
According to Hardy, a native and resident of Louisiana, DEI is about three different things all working together, and he used that Cajun specialty, gumbo, to help make is point.
Ingredient One: Diversity
Diversity, said Hardy, is just the “representation of difference. Diversity in the context of gumbo is like having the ingredients needed to make gumbo, but they are just sitting on the counter.”
Ingredient Two: Inclusion
Hardy said inclusion is the most important step in the process, because diversity without inclusion is a waste of time, and so is equity.
“Inclusion is the intentional engagement of that difference. It’s not just about having difference present, it’s about doing something with it. It’s like seeing the ingredients for really good gumbo and all you ever say is, ‘That would be some good gumbo.’ If we’re honest, that is how many of your organizations are set up.”
As an example, Hardy said he believes over the next decade discussions over what is professional and unprofessional are going to move considerably. The reason, he said, is that the parameters for what is appropriate and inappropriate were framed by people who look a lot like his audience at the VLI meeting, which is primarily older and white.
Ingredient Three: Equity
“Equity says it is important to have everything included. Equity is a seat at the table that drives decision-making,” he said. “A lot of times we look at boardrooms and executive teams and we don’t have the representation of the people we are reaching. Without bringing them into the process at all is kind of a problem.”
Impact & Measurements
DEI propels profits, said Hardy, who shared the findings, below.
“At my credit union every time we made decisions that would impact a broad spectrum of people, the perspectives were around the table,” Hardy said. “All of these things happened because DEI was the foundation of our work.”
Hardy said DEI provides robust support for employee recruitment and retention and cited a Glassdoor survey that found 67% of job-seekers evaluate a company’s diversity practices before accepting a job offer. Employees with the highest level of engagement perform 20% better and are 87% less likely to leave the organization, according to a survey by Towers Perrin.
On average, losing an entry-level employee costs employers 50% of that person’s annual salary, and losing a technical or senior-level employee costs employers 50-250% of their annual salary, Hardy added.
DEI Improves Employee Performance
“What could happen in your organization if your employees gave just a little more?” Hardy asked. “DEI has been proven to get employees more engaged. Most high-performance companies strive for 80%. If you could move from 50% to 80%, what would your organization look like with 30% more production?”
The DEI journey is not easy, acknowledged Hardy.
“DEI work is hard because there are so many opinions about it. It is political? Is it this? Is it that? But if you take all that away, it’s just about people. And if you get to that point you get to where you can take it on responsibility. It’s about doing right for people. When you are part of the in group, it’s hard to think about what’s happening with the out group.”
DEI Increases Innovation and Creativity
Hardy noted a Forbes survey revealed 56% of international business leaders strongly agreed diversity improved innovation in their companies.
He also cited a Boston Consulting Group study that found companies that reported above-average diversity on their management teams reported innovation revenue that was 19 percentage points higher than that of companies with below-average leadership diversity—45% of total revenue vs. just 26%.
“What would happen in your credit union is revenue increased 19 percentage points?” he asked.
DEI Promotes Member Satisfaction
“If you do this well you are going to see member-satisfaction surveys going up,” said Hardy. “As you build DEI you should also be measuring how it affects your bottom line.”
DEI Opens New Opportunities
Measuring profitability from innovation is an excellent measurement of the ROI from DEI, he said, pointing to other Boston Consulting Group research that found companies with above-average diversity scores experienced a 45% average innovation revenue in 2017, compared to only 26% experienced by non-diverse organizations
DEI Boosts Brand Reputation Chart
“The question is, what would your community say about you?” asked Hardy. “Corporate responsibility is a high marker for (younger generations)."
The Five Pillars of DEI
According to Hardy, there are five pillars of DEI that include:
Community Development
“This has to be the end-goal of DEI. How are we going to reach the community and connect? “Who are we reaching? Very often we don’t have to reinvent things. These things already exist in the community and we just have to come alongside. At that first credit union (where he was CEO) I asked in our first strategic planning session, ‘If we were no longer in this community, why would they miss us?’ We decided to focus on how to end poverty in our community and then we focused on that.”
Seeking to end poverty, Hardy added, requires addressing transportation, shelter and empowerment, in that order. But most organizations do those steps in reverse, he said.
Board Governance
“DEI is not just an HR project. It’s about more than training. It needs to lift all the way up to the strategic level of the organization if it is going to be successful. If the board is not on board, DEI will not work in your organization.”
Management
“Management has to be on board. Board and management have to steer this together. The board develops strategy and then management has to execute it.”
Brand
“Brand is the consumer facing side of who you are. And you can’t say you are committed to DEI and every ad you put on it has just one group or race on it. Your messages matter and everything you craft around it communicates whether you are serious about it.”
Culture
“This is the internal delivery of who you are. You can’t do DEI right if you are just presenting it externally and not delivering it internally to your staff. And you have to create synergy between brand and culture."