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FAST FORWARD: LEADING IN A BRAVE NEW WORLD OF DIVERSITY charteredaccountantsanz.com/futureinc
JOINT
FOREWORD
LEE WHITE Demographic changes and the CINDY HOOK This paper will provide all our 4. The Coca-Cola Company:
CEO, Chartered Accountants continuing war for talent mean CEO, Deloitte Australia leaders with greater insight John Lewis Jr, Global Chief
Australia and New Zealand diverse talent will be sought after about what it means to behave Diversity Officer
in organisations around the world. inclusively and its importance 5. Deloitte: Clare Harding,
When I look at the economic
In addition, Asia’s continuing in the context of future National leader of Strategy
As a leader in 2015 I understand and business challenges facing
economic transformation will business challenges. and Operations
the need for and the importance us nationally and globally, there
result in diverse markets along
of diversity of thought. Diversity is no doubt that diversity is a Deloitte Australia is proud to 6. Deloitte: Adam Powick,
with globalization and digital
of thought is vital to the success of pre-requisite to the success have partnered with Chartered Global Consulting Executive
innovation requiring diverse
our organisation. Without it I know of our business. Accountants Australia and
ideas. Shaping all of this will be 7. Sodexo: Dr Rohini Anand,
we won’t be fully equipped for the Our commitment to achieving New Zealand in the development
the leader of the future. Senior Vice President and
business challenges of the future. equality in our workplace has been of this paper, authored by Juliet
We’re delighted to partner with Global Chief Diversity Officer
longstanding. As the war for talent Bourke (Partner, Human Capital)
However, success will not be
Deloitte on this paper. Their and Bernadette Dillon (Director, 8. The United States
achieved by diversity alone. It will intensifies, our ability to attract
insight and expertise takes the Human Capital). Government (Office of
require a special type of leadership. and develop the best talent will
notion of leadership to a new level. continue to be critical. In addition, Personnel Management):
Successful leaders in the future ACKNOWLEDGEMENT
We thank the team at Deloitte for we know that when different Bruce Stewart, Deputy
will require different behaviours
their contribution to this paper. people with different skills and Thanks and acknowledgement Director Strategic Initiatives
and ways of thinking. As leaders
I hope you enjoy our thinking different perspectives collaborate, to the business leaders, and
we must look at how we can be 9. Walmart Inc. (Global Office
and encourage you to join it enables new ideas and better subject-matter experts who
inclusive to ensure that the benefits of Diversity): Donald Fan,
the conversation. problem-solving. As the business have shared their insights for
of diversity contribute to the Senior Director.
landscape becomes more complex the purposes of this paper:
success of our organisations. Deloitte also thanks its many
and ambiguous, this will allow us to 1. The Australian Army:
The latest in our future[inc] series Australian and international
serve our clients more effectively. Lt Gen Angus Campbell,
“Fast Forward: leading in a brave clients across consumer
To leverage the diverse talent Chief of Army
new world of diversity” explores how business, financial services,
and ideas of our people, and to 2. Bank of New Zealand: mining and resources,
the global mega trends are making
succeed in the future, we must Tony Arthur, Head of professional services, property
diversity a business imperative.
have an inclusive culture. This Retail Distribution and the public sector, which
is both the responsibility and
3. BHP Billiton: Mike Henry, have helped shape our thinking.
expectation of all leaders across
our firm. We don’t always get President of Coal
it right, and have a way to go.
charteredaccountantsanz.com/futureincCONTENTS
Diversity of thought, markets and talent
are heightened by increased global mobility,
technology and new ways to communicate.
Everyone contributes and everyone
benefits. But to get this right, and really
HARNESS THE POWER OF DIVERSITY
our leaders need to understand the potential,
06 10 18
INTRODUCTION PART A PART B
be flexible and above all inclusive. THREE FOUNDATIONAL SHIFTS THE SIX SIGNATURE TRAITS
IN THE BUSINESS LANDSCAPE OF AN INCLUSIVE LEADER
36 39 40
LEE WHITE FCA
CEO OF CHARTERED ACCOUNTANTS AUSTRALIA AND NEW ZEALAND
CONCLUDING APPENDIX 1 REFERENCES
REMARKS DELOITTE INCLUSION CONSTRUCT
42
ABOUT THE AUTHORS6
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What do leaders need to be good at today SO WHAT ARE THESE SHIFTS?
to create business success tomorrow?
Futurists identify five1 to eight2 shifts or “global megatrends”.
Five years out? Ten years out?
Three will have a heightened impact for leaders in Asia Pacific.
INTRODUCTION 01
DIVERSITY OF MARKETS
The slow but inexorable flow of financial power from the West to the East will culminate in more
than 20 of the world’s top 50 cities ranked by GDP by 2050 being located in Asia, up from 8 in 2007.3
This redistribution of wealth, trade and influence will see Asia home to two-thirds of the world’s middle
class by 2030 compared to one third today4, providing local organisations with a tantalising opportunity
to access the “next billion” consumers.
The answer to this question rests on knowing
what future challenges lie ahead. We are
02
living in an increasingly VUCA world: Volatile, DIVERSITY OF IDEAS
Uncertain, Complex and Ambiguous – a Globalisation, hyper-connectivity and digital innovation are changing the nature of consumption,
scenario that makes it difficult to predict the competition, how markets work5 and what consumers expect. Seemingly overnight, this has already
future with any precision. We can be certain, reshaped whole industries (e.g. film, newspapers, retail, banking, universities) and iconic brands
however, about some of the underlying (e.g. Kodak, Borders, Blockbuster), and brought forth new players (e.g. Uber, Square). Opportunity or
shifts that are taking place. threat, it is a reality that has catapulted innovation – of products, processes and business models –
Some of these shifts are developing slowly to the top of the business agenda.
and can only be seen by looking at trend
03
indicators over a sustained period. Others
are happening with speed and are visible to DIVERSITY OF TALENT
the naked eye. Slow or fast, their combined Shifts in education and migration flows around the globe, population age profiles (some growing
impact on organisations will be profound. younger, most aging), expectations of equality of opportunities and work/life balance are all changing
For leaders and their advisors, they will the demographic shape of workforces. Unlike the shift to Asian markets or digital disruption, changes
throw up wicked problems, but for those to the composition of talent pools are not new. Therefore their implications could be easily overlooked
willing and able to adapt quickly, they as one of the significant re-shapers of the future business landscape. However, more than ever, future
present enormous opportunity. success will depend on an organisation’s ability to optimise its diverse and dispersed talent pool.8
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These shifts will make the context for leaders This paper is structured in two parts. Part
VISUAL 1: THE SIX SIGNATURE TRAITS OF AN INCLUSIVE LEADER7
much more diverse – in terms of markets, A explores in more detail the foundational
ideas and talent. This contextual change shifts elevating the importance of inclusive
demands adaptation. leadership – the “why care?” section. Part B
To thrive if not just survive, leaders will need pinpoints the six signature traits of an inclusive
to think and behave differently. Of course, leader, and how their specific patterns
the core elements of leadership are timeless, of thinking and behaviours translate into
such as the ability to set direction and create business success.
followership, but we see a new capability as To identify these traits, we have drawn on
vital to the way leadership is executed. We the experiences of “best-in-class” inclusive Because bias is a leader’s Because tapping into different
predict that organisational success will lie in leaders in diverse sectors globally and Achilles heel thinking enables growth
leaders understanding what it truly means subject-matter experts. We have also built
to be an inclusive leader. In sum, the ability heavily on the prior thought leadership and
to be an inclusive leader, in Darwin’s terms, consulting experience of Deloitte6 with respect
will be the “adaptive factor”. Hear us out. to diversity and inclusion.
Taking the two exemplar elements of
For leaders in the Asia Pacific, and beyond,
direction setting and followership further,
we believe this paper warrants consideration
traditional leadership skills have developed
for three reasons:
in the context of organisational fiefdoms,
command and control hierarchies, and in 1. It introduces six signature traits enabling
localised environments. In contrast, the leaders to move beyond the headlines and Because talking about
future landscape requires leaders to have understand, at a more granular level, what imperfections involves
personal risk taking Because not everyone
a breadth of perspective far beyond their it means to be an inclusive leader (beyond sees the world through
personal knowledge and experience, as well the current focus on unconscious bias). the same cultural frame
as organisational and national boundaries.
2. It explores how the patterns of thinking
Identifying new opportunities, making
and behaviours of highly inclusive leaders
robust predictions and solving complex
will translate into future business success.
problems will only be possible if leaders are
connected to, and include, diverse points of 3. It frames the need for inclusive leadership
view. And in relation to followership, leaders in terms of the local context, providing
will need to behave highly inclusively if they Australian and New Zealand companies
are to lead an increasingly diverse and and institutions with insights about how
dispersed workforce. to adjust to the three foundational shifts.
Because staying the Because a diverse thinking team
This paper will help leaders think about how course is hard is greater than the sum of its parts
traditional notions about what it means to
be a leader must change. Our intent is not
to introduce a new type of leadership; much
research has been undertaken before us to
identify the characteristics of high performing
leaders and those fundamentals still hold true.
Instead, we propose that ideas about what
© 2015 Deloitte Touche Tohmatsu
it means to be an inclusive leader should be
woven through these known attributes. This will
ensure leaders build their capability to create Asia’s economic transformation Diverse markets
and lead their organisations into the future. Digital disruption Diverse ideas
Demographic changes Diverse talent10
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PART A ASIA NOW REPRESENTS THE SINGLE BIGGEST GROWTH OPPORTUNITY in the
portfolio of many organisations around the world.
THREE FOUNDATIONAL SHIFTS Success for those chasing a piece of the pie
is not guaranteed however. Geographically
vast, it is a region rich in social, cultural and
Deep appreciation and insight into the
nuances of Asian markets and culture are
required to customise an organisation’s
IN THE BUSINESS LANDSCAPE political diversity, with its economies at vastly
different stages of development. As McKinsey
& Company observes: “…even the most
business models, product and brand
strategies, and talent management practices
appropriately. Having people with the right
sophisticated multinationals must change cultural and market experience is critical says
This Part explores how does diversity As income levels and mobility have risen, significantly to realise Asia’s growth potential”, John Lewis Jr, Global Chief Diversity Officer
and leadership interlink with the future so too has the demand for a broader range warning that “for global consumer giants, of The Coca-Cola Company: “Right now our
of business, looking specifically at how of goods and services. Asia now represents fidelity to methods that work back home can fastest growing markets around the world are
inclusive leadership will help business the single biggest growth opportunity in be futile.”13 Deloitte agrees; “Organisations Sub-Saharan Africa, India and China. So the
respond to three foundational shifts. the portfolio of many organisations around are finding the past strategies of reducing question of how we win in these markets is as
the world.10 According to a 2014 survey by costs and exporting affordable, scaled-down much of how we embed ourselves in these
FOUNDATIONAL SHIFT 1: PricewaterhouseCoopers, 67% of Australian versions of successful products or services cultures. …the question I put to our business
ASIA’S ECONOMIC CEOs now regard China as their top may not suffice. But they also know that leaders is – even if we get all the tactics and
TRANSFORMATION – destination for offshore growth.11 The New customising for every local market is both logistics right – can we win if we don’t get the
Zealand Government’s international business impractical and expensive. New approaches people part right?”
DIVERSE MARKETS
agency says local exporters have regional and new ways of thinking – about categories,
Asia’s economic transformation has been 2010 research by AsiaLink and the Australian
trade advantages over US or European cultures, and commonalities – are needed.
nothing short of remarkable. By 2025, Industry Group revealed that capability gaps
competitors based on their geographic Serving the next billion is a tantalising
the region is forecast to account for and experience represent one of the biggest
proximity, political closeness and time prospect, but reaching them profitably is
almost half the world’s GDP: home to four impediments to realising the Asian growth
zone efficiency with China.12 anything but straightforward.”14
of the ten largest economies in the world opportunity. According to the 380 businesses
– China (first), India (third), Japan (fourth), surveyed, the higher the proportion of senior
and Indonesia (tenth)8. The global middle leaders who have cultural training, speak an
class population is expected to increase “… EVEN THE MOST SOPHISTICATED Asian language and have lived or worked
from 1.8 billion in 2009 to 3.2 billion by MULTINATIONALS MUST CHANGE in Asia, the higher the reported business
2020, with the majority of this growth performance in Asia.15 Yet just half of those
significantly to realise Asia’s surveyed reported having board members or
coming from Asia.9
growth potential.” senior executives with experience in Asia or
relevant language ability.1612
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Asia’s economic transformation and its These conditions pose both threat and
VISUAL 2: AUSTRALIAN BUSINESS LEADERS WITH ASIA EXPERIENCE AND BUSINESS PERFORMANCE IN ASIA17
burgeoning middle class in particular, present opportunity for every sector over the next
enormous opportunities for many Australian 15 years. In 2012, Deloitte Access Economics
% of senior leaders with Asia experience
and New Zealand organisations. Realising estimated that 32% of the Australian
70 % Board members speak an Asian language
those opportunities depends on leaders’ economy would be susceptible to significant,
capabilities to work in and across that context. imminent threat from digital disruption by
Board members had cultural experience
60 %
and/or pre-departure training However, research suggests that many 2017 and another 33% in the longer term (see
46% leaders are not sufficiently sensitised to, or Visual 3).24 This prediction proved true, if not
50 % Board members lived in Asia
39%
connected with, Asian markets to pursue an understatement when Deloitte reviewed
Senior executives speak an Asian language their growth ambitions. Therefore a focus the impact of digital disruption in 2014.25
40 %
Board members worked in Asia for more on building capability, both individually and
than three months at a time In June 2014 Sarv Girn, Chief Information
27% across the workforce, is paramount.
30 % Officer at the Reserve Bank of Australia
Senior executives lived in Asia
echoed this read of the market, warning:
20 % Senior executives had cultural experience FOUNDATIONAL SHIFT 2: “Ignoring the waves of digital disruption…
and/or pre-departure training
GLOBALISATION, HYPER- has led to extinction for many. You only
10 % Senior executives worked in Asia for more
than three months at a time
CONNECTIVITY AND DIGITAL have to look at the likes of Nokia – which in
INNOVATION – DIVERSE IDEAS spite of owning 30 per cent of the world’s
0% Average
Worse than expected As expected Better than expected Organisations must “innovate or die,”22 says mobile patents (GSM) finds itself struggling
REPORTED BUSINESS PERFORMANCE IN ASIA Microsoft founder Bill Gates. A bold and stark to stay relevant; Kodak invented the digital
statement, but we need not look far to see its camera technology, but failed to capitialise
validity. For organisations around the world, on it; General Motors produced the first
the new reality is characterised by falling commercial electric car almost 20 years
barriers to trade, shifting national priorities, ago, stopped its rollout, and now finds
Building on this, in 2012, AsiaLink identified In light of its super regional strategy, CEO hyper-connectivity and digital disruption. itself trying to catch up with the Japanese
a set of individual and organisational Mike Smith reflected in June 2014 on how hybrids; bookstores, the music industry and
This scenario is changing the nature of newspapers – all of which were the giants
capabilities critical to business success in, ANZ is developing its Asian capability:
consumption, competition and the way of their time, now find themselves trying to
and with, Asia18. Again, Asian experience, “Building a business outside of your main
markets work, in the process redefining avoid extinction.”26
language ability and cultural competence domestic markets… is difficult and takes
consumer expectations. Hyper-connectivity,
were highlighted, along with the ability to build enormous effort. Getting the right workforce
for example, has altered the balance of
and sustain local networks and engage with …is essential... It’s imperative you hire people
power between monolithic institutions and
Government.19 That said, as Diversity Council that have an intimate feel for how a market
consumers, emphasising the importance
Australia observes, not all organisations will works. But this is more than just hiring
of customer centricity and personalisation.
need to increase their Asia expertise: “For locals and experienced ex-pats. … it includes
Similarly, it has opened the door to rivals in
some companies, Asian talent will be very ensuring your senior leaders, the people
emerging countries, along with others closer
important as their future market positioning making the decisions and setting the strategy,
to home who lack the infrastructure (but not
features Asia strongly, whereas the focus of have the experience necessary to make the
agility) of existing large players.23
other companies may be mainly domestic or right calls. It sounds simple but is much harder
in other markets and so a different cultural in practice given the lack of sophisticated Asian
mosaic may be more appropriate.”20 experience in Western markets like Australia.”21
“Business success in Asia “includes ENSURING YOUR SENIOR LEADERS… HAVE THE
EXPERIENCE NECESSARY TO MAKE THE RIGHT CALLS. It sounds simple but is much
harder in practice given the lack of sophisticated Asian experience in Western markets
like Australia.” Mike Smith, CEO ANZ14
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It’s an alluring proposition. Yet its
VISUAL 3: DELOITTE’S DIGITAL DISRUPTION MAP 32
In the race for new ideas, collective intelligence effectiveness relies heavily on a leader’s
and diversity of thinking are GAINING ability to include a broad range of ideas, align
diverse team members, leverage diverse
PROMINENCE AS A POWERFUL FORCE to
32% SHORT FUSE, BIG BANG
50
LONG FUSE, BIG BANG
33 % strengths and actively address the potential
Impact (% change in business)
of the of the sense market shifts and challenge the status quo. for conflict and confusion – a dramatically
Australian 45 Australian
economy ICT and media economy more sophisticated way of assembling and
Retail trade 40 managing teams. At its extreme, the broad
Finance
Education “casting of the ideas net” will require leaders
35 Transport and post
Professional services Health According to Deloitte, diverse thinkers to work across the boundaries separating
30
Agriculture Recruitment help increase the scale of new insights by partners, customers, the general public and
Arts and recreation and cleaning accessing a wider range of perspectives.30 nations, for whom a traditional command and
25 Government
Real estate Collective intelligence can also help guard control style leadership will simply not work.32
services
20 Utilities against groupthink and overconfidence, Arthur reflected on the Bank of New Zealand’s
Timing (years) 15 by triggering more careful information new operational paradigm: “We have been
0 1 2 Construction 3 4 5 processing than may occur in homogenous recognised for the last 3-4 years as the
Accommodation 10
Wholesale Mining
groups. As “Willful Blindness” author Margaret number one small business bank. One of key
and food services trade
17% 5 Manufacturing
18% Heffernan wrote: “In this context, diversity ways that team has driven results is… creating
of the of the isn’t a form of political correctness, but an customer focus groups and bringing them into
Australian 0 Australian
economy SHORT FUSE, SMALL BANG LONG FUSE, SMALL BANG economy insurance policy against internally generated the conversation. Now this is not that clever
blindness that leaves institutions exposed in itself. The trick is to make sure we have the
and out of touch.”31 Tony Arthur, Head Retail right type of customer and/or connection
Distribution at the Bank of New Zealand, to the community where they can challenge
agrees: “We are living in a VUCA world and us, and that we have the right people in the
in facing that world where predictions and room, who bring the very depth and broadest
Most organisations recognise the threats and Given the need to think differently, what sets forecasts are less and less easy to get right, of thinking from the Bank, and we get the
opportunities posed by digital disruption. In a apart breakthrough innovators from the rest? broadening the debate and including a wide balance of talking and listening right.”
2014 Boston Consulting Group survey of 1500 Clearly, idea generation is critical. Indeed, variety of views is critical.”
global innovation executives, three-quarters the above survey found that “breakthrough” Given the capacity and speed of technology
said innovation was among their company’s innovators “cast a wider net for ideas” when to unleash even greater levels of innovation,
top three priorities and 61% had increased compared with either “strong” or “disruptive” digital disruption is one of the foundational
shifts shaping the future of business. Its
61
innovation spending compared with the innovators.29 Collective intelligence and
%
prior year.27 Yet despite this, 83% perceive diversity of thinking are gaining prominence effects are both profound and immediate,
their companies’ innovation capabilities as a powerful force to sense market shifts not only in terms of products and services,
to be average (70%) or weak (13%).28 and challenge the status quo. but also in terms of engagement with the
global ecosystem, competition threats and
operating models. In this context, a leader’s
capability to tap into and surround themselves
with diverse thinking groups – both internally
Despite the high priority and increased spending, had increased and across boundaries – will be critical to their
83% of executives surveyed by the Boston innovation spending organisation’s ability to adapt.
Consulting Group PERCEIVE THEIR
COMPANIES INNOVATION CAPABILITIES
TO BE AVERAGE (70%) OR WEAK (13%).16
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Being inclusive will require leaders to adapt to individuals within their
diverse and dispersed workforce, and to CREATE ENVIRONMENTS
THAT OPTIMISE INDIVIDUAL AND GROUP PERFORMANCE.
FOUNDATIONAL SHIFT 3: Let’s examine the fundamentals. The working To date, however, the data shows mixed In future, demographic shifts will change the
DEMOGRAPHIC CHANGES – population in both Australia and New results when it comes to organisations’ ability workforce profile even more, putting greater
Zealand is ageing. In Australia, the number to attract and develop diverse talent. The pressure on leaders to be highly inclusive to
DIVERSE TALENT
of working age people for every person over average representation of women in ASX100 allow individuals to succeed regardless of
Diversity of talent is at risk of being
65 years old has fallen from 7.3 in 1974-75 senior executive positions has remained their irrelevant differences (such as visible
overshadowed by the two previous shifts.
to 4.5 people today, and is predicted to relatively consistent, from 24% in 2011 to diversity). Leaders will require greater levels
This is because demographic change
nearly halve again by 2054-55.33 In New 23% in 2014. Recent data from NZX showed of adaptation of personal behaviours and
has a slow burn effect on population and
Zealand, the proportion of the labour force that, of the 17 companies reporting in the organisational systems to bring out the best
workplace profiles. And, of course, diversity of
aged 55 years and over is likely to grow from December 2014 quarter, 15% of directors and from this diverse talent pool.
talent is not a new topic. Equal Opportunity
about one in six in 2007 to around one in 24% of executives were women, compared
legislation and the proverbial “war for talent”
four by 2020.34 with 14% and 21% respectively for all of 2014.42
have seen organisations pay more attention
Similarly, while 9.6% of Australians have Asian
to historically marginalised population The workplace is becoming more ethnically
cultural origins, this is shared by just 1.9% of
segments (e.g. women, culturally diverse diverse too. At 30 June 2014, 28.1% of the
ASX200 senior executives.43
groups, mature age workers, people with estimated resident population in Australia
a disability and the Lesbian, Gay, Bi-sexual was born overseas, compared with 23.8% of Many organisations are yet to turn their
and Transgender community). Despite the population in 2004.35 While individuals attention to the impact of other demographic
this, organisations around the world have born in the United Kingdom continue to shifts. In 2013, Chandler Macleod surveyed
generally struggled to include diverse represent the largest group of overseas- 480 senior business people and 672
employees. At senior leadership levels, born residents, this number has declined Australian jobseekers on the advantages
homogeneity largely prevails. from 5.6% in 2004 to 5.2% in 2014.36 and challenges of increased mature worker
Conversely, the proportion born in China and participation. Of the employers surveyed,
However, leaders ignore diversity of talent at
India – the third and fourth largest groups – 44% believed changing demographics would
their peril. The diversity of talent imperative
increased from 1.0% to 1.9% and 0.7% to 1.7% have little or no impact on their organisation,
will only intensify over time. Leaders must
respectively in the ten years to 2014.37 In New leading to the conclusion that many were
adapt, even more than they currently are, to
Zealand, the 2006 Census showed that underprepared for its impact.44 Furthermore,
individuals within their diverse and dispersed
individuals of Asian ethnicity comprised 9.2% despite 61% of employers reflecting positively
workforce, and create environments that
of the population, a proportion expected to on older employees’ productivity and
optimise individual and group performance.
increase to approximately 15% by 2026.38 crisis management skills, a similar number
The migration of visitors across the globe, (60%) also commented negatively on other
including students, is also creating a group issues, many of which reflected myths
of highly mobile and educated workers.39 and stereotypes.45
By 2030, China will have more college
graduates than the entire US workforce; by
2020, India will be producing four times as
many college graduates as the US.4018
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Bringing this back to the three foundational shifts in Part A, in the context of:
• Diverse talent – when employees feel highly included, they are more engaged in their work,
more likely to stay, advocate and go the extra mile for their employer.
• Diverse ideas – when employees feel highly included, they are more willing to speak up with
new or alternative views, enhancing decision making.
• Diverse markets – when these ideas come from individuals with different backgrounds and
life experiences (e.g. culture), new opportunities and greater insights are identified in new
markets or untapped customer segments through, for example, customising product and
PART B
brand strategies.
In all these cases, a leader casts a powerful shadow on an organisation’s culture. When
employees see and experience leaders behaving inclusively, they too will adapt their own
behaviours and actions to the benefit of others, including customers.
THE SIX SIGNATURE TRAITS
VISUAL 4: DELOITTE INCLUSION STAIRCASE48
FAIRNESS AND RESPECT VALUE AND BELONGING CONFIDENCE AND INSPIRATION
OF AN INCLUSIVE LEADER Foundational element and
underpinned by ideas about equality
Focuses on the uniqueness of
individuals being known and
Focuses on creating the conditions
for team high-performance, through
of treatment and creation of a “level appreciated. their confidence to speak-up and
playing field” for diverse talent. motivation to do their best work.
FIRST THINGS FIRST – Deloitte’s research reveals that inclusion is
a dynamic process of active engagement
WHAT DOES and adaptation to other people.46 More
INCLUSION MEAN? pointedly, when employees feel respected
“How you can get away with not using and are treated fairly, when their unique
all of your potential talent is beyond me,” value is known and appreciated, and they
says Bruce Stewart, Deputy Director have a sense of belonging, then they will THE SIX SIGNATURE TRAITS OF AN INCLUSIVE LEADER
Strategic Initiatives, US Office of Personnel feel included.47 Our research shows best-in-class inclusive leaders demonstrate six signature traits – in terms
Management. “The lifeblood of an Inclusive leadership is about: (1) treating of what they think about, and what they do – that are reinforcing and inter-related. This is not
organisation is the uninterrupted flow people and groups fairly, i.e. accordingly to say other people-orientated capabilities are not important (e.g. empowering others) but
of ideas, identities and information. And to their abilities rather than an irrelevant inclusion has very specific characteristics.
when those three things are distributed in demographic characteristic or stereotypes,
a balanced way – when ideas aren’t just (2) personalising individuals, i.e.
shut off, or whatever identity an individual understanding the uniqueness of team VISUAL 5: THE SIX SIGNATURE TRAITS OF AN INCLUSIVE LEADER
chooses to have is not stifled and information members, customers and key stakeholders
is not segregated – then that organisation and (3), using this knowledge about
has the opportunity to be successful.” individuals to make teams smarter. 1 2 3 4 5 6
Committed Courageous Cognisant Curious Culturally Collaboration
intelligent20
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TRAIT 1: COMMITTED “The business case is compelling, but for this “I have lived and worked in six countries,
A highly inclusive leader expends time, “One way I talk about diversity to work, you need to connect to the minds in a significant spectrum of environments
energy and resources on diversity is to give examples of situations and the hearts”, agrees Lewis Jr, cautioning, and cultural backgrounds. … I think every
and inclusion “But, we are not always comfortable talking developed country is far more global than
where a leader has “let a voice in” others may perceive… If you take the Muslim
about the hearts in the workplace.” According
“Being inclusive is a big challenge,” says Clare successfully… where the inclusion of to Dr Rohini Anand, Senior Vice President population in Australia, it is about 2% of the
Harding, Head of Strategy and Operations someone’s opinion has CHANGED population. But if you go to Western Sydney,
and Global Chief Diversity Officer at Sodexo:
Consulting at Deloitte Australia. “It takes it is higher. So if you are a business operating
THE OUTCOME FOR THE BETTER.” “There is no cookie cutter approach. And you
energy, it takes effort, it takes mind space, in Western Sydney, you need to be far more
Susan Lloyd-Hurwitz, Mirvac have to see what’s in it for them. Unless they
and I think it’s actually harder than being a attuned to the particular nuances of that
see the value for them, they won’t want to
non-inclusive leader. But the outcomes are customer base.”
engage. This gets them focused intellectually.
so much better; it’s worth it.” Harding has
Henry’s insight is consistent with findings by You then have to hook them emotionally.” We suspect that combining intellectual and
zeroed in on why being an inclusive leader
is difficult: it takes time and it takes energy, the US-based think tank Catalyst. In 2009, So what does this hook look like? She explains: emotional elements enables leaders to speak
two of a leader’s most precious resources. Catalyst found a strong sense of fair play “We have had them mentoring someone who about diversity and inclusion in an authentic
So what motivates a leader to expend was the most significant predictor that men is different from themselves, to get to know and compelling way. According to Powick,
those resources in the pursuit of inclusion? would champion gender initiatives in the inclusive leaders have an “authenticity about
them personally. It is about giving people
Moreover, how can leaders motivate others workplace.49 According to Catalyst, “with just the agenda, and a consistency about it as
experiences – mentoring, conversations,
to build a culture of inclusion? a small jump in respondents’ sense of fair well. It is in their communications. People look
putting them out in the community.”
play, the likelihood of being identified as a at them and say they are ‘fair dinkum’.” For
Clearly, an understanding of the champion increased more than three-fold.”50 Anand’s change strategy is at once both Anand, this contrasts with those who are
commercial imperative is critical, and simple and very sophisticated. Its simplicity not committed: “It is not necessarily people
Part A has addressed that issue. “The Interestingly, Catalyst also observed that
lies in the simple tactic of leaders exposing saying overt things… They are just mouthing
business case is pretty obvious,” says “their commitment to fairness ideals was
themselves to others’ experiences, especially words without internalising it. Therefore it is
Donald Fan, Senior Director in the Global rooted in very personal and emotional
those in positions of disadvantage. On the shallow and not sustainable.” Importantly,
Office of Diversity at Walmart Inc., experiences.”51 This finding has particular
resonance for Adam Powick, Global other hand this type of “perspective taking” is a this combination can help leaders inspire
“Win the war for talent, drive innovation highly sophisticated activity, requiring leaders others through compelling story-telling
and enhance our customer relevance.” Executive at Deloitte, “At school…it was
very much an in-group and out-group to step back from their personal world view as Susan Lloyd-Hurwitz Mirvac CEO and
Intriguingly, however, most of the best-in- that I experienced. And I have always had and take a broader perspective. It is this Managing Director explained in a recent
class leaders interviewed for this paper cited sensitivity to any form of exclusion that ability to not only “see” but to emotionally interview: “One way I talk about diversity is to
the extrinsic reward of enhanced business comes from a person.” Powick then goes on connect with others’ views, that enables give examples of situations where a leader
performance as a secondary motivator. to say, “And as a business leader, it is a really a leader to see their own world through has “let a voice in” successfully… where the
Their first motivation point was aligned to deep view that a diverse talent pool provides different eyes, which helps compel change inclusion of someone’s opinion has changed
personal values and a deep seated sense of a better overall result, particularly in thinking and reinforce active engagement. the outcome for the better. These stories help
fairness. As Mike Henry, President of Coal at differently and innovation.” people understand what gender balance and
Intuitively we know that exposure to inclusion can actually deliver to the business.”54
BHP Billiton, volunteered, “There are probably
So what does this mean for the way leaders difference, especially when it combines
three elements that motivate me to be
can motivate others? In his extensive body intellectual and emotional elements, is a
inclusive. The first is the values aspect. Not
of work on successful change efforts, highly disruptive moment. In one interview,
just for diversity but inclusion. This aligns well
John Kotter emphasises the head-heart a leader talked about the way their
with my personal values and our corporate strategy. According to Kotter, while engaging international experience (a “see and feel”
values. Secondly, I tend to be someone who the minds of individuals through logical, situation) helped broaden their perspective:
is very rational and there is a very strong rational arguments is important, “people
business case for both diversity and inclusion. change what they do less because they
Thirdly, I am someone who has a lot of energy are given analysis that shifts their thinking
for excellence, and if you really want to have than because they are shown a truth that More than just talking, the importance of diversity and inclusion is reflected
this as both an individual and collective, you influences their feelings”.52 Kotter believes in the dedication of time, energy and resources by inclusive leaders which
have to have an inclusive culture.” the opportunity to “see and feel” issues or
signal that A VERBAL COMMITMENT IS A TRUE PRIORITY.
visualise solutions is essential in committing
others to challenging goals.5322
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Yet highly inclusive leaders also appreciate To this point, Mike Bush, Commissioner TRAIT 2: COURAGEOUS In a much more direct and confrontational
that a disconnect often arises between what New Zealand Police, measures the impact A highly inclusive leader speaks up and way, and one appropriate to his context,
a leader thinks he or she is saying, and what is of his communications in terms of hearing his challenges the status quo, and acknowledges the former Chief of the Australian Army,
actually being heard. As Juliet Bourke writes own words relayed by front line employees: their personal limits Lieutenant-General David Morrison, told
in a 2014 Catalyst blog: “Simon Rothery, the “The thing that makes me really proud is when his soldiers and officers in a now infamous
CEO of Goldman Sachs Australia and New I hear the front line using the language and “The early adopters of this work have been… video57, “I have stated categorically, many
Zealand, wondered whether his staff was demonstrating their understanding of the perceived as mavericks in their environment” times, that the Army has to be an inclusive
really hearing his message that diversity is new direction.”55 says Lewis Jr. “Frankly, they need to be a bit organisation, in which every soldier, man and
critical. We talked about Deloitte research courageous, because this bucks the trend. For woman, is able to reach their full potential
More than just talking, when leaders dedicate leaders, they need to make a decision as to
showing that leaders often think they are and is encouraged to do so. Those who think
time, energy and resources to inclusion, whether they dig in and entrench as they are,
communicating their commitment clearly, that it is OK to behave in a way that demeans
this signals that a verbal commitment is a or recognise the world as it will become, and
but staff report hearing silence on the topic. or exploits their colleagues, have no place in
true priority. Juliet Bourke again: “For Alan be part of the change...” The courage to speak
This is usually a question of relativity: leaders this army…On all operations, female soldiers
Joyce, the CEO of Qantas, that realisation up, challenge others and the status quo is a
are talking about diversity, but not to the and officers have proven themselves worthy
led him to audit his diary over a six-week central behaviour of an inclusive leader and
same extent as other business priorities. of the best traditions of the Australian Army.
period to review the amount of time he was it occurs at three levels: with others, with the
In an environment of information overload They are vital to us, maintaining our capability
allocating to his women mentees and test system, and with themselves.
what gets said less frequently can be missed now, and in to the future. If that does not
whether it matched his personal commitment
completely. After this conversation, Simon suit you….then get out.” To create enduring
to advancing women through mentorship.
Rothery decided to earmark a place for change, Morrison introduced “Respect” as a
Alan’s intent turned out to be reflected in his
diversity in every significant communication
actions—but the audit was hugely symbolic in “FRANKLY, LEADERS NEED TO BE A BIT new and explicit value for Army which, when
moment. Now, whether he’s talking to new framed in the context of Army’s traditions,
its own right and served as a model for other COURAGEOUS, because this bucks the trend.”
employees, the media, or his staff, he makes ensured that the change was both symbolic
leaders in his organisation.”56 John Lewis Jr, The Coca-Cola Company
sure to include diversity as one of the five key and highly impactful.
messages he wants to impart. It’s a deliberate
Courage comes into play, in particular, in a
strategy to ensure his message gets heard.”
preparedness to take a different approach
Challenging others is perhaps the most to the traditional path which may have seen
expected focus for leaders. For Harding, to serve the business well in the past. Highly
courage includes gently challenging followers inclusive leaders think about whether existing
to see their behaviours and the impact they settings promote high performance and
WITH RESPECT TO COMMITMENT, BEST-IN-CLASS INCLUSIVE LEADERS: have on others. “I talk (to my team) about how transformation or, conversely, maintain similar
I came across in that meeting,” says Harding. ideas and similar people. Powick explains:
What do I think about? What do I do personally? What do I do for others? “But I also give them really regular feedback; “We are a very traditional business. We
• Alignment to personal values • Communicate frequently, • Articulates the “what’s in it for ‘Did you know you did that in that meeting, have expected people to grow up the same
of fairness authentically and engagingly the me” and facilitates compelling how others may perceive that?’ It’s really way for 50 years... senior manager, director,
• Commercial value of diversity and
case for diversity and inclusion experiences to ignite the active important to make the feedback regular… and partner. Our metrics haven’t changed
engagement of followers on the ground coaching is critical.”
inclusion with respect to talent, • Prioritise time, energy and in years. …the number one thing I have done
customer and innovation and resources towards diversity • Utilises extrinsic motivation is revamp our performance management
problem-solving and inclusion. tools appropriately (targets, system. This came from a frustration that it
accountability, rewards,
• Taking personal responsibility • Seeks feedback of the impact was very one dimensional; that only certain
recognition).
for action. of their leadership shadow. people were getting through the system.
I had to bust this entirely.”24
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Similarly, in the 1980s McKinsey changed Finally, inclusive leaders have the courage Humility, according to Catalyst, also For the less inclusive leader, the requirement
its recruiting practices to promote divergent to speak out about themselves, to reveal, encompasses learning from criticism and to be vulnerable is countermanded by a belief
thinking and meet a demand for a larger in a very personal way, their own journey different points of view, and acknowledging that their decisions are good, if not “good
volume of consultants. Instead of continuing to being inclusive. There’s a vulnerability to as well as seeking contributions of others to enough”, and therefore including diverse
to recruit from a narrow pool of MBAs being an inclusive leader because confronting overcome one’s limitations. Yet it is difficult viewpoints is effort that is not worth the pain.
from the top US business schools, others and the system immediately invites for leaders in the public spotlight to admit Lt Gen Angus Campbell, current Chief of
McKinsey’s Advanced Professional Degree the spotlight to turn on the speaker. Instead they don’t have all the answers. Courage and Army puts it this way: “I think that for many
Program (APD) sought out talent from of shying away from the challenge of humility therefore go hand in hand, “To be a senior executives… 80% is gut feel, I’m the CEO
industry and from broader non-business imperfection, or entering the fray with bluster good inclusive leader, you must have humility. and I’ve done this and I know the business.
university schools.58 and bravado, highly inclusive leaders adopt You have to understand your strengths Inclusion means you are going to get the extra
an attitude of humility. In 2014, US-based and weakness…and what you actually can’t 20% and that is the difference between being
Where courage came in was the
think tank Catalyst identified “humility” as do”, says Harding. Anand agrees, “Those the market leader, the market innovator, the
preparedness to challenge the status
one of the four leadership behaviours that (leaders) who lack self-awareness and head of the game. You are going to get that
quo, and then to address the initial bias
predicated whether employees felt included.62 lack humility to learn and admit they don’t extra 20% from the others... I think when you
for MBAs, which resulted in APDs being
Yet as Catalyst rightly pointed out, it is the one know everything; these would be leaders don’t have an inclusive circumstance, you
sidelined and failing to make partner at the
attribute that is “most antithetical to common who miss an opportunity to learn and will ride the 80% wave, but… that is the wave to
same rate as MBAs. Courageous partners
notions of leadership.” be blind-sided if they are not careful.” obsolescence, not to next opportunity.”
talked with their peers one-on-one and
sought personal promises of commitment to
support APDs, they briefed the partnership
evaluation committee on the need to THERE’S A VULNERABILITY TO BEING AN
evaluate performance objectively, and they INCLUSIVE LEADER because confronting
“intervened when necessary to improve
others and the system immediately invites the
their chances of ‘fitting in’.”59 Today, “20-30 WITH RESPECT TO COURAGE, BEST-IN-CLASS INCLUSIVE LEADERS:
percent of North American associates spotlight to turn and focus on the speaker.
What do I do for my
are now classified as APD, compared to What do I think about? What do I do personally? What do I do for my team?
organisation?
10 percent in the early 1990s.”60 Looking
back on it now, Brian Rolfes (Administrative In the context of inclusion – how is humility • Acknowledging • Be on the front foot • Help others to see • Challenge entrenched
strengths and of change – an active the impact of their organisational attitudes
Principal and Director of Firm Recruiting demonstrated? Best-in-class inclusive
blind spots change agent behaviours and practices that
McKinsey) comments, “The diversity of leaders talked about their personal promote homogeneity
background helps our problem solving, acknowledgement of bias (as well as a • Correcting biases • Speak up about • Set explicit standards to
personal biases, guide others’ behaviours • Make impactful
which is at the heart of what we do” and desire to change that state) and work to • Learning from criticism
challenges and goals symbolic changes.
industry experience and discipline knowledge identify their own mistakes. Henry employs and different points • Hold others to account
provides “instant credibility with executives three strategies to respond to his own blind of view. • Seek feedback from
• Make tough decisions
diverse others to fill
in that kind of industry”.61 spots: “One, I am very open about my blind with respect to team
personal gaps
spots, and the things I’m working on. Two, I appointments.
do seek quite regular feedback from peers • Behave humbly,
acknowledging
and subordinates, and three I do try to stay personal limitations
attuned.” It’s a strategy with obvious multiplier and vulnerabilities.
effects. Henry again: “A bit of personal
disclosure goes a long way. In the lead up
to our (Inclusive leadership) training, I did
the Harvard Implicit Association Test. And
I was absolutely open (about the outcome)
with my team. I said this is a really important
thing from a values perspective, but I know
that I have subconscious biases, I am not as
inclusive as I want to be.”26
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TRAIT 3: COGNISANT Biases are a leader’s Achilles heel, resulting Highly inclusive leaders exert considerable Henry recalls feedback that his body
A highly inclusive leader is mindful in decisions that are demonstrably unfair effort to learn about their own biases, language doesn’t always match his words:
of personal and organisational blind and irrational. Highly inclusive leaders are self-regulate and develop corrective “When I am starting to come to a strong
spots, and intervenes deeply aware that biases (both conscious strategies. Without these interventions, view, and I have an insight, I push myself
and unconscious) can narrow their field they understand their natural state is one back from the table. It was my physical
“The leaders that are inclusive do a couple of vision and prevent them from making of self-cloning and self-interest, and that means of making myself smaller. The other
of things,” says Anand. “At the individual objective decisions. success in the modern collective workplace thing they picked up on is my tapping foot…
level, they are very self-aware and they act requires a different approach.
Inclusive leaders are highly sensitised to When I get a bit impatient, I will be calm
on that self-awareness. They acknowledge
two fundamental phenomena: personal Henry is aware that recruitment is a faced, but my leg taps. It inclusion is a
that they don’t know what they don’t
biases, such as homophily and implicit vulnerable moment for him: “I am very clear lot of effort.”
know. And they acknowledge that their
organisations, despite best intentions, have stereotypes; and information processing about the type of person I gravitate to when A deep understanding of self also leads
unconscious bias and put in place policies, biases, such as confirmation bias and hiring. Consciously, I put all sorts of checks inclusive leaders to assess how their default
processes and structures in order to group-think.63 Importantly, they are cognisant and balances in place with respect to the settings may differ from, and impact
mitigate the unconscious bias that exists.” of the situations and factors that cause thinkers I gravitate to. There have been others. Indeed, this light bulb moment for
them to be most vulnerable to their pull, times when I have overridden my opinion Harding led her to adjust her behaviours,
such as time pressures and fatigue. with others’ advice, and it has worked with demonstrable improvements in terms
out spectacularly.” of team performance: “In some recent
leadership training that I did, my coach
At Walmart Inc., leaders have been
VISUAL 6: EXAMPLES OF SUBTLE BIASES THAT CAN NEGATIVELY IMPACT THE WAY WE SEE OTHERS AND THE DECISIONS WE MAKE
starting asking about the individuals in my
encouraged to focus on understanding
team, and how much I knew about them.
micro-biases in the form of non-verbal cues,
It was a real eye opener. I am a strategist
both in relation to diverse talent and diverse
and big picture thinker, so I would set a
customers. As Fan explains, “What we are
direction for the team with 4-5 priorities
Group think really dealing with is the nuances, when we
underneath. It was only when the coach
When the desire for group do a day-to-day interface with customers
pointed out that there was someone on
harmony overrides rational and associates colleagues. What does
decision-making.
my team who was more detailed about
In-group favouritism our body language reveal? It’s about how they go about things that I completely
A tendency to favour being mindful of these non-verbal cues.” changed my style with that person. It
Implicit stereotypes members of in-group has totally changed the way they have
Occurs when peopled and neglect members of interacted with the team, in terms of
judge others according to out-groups.
discretionary effort and positivity.”
unconscious stereotypes.
Attribution error Highly inclusive leaders exert considerable effort to LEARN ABOUT THEIR
Similarity-attraction
Occurs when the wrong BIASES, SELF-REGULATE AND DEVELOP CORRECTIVE STRATEGIES.
reason is used to explain
bias (homophily) someone’s behaviour. Without these interventions, they understand their natural state is one of
The bias to more easily Coupled with in-group self-cloning and self-interest…
and deeply connect with favouritism, this results in
people who “look and a positive attribution for
feel” like ourselves. in-group members and a
Confirmation bias negative attribution for
out-group members.
Seeking or interpreting
information that is partial
to existing beliefs.28
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Highly inclusive leaders think about three Highly inclusive leaders seek to pinpoint TRAIT 4: CURIOUS In a virtuous circle, open-mindedness
elements of fairness within the workplace, moments that work to create covert and A highly inclusive leader has an open- and curiosity encourage connections with
particularly as they relate to diverse talent64: subtle advantage for some and subtle mindset and desire to understand how diverse others, which in turn builds a leader’s
1. Outcomes (“distributive fairness”) – “Are disadvantage for others, perpetuating others view and experience the world perspective-taking capabilities. As a by-
outcomes such as pay and performance homogeneity and undermining inclusion. product, when faced with a broad set of
This understanding led Alan Joyce to put “There’s two key parts that I think about ideas and possibilities, these behaviours help
ratings, as well as development and
strategies in place to mitigate the impact (in the context of inclusion),” says Campbell. leaders to amass a spectrum of ideas and
promotion opportunities, allocated on the
of bias in performance conversations: “In “One is: Do I know the people who I am make more robust decisions in an unknown
basis of capability and effort, or does their
the past, people’s opinions and biases working with sufficiently such that I can territory (let’s say, the Asian market).
distribution reflect personal, historic and
were often at the forefront of our talent practically include them effectively? You have
systemic bias?” While intent is important, highly inclusive
discussions. We embarked on a strategy to enough of a connection that you recognise
2. Process (“procedural fairness”) – “Are the them as individuals. And number two is, leaders are acutely aware of how ineffective
take out bias—using external assessments,
decision-making processes and policies I think you really need to like hearing divergent their curiosity and perspective taking
global benchmarking, leadership and
I apply in the allocation of those outcomes but considered opinions, and then be behaviours can be if diligence is not applied.
“potential” data. Now we have a more
(a) transparent, (b) applied consistently, comfortable with making a decision.” Being present and actively listening to
objective and collective view of talent. This
(c) based on accurate decisions, and (d) diverse others is a core skill. Campbell says
enables us to confidently discuss career Highly inclusive leaders accept the limitations
include the views of individuals affected by about his own efforts: “I try to listen. And I
planning, mobility and the benefit of getting of their world view and hunger for the views
the decisions or are they tinged with bias try to understand why someone’s opinion
different critical experiences across diverse of others to complete the picture. This sense
thus leading to undeserved success for is different to mine. And I think in those
business segments.”65 of incompleteness helps drive behaviours
some and failure for others?” two efforts, in trying to listen you are both
associated with curiosity and open- recognising the individual and you are
3. Interpersonal and informational fairness – mindedness – a thirst for continual learning. respecting them, and you’re giving pause to
“Do I explain to those affected the process They are also skilled at synthesising diverse analyse, compare, complement and question
applied and the reason for the decision perspectives to optimise decision-making. your own beliefs. And in giving space in trying
made, and do I treat people respectfully
Highly inclusive leaders adopt an open- to understand the difference of opinion,
in the process, or do I privilege some and
mindset, especially when listening to new you are giving space for the project, or the
neglect others?”
information or engaging in new experiences. initiative or the program you are dealing with,
They withhold fast judgements, are tolerant to become better.”
of ambiguity and look for context to explain Harding agrees: “(Inclusive leaders) take
individual behaviours. They give weight to active listening to another level. You need
the insights of others. Such behaviours do to demonstrate that you have heard them.
WITH RESPECT TO COGNISANCE, BEST-IN-CLASS INCLUSIVE LEADERS:
not come easily. Time and effort is required People need to feel they can influence their
What do I do for my to actively engage with diverse others. But leader, and other people need to see that
What do I think about? What do I do personally? What do I do for my team?
organisation? the result is loyal followers who feel that their they can too. If only people in the clique can
• Accept the reality of • Learn about personal • Create a shared • Initiate an audit uniqueness is valued. influence their leader, you are not an inclusive
bias and have concern blind spots language and of the fairness of leader. You don’t need to be indecisive and
for its impact understanding about organisational systems engage in leadership by committee. You need
• Self-regulate thinking
biases, to promote with respect to
• The impact of micro and behaviours to explain why you have chosen a different
non-judgemental talent, customers and
behaviours (e.g. route; not that you have just ignored them.
• Seek feedback on the feedback stakeholders
messaging through You need to visibly listen, make decisions
fairness of outcomes,
non-verbal cues). • Encourage others • Employ strategies to
process and information and provide explanations about why you
to learn about their mitigate system and
access in decision-making made decisions.”
own blind spots. process biases.
• Be conscious of
moments vulnerable to
bias such as information
overload and fatigue.You can also read
