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Hi there, and welcome to episode 11 of the No Bullsh!t Leadership podcast. This episode: Pale, Male, and Stale, aka Diversity is Harder Than It Looks.
Now, no one can accuse me of not taking on the big issues in this podcast, and this one is particularly vexed, because whereas there's almost universal acceptance of the value that a diverse team brings to an organisation, very few organisations actually have this nailed. We've had comments and questions from lots of listeners, particularly around gender diversity and also a big shout out to Danielle Duell, who's Chief Executive of People With Purpose. Danielle was instrumental in helping me put together the Purpose Led Strategy at CS Energy. Danielle has a lot of clients talking to her about this stuff as one of the hot topics. This is why we're taking it on now.
Emma and I also contributed to an article in Marketing Magazine last month, which was talking about the transition from a Chief Marketing Officer to a CEO role and the fact that there is still some job function discrimination going on in that space.
I'm going to try and cover this as simply as I can. We're going to start by looking where we should look first, and that's examining our own belief systems. Then we're going to talk about why it's really hard to build diversity at the top level, particularly if it's not part of the prevailing organisational culture and particularly in industries that are traditionally male dominated. Then I'm going to give you a quite detailed example from my time at CS Energy. Alright, so let's get into it.
Let's start with what we believe. If you don't believe in the value of diversity, then what are you doing? You don't need to spend much time Googling the internet to find out how much value comes from diversity, and all organisations benefit from it when they manage to get this thing right. The jury is in. There's absolutely no question that it is value accretive to make your workforce more diverse. If you don't believe in it, you really need to go back and have a think about where you're coming from.
I see so many people get stuck in this, but particularly the pale, male, stale guys that are like me, because they start talking about things like reverse discrimination. This is the biggest red herring you will ever see. Reverse discrimination is a way of saying, "I'm being discriminated against because I'm in the privileged majority." That is a really, really weird thing. Pointing out the fact that for years and years and years unconscious bias has probably acted in these people's favour, including mine, in terms of our ability to get the opportunities, the promotions, the pay rises, and everything else that we've been given throughout our careers. So to bitch and moan about that now is pretty rich.
It's also fair to say that diversity is not just about gender. When you're talking about putting a workforce together, you need diversity in all aspects. So yeah, sure, there's gender, but there's also industry background and making sure that you don't get the group think that occurs when everyone has been brought up through the same industry throughout their careers.
There's the functional background diversity. So sure, you need accountants. You need HR people. You even need lawyers in your organisation. There's diversity in cultural origin and belief system. There's even a really important productive tension that's created when you have people with diverse task and people orientations. So there's a whole range of ways that diversity plays out.
All of this can play out and it doesn't have to interfere with an organisation being a meritocracy, which is best person for the job. But if you're thinking about diversity and team fit and the higher up you go, the more important this becomes. Hiring and promotion decisions get more complex, because you're weighing in team fit, skill and experience mix, and overall value creation, not just individual capability. So the meritocracy is not just about who the best individual is for that role. It's also about who adds the most to the team so that you get the most overall value from that hire or that promotion.
Earlier on I mentioned the term "unconscious bias." I'd just like to give you some statistics on unconscious bias. I'm not sure if you realise this, but 63% of people have unconscious biases. 28% of people have no self-awareness, and 9% are just straight out liars. So if you add that up and do the math, 100% of us have unconscious biases. Now look, obviously I've just made that up for a bit of fun and to make a point. Every single one of us has unconscious biases that we need to recognise and deal with. It doesn't matter if we're in the majority from a privileged background or in a minority group. We all have unconscious biases.
I just want to digress for one minute and just have a quick word on privilege. Privilege doesn't mean you were born into a wealthy family. If you're listening to this podcast, by definition you are privileged, as you're seeking out your higher order needs through self-actualisation. This is the stuff that Abraham Melzer was talking about when he developed the Hierarchy of Needs model. When we talk about privilege, we're talking about things like access to clean water and to food and to shelter, personal safety. How many of you were actually born in a war-torn country? Access to healthcare and medicine. Were you born without a physical disability? Do you live in a country where you have freedom of speech and access to education? Because these are things that define privilege, and most of us in the western world fall into that category. Three dozen odd OECD countries. The vast majority of those populations live in privilege. But we somehow convinced ourselves that only those who are living in five million dollar houses and driving around in Ferraris are the privileged ones.
Let's ask the question, "What's so hard about this?" If it was easy to build a diverse organisation, everyone would have already done it. There's a couple of things that I've found that play out as really limiting factors when you're trying to build a diverse workforce. The first thing is that disadvantage is historical. When you're trying to right historical anomalies, it's difficult, because the people who get into positions of power with the hiring and firing have the old school thinking, and you're working against their unconscious biases and their prejudices in their hiring processes.
We all hire in our own image to some extent. The things that we identify in others that we like about ourselves are the things that we're attracted to. This is why Jeffrey J. Fox says, "Never let weak hiring managers into your organisation, because they will hire in their own image. If they're weak, they will hire weaker, because sevens hire fives and fives hire threes and threes hire ones. All of a sudden, your capability is gone."
The same thing works in terms of prejudices and diversity. So we like to hire people that make us feel comfortable in our own skins. This is a problem that perpetuates the existing situation, and that's one of the things we have to overcome. Now, we can guard against this somewhat by putting together quite diverse panels when we're hiring and promoting people, but we have to be a little bit careful not to break the accountability model, because you still need a single person accountable for making that decision.
One of the other difficulties in trying to build a diverse workforce is that some industries are by their nature more blokey than others. If you look at the STEM disciplines in universities ... And STEM is the acronym that stands for science, technology, engineering, and mathematics ... those cohorts are heavily weighted towards males. So when those graduate pools come out, you might end up with 85% male graduates and 15% female graduates. So in those industries, the odds are already stacked against gender diversity right from the start.
One of the really big issues that stops us from building diverse organisations is that the majority of women still have their careers interrupted by starting a family at some point. Now, I really see this as a key opportunity for building a more diverse workforce. In fact, when I first went into CS Energy, before I had time and money to put into a concentrated programme on increasing diversity, this was where I started. I said to the leaders and I said to our HR group, "Let's just not do any dumb shit. Let's stop penalising great women who are just putting their career on pause momentarily to go and start a family. It doesn't matter whether they want to step out of the workforce for three months or three years. You shouldn't be pushing them away, because that's just dumb. Not only are you hurting them, but you're hurting your own organisation, because you're letting good talent slip away. None of us can afford to do that."
I just want to refer to a very recently released study from McKinsey and Company, which is the premier consulting firm in the world. This is about the differences between the way men and women are treated in the workplace. This is based on four years of data from over 460 companies employing almost 20 million people, so it's pretty solid.
Now, there was a range of findings in this report, but the thing I found most interesting was what they found around microaggressions in the workplace. I've got to tell you. I wasn't familiar with the term "microaggressions," but this is things like having your judgement questioned in your area of expertise or needing to provide more evidence of competence than others do or your work contributions being ignored or being addressed in a less than professional way. The relative incidence of this between men and women is amazing. Some of these microaggressions occur twice as frequently for females as they do for males. For example, being mistaken for someone else at a much lower level role. This may explain, at least to some extent, why females who are equally qualified for roles as their male counterparts are much less likely to go for it. Why would they when their confidence has been damaged so much on the way through, because all of this adds up over the course of a year, five years, and a career.
These issues are generally deep-rooted and they generally occur reasonably early in a woman's career. Once you get to the top levels of organisations and you're hiring in those organisations, the availability of candidates is really important. You can't fabricate a list of diverse candidates if they're not there. We spoke about the STEM discipline issue before. But is it because we're getting biases in the executive search organisations and how they go about their work? Or are we getting just the ramifications of early career choices and filtering as women come through the system?
I really see this as a key opportunity for organisations to grow from below, because you can't just pluck people to the top and say, "I'm going to take you over this other candidate regardless of experience and skill." What you can do is grow it up from the lowest levels. Given the opportunities at those levels and shepherding the talent through is critical. It doesn't matter whether it's male or female, black or white, heterosexual or gay, Christian or atheist. It doesn't matter. You've got to find the talent and nurture it, and particularly to nurture the diversity at the lower levels of the workforce.
This is also benefited by mind shift from activity to value. I will have another episode on this at some point in this podcast series. But I see a lot of organisations bound by activity, and a lot of managers who look at their people and say, "You need to be at your desk at 7:30 in the morning and you need to leave at 6:30 at night. If you're not putting in the hours, then you're not working hard enough." But really, if we shift to a value mindset instead of an activity mindset, we can create a hell of a lot more value in a shorter period of time if we're working smart and we're working on the right things.
Now, I just want to detour briefly through the pay parity question. This is absolutely a no-brainer, so much so, that I think there's no excuse for having any pay disparity in any developed country. This just means equal work for equal pay. We're not talking about paying a female paralegal the same as a male partner in a law firm. We're just talking about the same pay for the same work.
A couple of years ago, I couldn't believe it when I found out that we had a pay parity issue at CS Energy. Most of our employees are covered by an industrial award, and so they don't have any pay parity issues. But there is a percentage that are under contract at CS Energy, and they have to be calibrated differently with the market. I couldn't believe it when I heard that there was a pay parity issue. But the head of HR, Kim Best, who's a fantastic person, came to me and said, "Marty, look. I've just done the analysis on this year's pay review cycle, and we have a small but significant difference that's noticeable between males and females." When we found this out, we didn't muck around. We fixed it straightaway. In fact, that afternoon we reported it to the board, and now we have process in place that actually makes sure that can't happen again.
While we're talking CS Energy, go and check out the website. This is my inspiration for the topic today. Pale, male, and stale. Now, don't get me wrong. I put together at CS Energy an incredible team, and the capability in those individuals and in the team dynamic is the best I could have possibly put together. But where's the diversity? It's not obvious, and certainly in terms of gender and in terms of cultural background, I would have loved to have more diversity on that team. Now sure, we've got a bit of diversity in industry background and functional experience, in the size of organisations and complexity of organisations these guys have worked for, and certainly in the task and people orientations that drive their thinking and decision making. But it's absent gender and racial origin diversity.
Now, those around me know how hard I worked to try and bring in a balance to that team. I briefed executive search firms to find especially female candidates for short lists, but the experience and capability simply wasn't there when compared to the males in those pools. My big learning from that is you've got to start a hell of a lot earlier and build it from the ground up. But you also need to have a mindset that there is a premium in diversity. That premium can actually deliver a lot more than the individual comparison between two candidates. The trouble is it only extends so far before the gap becomes untenable.
I'm really pleased to say that at the layer below the executive in CS Energy, the best talent the organisation has is predominantly female, and they are building for the long term. They have programmes and targets in place to ensure diversity flourishes going forward, but it just doesn't happen overnight. As I used to say, "It took a lot of years to cock the business up. We're not going to fix it in six months."
The things that we put in place at CS Energy to build for the long term: a clear and simple inclusion and diversity policy; a really clear employee value proposition so the prospective employees know what to expect from the organisation; the equal pay guarantee, which I've spoken about earlier; and the flexible working arrangements that don't disadvantage an individual or the company when they have to take a career break to start a family. Now, beyond this, because all of that's pretty non-controversial, we also set some targets for participation of both gender and indigenous people. We set some targets that were both overall targets for the organisation, because it's a traditionally male dominated industry. We also have subordinate targets for females in non-traditional roles. So example, engineering roles and roles out on site. Also, leadership roles, so that we're increasing the percentage of women that comes through the leadership layers.
Now, all this is working well and driving towards result, but it does take time. It certainly doesn't happen overnight. For me, probably one of my regrets in the organisation was that I wasn't able to move that forward fast enough.
That brings us to the end of episode 11. To pick up the free downloadable, some ideas for building a more diverse workforce, go to www.yourceomentor.com/episode11. Thanks so much for joining us, and remember, at Your CEO Mentor, our purpose is to improve the quality of leaders globally. If you like this episode, please subscribe to the podcast through your favourite podcasting app, and give it a rating so that we can reach even more leaders.
I look forward to next week's episode, where we look at the war for talent. Until then, I know you'll take every opportunity you can to be a no bullsh!t leader.