Editor's note: This post originally appeared in the September issue of American Banker Magazine.
In South Africa this June, President Obama delivered a powerful speech about the lives we lead and the aspirations we have for our families and societies. The impact of his important message to us, as individuals, was amplified by the palpable influence of former South African President Nelson Mandela, a moral compass for those striving for freedom and equality.
The speech also contained critical insights for business leaders. As Obama reminded his audience at the University of Cape Town, "no country will reach its potential unless it draws on the talents of our wives and our mothers, and our sisters and our daughters."
Replace "country" with "company," and you have a valuable observation that way too many enterprises still fail to appreciate fully, and steadfastly act on.
Yes, most business leaders intuitively understand that their companies cannot reach full potential if their human resources policies fail to embrace talent regardless of gender, race, culture and sexual orientation. The problem comes in correcting long-standing practices and mindsets that, over far too many years, have become deeply entrenched in the way companies operate and individuals interact.
Many companies have found inclusion and diversity initiatives hard to design and sustain. Progress can be slow and skepticism high, especially at first and particularly among entrenched groups. The early gains often lack visibility, and course corrections are inevitably required. Indeed, it should not come as a surprise that, despite lots of fanfare at launch, some companies have ended up essentially deeming the odds insurmountable.
If not derailed by the high degree of difficulty, multiyear diversity and inclusion efforts also can easily fall victim to the temptation to substitute words with action, to create PR campaigns that speak to awareness without undertaking the detailed measures that actually change behavior and provide ongoing reinforcement. These are just some of the reasons why many executivesand a significant number of the people looking to them for real leadershipare often disappointed with the outcome of policies in this area.
Given the importance and huge upside of success, the risk of disappointment must be continuously confronted and overcome. This requires business leaders to reassess and repeatedly communicate the why, how and when, including their personal commitment. So here are seven insights that we at PIMCO have found particularly valuable in pursuing this important objective, which we believe is essential to maintaining our firm's tradition of meeting and exceeding client expectations.
- Be clear about the merit-based arguments for inclusion and diversity. The evidence is overwhelming; it is also intuitive. Properly drawing on a broad spectrum of talent, ideas and perspectives produces better outcomes for clients in a fast-changing world.
- Tailor what you learn from outside research and experimentation. There are many difficult judgments to be made about the initial scope and scale of inclusion efforts, including proper sequencing. External insights are a great starting point, but any approach must be adapted to your firm's culture and circumstancesotherwise you invite skepticism that will undermine progress and weaken business capabilities.
- Address the unconscious biases that we all harbor. Science-based training combined with practical examples can do a lot to collectively identify existing biases that lead to suboptimal outcomes in important decision-making. We have found that initial firm-wide training needs to be quickly reinforced with more tailored tools and solutions.
- Guard against a "tick-the-box" mentality or an excessive focus on metrics. This is about a durable evolution of core values that serves clients well for many years. It requires the continuous incorporation of best practices and new knowledge into what employees do, not just individually but as an organization. Traditional metrics help but they capture only a portion of what is needed and what is achieved.
- Recognize that gender diversity, like other forms of diversity, is a fundamental input to the cognitive diversity that is critical for navigating a fluid and increasingly complex global economy. The theory and evidence on this are clear. The potential upside becomes even more substantial when companies have to react to the types of global realignments that have become so common these days. Broad engagement is critical to sustained success, which is why it is important to include men on gender initiatives.
- Own the initiative and hold yourself explicitly accountable in front of colleagues. There simply is no substitute for buy-in from senior leaders, starting with the CEO.
- Finally, never let current success blind you to the greater success that is achievable in the future. As Warren Buffett noted in Fortune on May 2, America has forged its success "while utilizing, in large part, only half of the country's talent. For most of our history, women ... have been relegated to the sidelines. Only in recent years have we begun to correct that problem."
Business leaders have an obligation to make this correction. It is the right thing to do. Though it may be hard, it certainly is feasible, and unquestionably it is in the strong collective interest of our clients, our employees and our institutions.
Mohamed El-Erian is the CEO and co-chief investment officer of PIMCO.