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Originally published on LinkedIn

In an article first published in 2004, Harvard Professor David Thomas argued that the real competitive advantage of a diverse workforce is the capacity of its members to learn from each other so that they can develop an expanded range of competencies that can be applied to all aspects of their work. If this is true, then it would stand to reason that striving for both diversity and inclusion would increase a company’s competitive advantage and impact its bottom line.

Here are 5 steps to increase your company’s competitive advantage by leveraging both diversity and inclusion.

Step 1: Differentiate Between Diversity and Inclusion

The first step is to have a detailed discussion at the senior leadership level on the meaningful differences between the concepts of diversity and inclusion. To achieve competitive advantage, the company leadership must make distinctions between the two. Although a company may boast tremendous diversity among its staff, from administrative teams to management, steps need to be taken to ensure inclusion is part of the overall strategy.

Diversity is variety, inclusion is action. Having people from different backgrounds, with different religion, gender, race, and age from one another is diversity. But a team with diversity doesn’t necessarily mean a team with inclusiveness. Inclusion is more than just random variety, is is purposeful, it requires a culture that mindfully validates and facilitates growth and development of everyone, and that includes variety in every cross section of the whole.

A colleague once constructed the perfect metaphor for differentiating between the two: “Diversity is being invited to the party; Inclusion is being asked to dance.”

Step 2: Understand How to Create Opportunities

You should work with senior leaders in the organization to consciously address the “inclusion deficit.” Having people that are different is not enough; people in the organization need to be nurtured, opportunities for advancement need to be created, and more focus needs to be directed toward the retention of these individuals.

Without a sincere effort to improve bias or other barriers a minority group might face within the company, things are not likely to improve. Failure to change the status quo leaves employees without opportunities for advancement and leaves the company without a strategic opportunity to increase its competitive advantage.

Step 3: Re-Evaluate Company Practices

A thorough audit of the company’s practices is imperative to identify specific ways to transform the work environment into a truly inclusive space. Is uniqueness being valued? Are employees made to feel like an insider within the organization? Is there a clear channel for their ideas to be presented and considered? And most importantly: does the senior leadership team’s diversity reflect that of the company’s employees?

It serves no purpose to recruit intelligent employees with diverse backgrounds, unless you create an inclusive environment that allows them to reach their full potential and drive innovation.

Step 4: The Value of Inclusion

In order to persuade the leadership to put their time and attention behind this effort, and to approve an executable plan of action, it is crucial to show them that the biggest value in working towards creating a truly inclusive work space is a boost in competitive advantage; inclusiveness also increases the employee retention rate. And finally, by giving all of the team members a voice and real, tangible opportunities for growth, advancement and development, the company effectively becomes an incubator of new ideas and processes.

The Boston Consulting Group and the Technical University of Munich led a study** in which diversity leaders, HR executives and managing directors at 171 European companies from a wide range of industries and sizes were surveyed. The study demonstrated a clear relationship between the diversity of companies’ management teams and the revenues they get from innovative products and services.

Step 5: Communicate and Implement the New Strategy

Finally, both individual and group discussions with managers and key members of the team need to be held, while being especially careful to curate a diverse team of speaker so that everyone’s concerns can be represented, and sincere, fully supported efforts to address them are implemented. This will increase their sense of belongingness to the organization.

These inclusive practices should be clearly communicated to the entire team, as this sends a strong signal to the company’s employees that they have a chance to be successful within the organization. A successful company strategy is one in which everyone understands that diversity is getting invited to the room, inclusion is getting a seat at the table.

In today’s global economy, a dynamic team embodying diversity and inclusion is better at adapting and reading the market, understanding what a non-homogeneous clientele’s needs and wants are, and delivering a solution that will have a high success rate.

*Thomas, David A. “Diversity as Strategy.” Harvard Business Review 82, no. 9 (September 2004).
** Lorenzo, Rocio et al “The Mix That Matters.” Digital BCG (April 2017).