At Penserra, every day is a graduate level workshop showcasing the strategic power of diversity and inclusion. Ask those employed by Penserra or any of their valued customers: embracing and promoting diversity provides a foundation for better problem solving and productive innovation. Likewise, academic research has shown that organizations who court all dimensions of diversity gain a competitive advantage, creating opportunities where team dynamics are intensified by broadening relationships, enhancing trust, and increasing accountability. As a result, organizations with greater workforce diversity such as Penserra have greater levels of customer satisfaction and are more capable of helping them reach their strategic goals.
Penserra, a minority-owned business enterprise (MBE) founded in 2007, is committed to the principles of diversity and understands the role it plays in running a dynamic, progressive and high performing organization. The firm is proud that 47% of the firm’s employees are from diverse groups. As an indication of the firm’s commitment to promote diversity and inclusion throughout the financial services industry, Penserra recently committed significant management and financial resources toward Diversity Project North America, a National Investment Company Service Association (NICSA) initiative consisting of 25 financial services firms whose aim is to promote diversity in the financial services industry through collaborative leadership from executive business leaders pooling resources from industry participants. Penserra Founder and CEO George Madrigal is a member of the project’s CEO Advisory Council, and Connie Kreutzer, Penserra’s Head of Institutional Sales, is a member of the initiative’s Executive Steering Committee.
Penserra also recognizes that diversity needs to be viewed as a strategic directive requiring as much art as science. Diversity is considered a science because there are certain essential principles and techniques required to measure social dimensions including, but not limited to, race, ethnicity, and gender. Diversity becomes art through the process of inclusion, a societal ideology ensuring opportunity within an organization through the achievement of a work environment in which all individuals are treated fairly and respectfully, have equal access to opportunities and resources, and can contribute fully to the organization’s success.
The Science of Diversity
Diversity has historically been viewed from evolutionary perspectives such as affirmative action, equal opportunity lawsuits, and representation quotas. As such, most firms were compelled to react, rather than act, to diversity initiatives. The dichotomy of reactive vs. proactive policies can be viewed from the perspective of identity diversity vs. skills diversity.
Identity diversity can be defined as the representative view of diversity using variables such as learning style, life experience, race/ethnicity, class, gender, sexual orientation, country of origin, as well as cultural, political, religious or other affiliations or perspectives. It is a two-sided coin – both how one views themselves and how others view you. While this type of diversity continues to be very important to building diverse teams, it may not be as important as skills diversity.
Skills diversity (one can substitute “cognitive”, “experience”, or “perspective” for “skills”) refers to the tools people bring to their organization. While identity variables still apply to skills diversity, it is driven by the multitude of experiences that makes people who they are, such as primary language, type of education, level of education, social customs, political beliefs, value system, problem solving methods, work experience, geographic origins, and a host of other variables.
The Art of Inclusion
No matter how an organization goes about building a diverse team, the team’s potential will never be realized unless the organization also masters the art of inclusion. This is the secret behind Penserra’s success as an organization.
A deceptively simple definition of inclusion is “managing a group so that all diverse members are given the opportunity to participate equally.” But it is more complex than that. Depending on the team and the goals, the company will need to artfully use a number of tools to unlock the team’s potential. Paradigm Strategy, a consulting firm focusing on diversity and inclusion, cites four principles it considers essential for a company to successfully unlock the benefits of organizational diversity:
- Objectivity– Promote and disseminate throughout the organization that decisions are made in objective, data-driven ways. This drives more equitable outcomes and communicates a sense of fairness to employees, ultimately boosting retention, performance, organizational commitment, and overall satisfaction.
- Belonging– Create a work environment where employees feel respected and valued and can express themselves authentically at work. When employees feel confident that they belong, they spend less time wondering if they fit in. As a result, employees not only perform better, they also have higher levels of engagement, perseverance, health, and well-being. By fostering feelings of belonging, companies empower people to focus on work and reach their full potential.
- Voice– Ensure everyone in the organization can feel safe speaking up and sharing ideas. When employees feel like they have a voice, they are more satisfied and committed to their jobs. Demographic attributes like gender, race/ethnicity, age, and cultural background, coupled with people’s specific personalities and communication styles, can lead to some voices being heard far more often than others. Employees from underrepresented backgrounds often face unique barriers with respect to voice, as they are often less empowered to share ideas, given less speaking time, and interrupted when they do share. By proactively giving everyone a voice, leaders can ensure the best ideas are on the table.
- Growth– Advocate employee growth by ensuring everyone has an opportunity to learn, develop, and advance at work. Create a culture promoting a personal growth mindset – the belief that abilities and talents are malleable rather than fixed traits. With hard work and coaching, all employees can develop and improve.
Diversity and Inclusion: An Analytical Approach
Since 2016, Thomson Reuters, a financial services information company, has compiled a Diversity and Inclusion Index, a list highlighting the 100 most diverse and inclusive companies globally. Powered by environmental, social, and governance data (ESG), the index is a quantifiable measure of a company’s diverse and inclusive work practices, using widely reported metrics (such as board gender diversity, day care services and management training programs) as well as less easily quantified measures like how inclusive companies are.
Ranking over 7,000 companies, the Thomson Reuters Diversity and Inclusion Index draws from over 150 content research analysts trained to collect ESG data. These analysts process manually over 400 ESG measures for a single company, with each measure going through a careful process to standardize the information to make sure it is comparable across the entire range of companies. The starting universe of candidates for the index is the set of equities tracked by their ESG database at the rebalance date. There are a total of 24 diversity and inclusive measures, with each having its own defined benchmark and rolling up into one of four diversity and inclusive “pillars”. The four “pillars” are:
- People Development
The index is rebalanced on a quarterly basis, after close of business on the final trading day of the month, using the most recent bi-weekly data update from the ESG database to update the scores. The new rebalance is effective at market open on the first trading day of the month
On the academic front is The Science of Diversity and Inclusion Initiative, housed at the University of Chicago Economics Department. This effort brings together leading researchers and organizations and blends them in a “living laboratory” to identify, accelerate, and apply new evidence-based approaches to advance diversity and inclusion.
For a growing number of organizations, creating a workforce that is representative of today’s diverse society is a moral imperative. But many also understand the business benefits of diversity. Companies that adopt diversity as a strategic narrative are smarter, they make better decisions, and they solve problems more effectively than non-diverse teams.
While the benefits of diversity are clear, organizational diversity efforts often overlook a key component to unlocking these benefits — inclusion. Diversity brings people from a wide range of backgrounds to the organization, while inclusion ensures that people feel valued and respected, and that they have equal access to opportunities. By acting inclusively, organizations can boost satisfaction, performance, commitment, motivation, creativity, innovation, engagement, and well-being
As Penserra has exhibited throughout its history, for diversity to deliver competitive advantage, the art of inclusion must be applied to unleash it. Moreover, Penserra has shown that a company’s strategic objectives can be achieved when employees are encouraged and rewarded to work effectively with people from different backgrounds, cultures, and identities.