In their new book, Move Fast and Fix Things, Frances Frei and Anne Morriss outline five strategies to help leaders tackle their hardest problems and quickly make change. Their third strategy is creating an inclusive environment that allows all employees to thrive. Although it can be hard to measure a complex outcome like inclusion, researchers are working to identify and quantify the many effects of inclusion on firm performance, and the insights they’re generating are persuasive.
Facebook made “Move fast and break things” an informal company motto. But leadership experts Frances Frei and Anne Morriss argue that this belief is deeply flawed — and that it keeps leaders from building a great company.
The best leaders move fast and fix things — they solve hard problems while making their organizations stronger. In their new book Move Fast and Fix Things (Harvard Business Review Press), Frei and Morriss outline five strategies to help leaders tackle their hardest problems and quickly make change:
- Identify your real problem. (See 10 Signs Your Company Is Resistant to Change)
- Build — or rebuild — trust with your stakeholders. (See 10 Pitfalls That Destroy Organizational Trust)
- Create inclusive conditions that allow your whole team to thrive.
- Tell a compelling story about the change you need to make.
- Execute your plan with a sense of urgency.
This month, we’ll be publishing a series of excerpts that correspond to each strategy. Today’s excerpt is about inclusion, which Frei and Morriss define as the act of creating conditions that allow other people to thrive — not in spite of their differences as complex, multidimensional humans, but precisely because of those differences.
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Although it can be hard to measure a complex outcome like inclusion, researchers are getting better at it. Serious people are working to identify and quantify the many effects of inclusion on firm performance, and the insights they’re generating are persuasive. Below is a list of some of our favorite findings, many of which remain generally underappreciated.
1. Inclusion helps you recruit good people.
Inclusion is now a tell for all kinds of talented people — not only the underrepresented — that you’ve built a healthy workplace and understand what it takes to collectively excel. Expect candidates to look for evidence of inclusiveness in everything from where you recruit to the fine print of your benefits package. For example, they may not need those same-sex fertility benefits or veteran mentorship services, but they’ll still see them as a sign that you appreciate difference.
2. Inclusion helps you retain good people.
It turns out that those same candidates will stick around as employees if you truly walk the talk on inclusion. Inclusion drives higher rates of retention at all levels of the organization, and some employee segments (military veterans top the list) will reward your ability to value their unique contribution with industry-leading loyalty.
3. Inclusion increases the engagement of your people.
Engagement scores are consistently higher for companies labeled “inclusive,” and we now have some interesting data that helps to explain these numbers. Inclusive companies are also almost three times better at coaching people for improved performance and four times better at identifying and building leaders. Making people better is the key to their engagement, and inclusion seems to give you an advantage.
4. Inclusion makes you more resilient.
When different types of people are thriving in your organization, you’re better at navigating crises and (our favorite business euphemism) “turbulent times” in general. You’re more adaptable, more comfortable with change, and better at dealing with personnel problems. One fun fact: while the S&P saw a 35% decline in stock performance between 2007 and 2009 (remember that ride?), the shares of inclusive companies went in the other direction, gaining over 14% in value.
5. Inclusion grows your marketplace.
Inclusive teams are better at identifying and cultivating new markets because they expand a firm’s peripheral vision and help eliminate its blind spots. More women in decision-making roles, for example, improves a company’s ability to solve problems for female clients. And this is before we even get to the macro implications of economic inclusion. For example, the U.S. GDP could get a boost of up to $25 billion if just 1% more of persons with disabilities joined the labor force. What percentage of that boost would represent new customers for your business?
6. Inclusion makes you more innovative.
Inclusion creates a healthier meritocracy for new ideas where out-of-the-box thinking is more likely to break through. This happens in part because people in inclusive organizations are more likely to surface and hear the what of a good idea rather than allow that idea to be diluted or buried by an unexpected who. How much of an innovation bump does true inclusion buy you? Depending on your starting place, estimates range from roughly 20% all the way up to 70%.
7. Inclusion turns you into better decision-makers.
Decision quality goes up when a range of voices are not only present but also integrated. In one delightful study, all-male teams beat individuals nearly 60% of the time, but gender-diverse teams outperformed individuals almost 75% of the time. Teams that were gender diverse, geographically diverse, and had at least one age gap of more than 20 years made better decisions than that lone individual 87% of the time.
8. Inclusion helps you manage risk.
In the wreckage of the 2008 financial crisis, a serious “Lehman Sisters” argument emerged positing that the story would have played out differently if more women had been in the room for the most consequential decisions. Subsequent studies have since explored this argument, concluding that gender inclusion in the C-suite and boardroom is associated with a healthier firm relationship to risk—neither overly risk-averse nor risk-seeking—and better overall performance.
9. Inclusion improves your stock price.
Estimated bumps to shareholder returns range from 10% to over 30% (seriously) when you get inclusion right. This may be why Goldman Sachs recently announced that it would no longer take any company public where the board is made up exclusively of straight, white men. Whatever your organization’s own return on inclusion may end up being, the question we often ask companies is, “What else are you doing to chase those kinds of returns?”
10. Inclusion makes you more money.
For all the reasons we’ve covered in entries one through nine, inclusion ends up boosting both your top line and bottom line. Your talented, engaged teams will drive higher revenues through better innovation and smarter market development, while allowing you to spend capital more efficiently through better decision-making, higher retention, and higher productivity. And when you hit some turbulence along the way, you’re more likely to land the plane safely. We hope to live in a world where inclusion is an organizational given. Until we get there, we know of no other distinction that can deliver these kinds of advantages.
This excerpt has been lightly edited.