Research: What Inclusive Companies Have in Common
by J. Yo-Jud Cheng and Boris Groysberg
The killing of George Floyd catalyzed a reckoning around racial injustice that led many corporate leaders to seek to evolve their organizations to meet today’s tremendous societal challenges. Many U.S. organizations have publicly pledged to increase diversity by filling more executive positions with individuals from underrepresented groups. Some boards of directors, like Nike, Starbucks, and Uber have gone further, tying executive compensation to diversity goals.
While it is still too soon to know the effects of these policies, we do know from prior research and our own experience that financial incentives can be effective in changing behavior in the short term. But will these policies create sustainable and long-lasting organizational change?
Alongside these formalized change mechanisms, we think it is just as important for leaders to turn their attention toward an informal lever for organizational change: culture. We asked more than 19,000 HBR readers to rate the diversity and inclusivity of their organizations and to rank their organizations’ central cultural attributes.
We found that one particular culture style differentiated the diverse and inclusive organizations from those that were not: a learning-oriented culture.
Developing the right culture can be a slow and difficult process. Although achieving a shift toward a learning culture will take longer than setting diversity targets and paying out bonuses, we believe organizations that are able to pull it off will be the ones to build equitable, diverse, and inclusive organizations for the long-run.
What Is a Learning Culture?
Each organization’s culture is distinct, but can be described by a combination of eight culture styles that fall along two dimensions: how individuals respond to change (stability versus flexibility); and how individuals interact (independence versus interdependence).
Learning-oriented cultures emphasize flexibility, open-mindedness, and exploration, and can equip organizations with the ability to adapt and innovate. The power of culture lies in its alignment with strategy, and therefore, there is no one-size-fits-all formula. However, the flexibility afforded by learning cultures can be invaluable in navigating today’s exceedingly uncertain business environment.
The Relationship Between Learning, Diversity, and Inclusion
Our survey of HBR readers revealed that 65% of respondents did not think that their organizations are diverse and inclusive. When we separated the organizations that were rated highly for diversity and inclusion from those that received low marks, some cultural differences emerged. Among organizations rated as very or extremely diverse and inclusive, 14% had an organizational culture in which learning was the most salient culture style. In comparison, among organizations rated as not at all or not very diverse and inclusive, only 8% ranked learning as the most salient style.
On the other end of the scale, we found that organizations that were not diverse and inclusive were much more likely than diverse and inclusive organizations to have cultures that emphasized authority (dominance, decisiveness) and safety (stability, preparedness).
It’s important to note that culture styles do not operate in isolation and that examining an organization’s most salient culture style only reveals part of the picture. Organizations are defined by multiple styles, so we next analyzed the relative salience of all eight culture styles. Here, we found that caring ranked as the most salient culture attribute across all organizations, on average, regardless of how the organization was rated on diversity and inclusion.
A culture that emphasizes caring, collaboration, and mutual trust will provide a foundation for diversity and inclusion, but that isn’t sufficient on its own. What’s interesting about learning cultures is that they differentiated the diverse and inclusive organizations from those that were not.
We found that as the level of diversity and inclusion reported by respondents increased, so too did the organizational emphasis on learning. Among organizations that were not at all or not very diverse and inclusive, learning ranked as the sixth most salient culture style (out of eight styles); among organizations that were very or extremely diverse and inclusive, learning ranked as the third most salient culture style.
When we zoomed out further, we found that organizations that are rated as diverse and inclusive had cultures more heavily weighted toward flexibility and independence, while organizations that were not diverse and inclusive had cultures that tended toward greater interdependence. While one might expect interdependence to be a good thing for inclusion, interdependent organizations tend to focus on tradition, rule