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Kenan Institute 2022 Grand Challenge: Stakeholder Capitalism
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Market-Based Solutions to Vital Economic Issues
Kenan Insight
Jun 15, 2022

A New Approach to DEI, and Why the Time Is Right

Part of our series on: Stakeholder Capitalism

Al Segars and Anselm Beach have delivered to business leaders a new, research-driven approach to diversity, equity and inclusion (DEI): the Values/Principles Model (VPM), defined by four core values that are the destination of the journey and seven guiding principles that serve as the means to get there. It’s a simple, straightforward framework detailed in an article that’s part of a special report in the summer issue of the MIT Sloan Management Review.

But can a simple framework provide the answers to a complex challenge that well-meaning organizations have wrestled with for decades? Segars, the PNC Distinguished Professor of Strategy and Entrepreneurship at UNC Kenan-Flagler Business School, says yes. He and co-author Beach, deputy assistant secretary of the U.S. Army’s Equity and Inclusion Agency, write in the article: “We found overwhelming evidence that the VPM values not only provide a standard for measuring distinct aspects of DEI but that they operate together, forming a belief system that guides attitudes and motivates the actions of people within an organization.”

Many organizations already have recruiting efforts, diversity training and grievance systems in place, so why is now the time to take a fresh look at DEI? Segars sat down recently to talk about the research, the story behind it and what he hopes CEOs will take away from it.

Best of Times, Worst of Times

Awareness has in one sense brought us to the best of times, Segars said. Many leaders have recognized the value of DEI to their organizations. Plus, “there are no longer any easy problems to solve.” Therefore, to be successful in the future, “We’ve got to figure out a way to frame tougher challenges in a better way; the perspective of DEI is that better way,” he said. “But it’s the worst of times because that involves change, dramatic change.”

At this crossroads for DEI, Segars and Beach saw leaders who had embraced the concept but failed to change their organizations, which can create a new set of problems. “People recognize that,” Segars said. “They say, ‘Well, they’re not really an organization that values a whole lot of different perspectives and talents.’ And so then the organization gets caught in this backlash of trying to do something, but what you’re doing backfires on you.”

Before diving into the article in detail, Segars put forth three takeaways he viewed as part of a top-line summary of the work:

  1. Put everyone “on the solution side of the equation,” meaning a focus on changing organizations rather than people. “We felt that a lot of what was being written about DEI and a lot about what was being prescribed to promote DEI was actually not inclusive,” he said.
  2. Build a better workplace. Many organizations were actively recruiting for DEI but not successfully. “They wanted people from underrepresented communities,” he said. “People from underrepresented communities didn’t want them.”
  3. Address how meritocracy is viewed, considering that some people need more help reaching their destination in an organization than others and that companies need systems to promote this kind of equity. “We cast all that as the left-handed baseball glove,” Segars said. “If you’re a baseball team and you only have right-handed baseball gloves, then left-handed people can’t play. They could try to play, but they wouldn’t be very good.”

Studying Those Who Do It Well

Segars and Beach undertook a multiyear field study of 17 organizations across multiple business sectors, including Google, Walt Disney Imagineering and Mayo Clinic, that have been recognized for their DEI efforts in business rankings. “It’s good leadership,” Segars said. “It’s the right idea about what DEI does for you. ‘It’s a capability, not a requirement.’ That was a quote that one of the executives gave us.”

Segars was inspired in part by the Boston University School of Medicine, where his daughter went to pursue medical and PhD degrees. “I was just so blown away by their approach to [DEI],” he said. Rather than reviewing only traditional academic metrics, the admissions committee uses a holistic approach. Each applicant’s experiences and attributes are considered as they relate to desirable traits for physicians, a process that has produced more diverse classes. “That probably was one of the first times I said, ‘There are organizations that do this very, very well,” Segars said.

Interviews with executives, middle managers and team members about DEI goals and ways to achieve them produced common themes, which created the VPM. They then surveyed an additional 350 employees in the same organizations along with 450 respondents from 113 Fortune 250 companies to test the model. (More details on the research are available in a box accompanying the article.)

The original interviews produced the core values — representation, participation, application and appreciation — and guiding principles on which the VPM is built. Of the four core values, representation was the one that companies most often got right, largely through their hiring, but broad, meaningful participation was a different story. “Participation is a leap of faith,” Segars said. “You seek and engage people and perspectives that have traditionally been invisible or discounted, which means different approaches to generating ideas, making decisions and engaging customers.” Of the core values, he said, participation “was the one that I think is most edgy, let’s put it that way.”

Crossing the Rubicon

Application stands above the rest in the difficulty to undertake, Segars said. “It’s hard. It’s really hard,” he said with a laugh. “We call that crossing the Rubicon when you’re able to do that.”

“You have to really rethink a lot of things that you’ve done as a company,” he said. “So if you think about the enemies of change, it’s history and success. You’ve got a long history of doing things, and they’ve all been successful, and now we’re going to change. We are going to redefine success. It’s very, very hard to do that.” Yet, a greater frontier of success lies ahead with an innovative approach to DEI.

In the VPM, application goes far beyond what a company’s employees see internally and extends to what its designers design and what its salespeople sell. “What you really want to do is say, ‘Look, we for the longest time have had a view of design, we’ve had a view of our customer. What if we open up that frontier a little bit? What if we figure out what communities really want? And have them be part of what we design?” Segars said.

An Expanded Model for Appreciation

Among the core values, appreciation is perhaps the most overlooked, but it should be considered just as vital. Segars and Beach found that weighing the values equally is important and that putting more importance on one than the others could have the effect of undermining the results of efforts using VPM.

“People want to be recognized by their peers. We want to be recognized by the people we work with, by the people that mean the most to us,” Segars said. “And yet, what the organization typically does is give out Employee of the Month, Employee of the Quarter and things like that, not realizing that when you do that, it’s a very exclusive practice, particularly if those reward systems are not understood.”

Moving toward recognizing groups in addition to individuals, making sure employees at all levels are recognized, and establishing transparency around how award winners are decided are among the ways he says appreciation can better coexist with DEI principles. “If you can create a system of appreciation that more fairly honors a community rather than a person in the community, you’re there,” Segars said.

A Call for Courage

The seven guiding principles that Segars and his co-author have identified as guideposts for achieving meaningful change are:

  • Build a moral case.
  • Encourage willful interrogation.
  • Develop new mental models.
  • Adopt entrepreneurial leadership.
  • Ensure accountability.
  • Be ambitious.
  • Expand the boundary.

The principles bristle with words calling for courageous leadership. “Encourage willful interrogation” stands out as one that might make even some of the bravest CEOs shudder. “There are things that go on in organizations that leaders would prefer not to know,” Segars said. “Sometimes it is very hard to learn and accept that your organization has longstanding flaws that impact some people in a very negative way.”

But “willful interrogation is really your best avenue for building trust,” he said. “If you’re willing to hear what’s going on in an organization, and you’re willing to acknowledge that. I think that was another thing that was key about willful interrogation, to say, ‘Yeah, we know the organization’s not perfect. I’m sorry that happened to you. And we know that there’s work to be done. Help us create a solution, let’s use these conversations to build a plan of action.’ To listen, acknowledge, respond and act was the beginning of building trust.”

‘The Seed Is Planted’

Segars hopes the article will give organizations a path “to be able to solve the difficult problems ahead, to be able to build the kind of workplaces that people want to be a part of, to build the communities where people benefit and work becomes something that is part of a greater ambition.” He does expect that some companies may think the model asks a lot, maybe too much, and that they will hesitate before acting. “But I think that when the seed is planted,” Segars said, “you think about it and you eventually know it is the right thing to do.”


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