Bottom Line Booster
Karyn Twaronite is a partner at Ernst & Young and the Luncheon Keynote for the 2016 Montgomery Chamber Diversity Summit. She was recently interviewed by the Montgomery Business Journal’s David Zaslawsky.
Montgomery Business Journal: What does diversity and inclusion mean to you? • Twaronite: How we look at it at EY is as a critical differentiator and as a critical process key to every aspect of our business, whether it be inside our business or outside our business. How we specifically look at it is that diversity is the differences and unique talents that we have within EY. Inclusion is how we best leverage those unique differences and talents of our team across all of our borders in EY.
How can smaller companies with limited resources emphasize diversity and inclusion? • You raise a very good point. I was reading a research report last night that showed about 15 percent of multinational companies actually invest in a diversity and inclusion leader, so to speak. That is an investment. I actually think that smaller companies might have an advantage in this space. I think what matters most in the diversity and inclusion space is tone at the top, and words and messaging really make a huge difference. I think that leaders of companies of all sizes can make a big difference, but certainly leaders of smaller companies can be very explicit in how they talk about it (diversity and inclusion) and why it’s important to them. They certainly can leverage some of our stuff if it’s worthwhile to them. We openly share it because we think that we all should invest in this space. They could appropriately share what their tone is and why they think it matters and then look to make action on those points. I would think that they could directly impact their culture to make further progress even more readily than larger companies. So I think it’s highly doable.
Smaller companies have an advantage because they don’t have so many layers for their message to get through. • It depends on the level of transparency that a leader has. It depends on the culture. It depends on how they like to communicate. If they’re not a communicator and if they don’t choose to be transparent or explicit, it’s not going to happen. We all know that from research, that diversity on its own makes an environment inclusive of differences does not automatically happen. We do know that there are a whole host of barriers such as unconscious bias and things like that and someone’s upbringing or their culture … that being said, unless you’re vigilant and intentional it’s very difficult to make progress. I would expect it to be very difficult to make any progress unless you’re explicit about what you would expect the values of your company to include.
Please talk about companies that implement diversity and inclusion policies having a more effective and productive workforce. • In our view there are a few aspects to this. One, I would reference the work of Dr. Kathy Phillips from Columbia Business School because this is her research, not mine … the context is that diverse teams actually are more accurate more of the time than homogenous teams, which are less accurate more of the time. With that is just further fodder for making sure that you don’t have homogenous teams that could potentially have the risk of groupthink and not necessarily make the right decisions. We know it’s good for decision-making and for us, we look at it that it’s better for decision-making. It’s better for client service because it’s incredibly important for us that our work be highly accurate and deliver quality service – that’s a foundation.
We have very sophisticated and smart clients around the world. In order for us to add value we better darn well be accurate and we need to be one step ahead of trends and matters. Having a diverse and inclusive team that is servicing an account is incredibly beneficial. We’ve also found by having a more diverse and inclusive environment that it has been incredibly impactful and important for retention, meaning less turnover of employees. We’ve also found that it has been incredibly impactful for making money – revenue generation – as well as brand favorability. I don’t know that there is any company out there that doesn’t want to do well as to its brand and reputation. We all know that we are far more successful when we get business through people’s experience with us and other references of that sort tend to be highly impactful. As an example, if you have a diverse and inclusive team you are far more likely to be able to have consistent customer service and a better-quality work product. With that, the customer is more likely to come back for recurring services or to recommend you to others, and that is very, very important.
Do businesses in general get that diversity and inclusion impact the bottom line? • I can’t speak for all companies, but I do spend a lot of time with terrific companies all around the world. I would say that many do and many more are with each passing month. As people are looking to be able to deal with global challenges, the workplace is very complex right now. Many employers are being asked to do more with less and they’re looking at, how can they better leverage their businesses? How can they innovate more? How can they approach new industries; new customer bases, etc.? One way that’s been proven that they could is by having a diverse and inclusive work environment.
I would also suggest companies like ours that have a platform in this space – we choose to share it because we know that there are still business leaders and companies that are skeptical and may not fully have read all the latest research that’s out there or feel as comfortable or informed. Some leaders say, “Aren’t we there yet? Aren’t we done? Isn’t this women’s issue behind us? The workplace looks pretty diverse.” In all fairness, some might feel like we have and some companies might have, but many of us continue to want to make a lot more progress. One thing as an example that we try to do wherever we can is to use our platform to get the message out there that this (diversity and inclusion) is incredibly important as a business reason and not because it’s just a character-building exercise or something made to do for the community.
Why is it so incredibly important for business? • One of the more recent studies that we sponsored … The Peterson Institute for International Economics headed by Dr. Adam Posen … we sponsored a study that he did this past February where he studied 22,000 global companies in over 90 countries. The bottom line of what he determined was that if you have 30 percent women in management … that you are more likely to have plus-6 percent more in net margin. The bottom line that he was sharing and that we promoted for them is more women, more money. Sometimes, for people who don’t believe that, we try really hard to make sure that the message is out there for all of us. More women out there means more money, but then also, if you don’t have women in your business you’re likely leaving money on the table.
Do EY’s diversity and inclusion policies attract other companies that have similar policies and want to do business with like-minded executives? Or does it have no impact? • Thank you for asking that because it really matters. One, it really does help to do business with vendors that have similar values. It makes a big difference. It’s incredibly important for us for those people that we buy services from. We’re finding that more and more of our customers value it and find tremendous benefit in this. They are using it as a differentiator. Clearly if we have a more diverse and inclusive workplace, chances are we’re able to come to solutions faster and (in) a more accurate manner. Chances are we have less turnover of the teams that service them. Chances are we’re going to have better, well-managed cross-border global teams that can provide them a whole host of different solutions or advice or counsel or diligence that they might need. This way, they know that we can service them better by having this kind of environment. Our customers dig deep and they look and they ask questions and they want to make sure – this way, they can really validate. This isn’t just a slogan on the website. These are very smart, sophisticated companies that know the difference. For us, it really is very impactful to be able to go very deep and show people what we have to offer. It really makes a difference when a customer says, “We selected you because you had the most diverse team that you were offering to us.” It’s usually not the only reason, but is usually one of two reasons. It could also be “that this is very important to us” and provides further validation … “to say not only do we know that this the right thing for us, but we love to see when it’s the right thing for other companies, too.” It’s well beyond comparing notes. It’s a real business differentiator.
In a speech to DiversityInc you talked about aligning human resources and diversity and inclusion. Why is that important? • For diversity and inclusion to really be effective, it has to be embedded in the key processes in a business, whether the business is a big business or a small business. That could be embedded in talent management processes – meaning, do you have managers that you say, “Hey, listen they are inclusive leaders and it matters and we’re going to give them recognition for that” or do you not ever mention it. That’s one way to be totally aligned with talent. You also want to be aligned with markets as well as finance, your sales groups, etc. To run it well, you’d like to be (aligned) with all your major functions and not have separate functions. I think if diversity and inclusion is completely separate, I think of it as a bubble that could just blow away, but if they are synergistic with all the talent processes – this way, you are able to promote a diverse and inclusive group. You have better equitable sponsorship of a whole host of differences in your population. You pay people more fairly. You hire more fairly. All of those things are critically embedded within the talent organizations within our company, including diversity and inclusion in every key process is really impactful.
Has diversity and inclusion moved from being predominantly about race and gender to any aspect that makes someone unique? Is there a lot of work left to do to get there? • Hey, we’ve got a lot more work to do to make progress, but I will tell you how we talk about it. It’s very explicit that we talk about many, many types of differences. For example, yes there are the more traditional types such as gender, sexual orientation, race, ethnicity, culture and nationality. We also explicitly talk about different abilities. We talk about different ways of thinking; different work styles. We talk about different generations in the workplace and their needs. We also talk about people being in different functions and how that can impact how well a team works and to be able to appreciate and leverage those differences. By spanning the entire (gamut) of differences and being very explicit – for example, in the U.S. we need to talk about veterans being a difference, and should be recognized and paid attention to in the workplace as being a valuable difference. By culling out all differences, then people can really see themselves on that list and it’s usually not one thing that somebody identifies with. White straight men are included in our list of differences as well, which we think is incredibly important and not just a program for some people but for everyone.
The Montgomery Area Chamber of Commerce ninth Diversity Summit is billed as: “The Business of Diversity: Aligning Your Diversity Strategy with Your Business Strategy.” What does that mean to you? • I think it goes to what I was touching on before, about embedding it in your business and what your key goals are. I would say it’s a key function and we treat it the same as we treat our marketing functions and our talent functions. And for us, it’s a critical piece of the business.
