Inclusive organisations can combat social inequality and improve the bottom line

“Market uncertainty is pervasive, and confidence is deteriorating. Many see increased risk of a cyclical downturn. Around the world, frustration with years of stagnant wages, the effect of technology on jobs, and uncertainty about the future have fuelled popular anger, nationalism, and xenophobia.

“In response, some of the world’s leading democracies have descended into wrenching political dysfunction, which has exacerbated, rather than quelled, this public frustration. Trust in multilateralism and official institutions is crumbling.”

Just a few years ago an analysis like this would probably only come from a rebel on the fringes of public debate, someone keen to upend the established order. But the author of this dystopian missive is Larry Fink, the founder of investment house Black Rock, writing a letter to company CEOs just a few months ago.

That such a dire warning should come from the very heart of establishment power is a sign of just how fundamental to our economy and society is the problem of rising inequality. And as Mr Fink makes clear, if we do not take action to combat that inequality an economic and societal reckoning may loom.

In recent weeks we have seen the tragic toll of division and hate. The carnage in Christchurch and Sri Lanka shows that social ruptures can have far-reaching and painful consequences. But the response to these horrific events has also given us a glimpse of a better world: leaning in, extending love, kindness and compassion in solidarity.

The problem is costly and deeply ingrained

To address a problem, first we must understand it, so it is worth taking some time to explore the scope of the impact of inequality.

First there are the material impacts on people that are disenfranchised – poor nutrition and diminished health, which can descend into homelessness and shortened lives.

Then there are the social impacts for those people – stagnation, humiliation and the grim reality of low expectations, cascading through multiple generations.

And finally there are the impacts that harm all of us, rich or poor – the cost to the community of higher health and security spending as well as the impact on crime, family violence and the perceptions of safety in our streets.

Picking up on just one of the implications, it is valuable to dive in deep on mental health. There is a growing understanding of the relationship between the level of inequality in a society and the incidence of mental health issues.

Approximately 800,000 Australians have severe mental health needs, with 3.3 million having mild or moderate needs, according to the Productivity Commission, but this population is not equally distributed across all social groups.

As the Australian Institute of Health and Welfare recently found, disadvantaged groups, such as people from very low socioeconomic backgrounds and people residing in remote areas, may have more difficulty in accessing services that could improve their mental health.

And the costs are borne widely. Poor mental heath has been found to cost Australian employers $11 billion annually, due to a combination of absenteeism, reduced productivity and higher compensation claims.

If we are serious about tackling the underlying factors that contribute to mental health challenges, we must find ways to help people who are struggling to have a better quality of life. The services available to people with the means to afford them need to be made available to a much larger cohort of people in need.

Inequality manifests itself in many ways

Privilege for some creates disadvantage for others. Power is distributed among a narrow slice of the population whose collective influence affects everyone. We cannot have a fair society nor respond to economic and environmental challenges when decisions are left in the hands of just a few who do not represent society as a whole.

Many organisations are attempting to rise to the challenge. But despite good intentions, inequality in opportunities and in outcomes is perpetuated because society has conditioned people to divide the world into ‘us’ and ‘them’.

These two groups are treated very differently as we value, reward and recognise those like us and frequently unconsciously devalue ‘them’. The implications of this include some people having more opportunities in life and at work, greater access to higher quality services to improve their lives, greater choice about where to live and a wider circle of support.

The consequences are costly: to business, to governments and to society – as well as to those left behind.

We all need to get better at ‘and’ thinking – not ‘you or me’ but ‘you and me’; not ‘us or them’ but ‘us and them’. Organisations that adopt this approach will be rewarded, not just in a warm feeling of doing the right thing, but in improved productivity, in scope to access new markets and in ability to attract talented staff.

Those of us who have succeeded according to traditional measures of success – position, salary and status – ignore the fact we are usually beneficiaries of a significant tailwind. We are prone to privileging our experiences, ideas and perspectives over those of others.

Unless we understand our differences, we cannot leverage them. Unless we appreciate the headwinds many Australians face, we cannot combat them. Unless we tackle these issues together we will all be poorer – not just in income, but in the society we want to live in.

Inclusive growth offers a new path

There is a way to create a more integrated and equal world.

Inclusive growth ensures that not only is an economy growing in aggregate, but that the benefits of that growth are shared equitably. Done right, inclusive growth can have a massive impact on people aspiring to reach the middle class.

Improving the health of lower income earners increases their economic productivity, allowing them to get an education and take on work, prompting a virtuous cycle. Further, higher income for poorer people increases their purchasing power, raising demand for local goods.

Creating pathways to access credit can help disadvantaged people try their hand at entrepreneurship, invest in their children’s education and even practice more effective family planning. And greater civic awareness can empower people to demand better services from their government.

But inclusive growth does not only occur as a societal level – individual organisations can also take steps to ensure that they use an inclusive approach. This means that they are considering the needs of a wide range of stakeholders, and in doing so are reaping significant benefits.

Benefits for organisations include:

• Greater participation, as people can do what they do best, free from the constraints of being pigeonholed into roles because of certain characteristics. Consider the lost opportunities when an engineering firm recruiter overlooks women, or a nursing home limits promotional opportunities for men, or a design firm nudges out its older staff. Organisations that do take a more inclusive approach to talent will benefit from the comparative advantage they gain over their peers. The Grattan Institute has estimated that Australia’s GDP would be $25 billion higher in a decade if Australia had a 6 per cent increase in female workforce participation, matching the level of Canada.
• Increased innovation, as organisations tap into new ideas that build on the experiences and perspectives of a wide variety of people. For example, many of the improvements in product design that we all take for granted now were sparked by considering the needs of people with disability. Accessible doorways, speech recognition software and tactile safety warnings would all be less common if not for the inclusion of people with disability in design teams. According to the Australian Bureau of Statistics, of people with a disability aged 20 to 24, only 32 per cent are at university or getting a vocational education, significantly less than the general population in that age group.
• Better public policy, as the intended beneficiaries of policies communicate their needs, interests and aspirations. On Indigenous matters, paternalistic programs driven out of capital cities are making way for programs developed collaboratively with people on the ground in remote communities. Right now Nous is involved in a community-led service delivery model for the Aboriginal community of Napranum in North Queensland, which aims to give the community control over the services offered for young people and how they are delivered.
• Greater contribution from staff, as sick leave due to stress, episodes of poor mental health and illness are reduced. Organisations with low morale and a poor culture often experience lower levels of engagement with staff, leading to higher absenteeism. Greater inclusiveness can keep people more connected to the work they are doing. Stephen Frost, the London Olympics diversity and inclusion head, argues that when gay people remain in the closet, they are 10 per cent less productive than when they feel able to be themselves.

Leaders need to turn good intentions into actions

It can be challenging to know how be more inclusive.

Addressing inequality and cultivating inclusion means understanding difference and leveraging that difference by creating equal opportunity for everyone to participate. That means leaning in and listening to the experiences of those we unconsciously devalue – and then making space for people with different experiences, perspectives and backgrounds to stand among us as equals.

With an inclusivity approach touching the full breadth of an organisation’s activities, managers seeking to understand how to do it strategically can benefit from experience elsewhere.

When it achieves inclusivity, an organisation can become a much bigger than the sum of its parts.

Get in touch to discuss how Nous can help your organisation become more inclusive.

Written by Deb May during her time as a Nous Principal.