Calls for societal change have sparked unprecedented demand to create more diverse and inclusive organizations — not just because it’s the right thing to do, but because it’s also the smart thing to do.

Research has shown time and again that diverse and inclusive organizations outperform their peers. Just one example: according to the 2018 CEPC whitepaper, Diversity & Inclusion in Corporate Social Engagement, diverse and inclusive organizations are 70% more likely than their peers to capture new markets.

Yet, despite spending more than $8bn a year on diversity programs, very few organizations have achieved their goal of becoming truly inclusive and diverse. So where are they going wrong?

There are various elements that go into building diversity and inclusion. And it’s important that organizations get all these elements right, whether they are developing talent acquisition processes that attract diverse perspectives, experiences and contributions or reducing biases and barriers to employee development. But there is one key element that all others depend on: inclusive leadership.

The problem for organizations is that skilled inclusive leaders are rare. In fact, our research shows that only 5% of leaders globally can be defined as inclusive. The good news is that inclusive leadership can be assessed, coached and developed.

What is an inclusive leader?

Through fieldwork and analysis of over 3 million leadership assessments, Korn Ferry has identified the five disciplines and five traits that define an inclusive leader. To learn about these disciplines and traits in detail, you can download our whitepaper or explore the model below.

The top takeway is that inclusive leaders are leaders who interact with the diversity around them, build interpersonal trust, take the views of others into account, and are adaptive. These abilities increase their effectiveness and the impact they have on:

  • Individuals
  • Teams
  • Organization as a whole

In the following sections, we’ll explore each of these areas in more detail and look at some of the specific benefits inclusive leaders bring to your business.

Individual benefits of inclusive leadership: unlocking potential

Inclusive leaders help organizations attract the best talent from talent pools that haven’t yet fully been tapped. This is crucial, not simply because it spells more high-quality talent for your business, but bringing in perspectives and experiences from traditionally underrepresented talent groups provides insight into the perspectives and experiences of underrepresented customer groups as well. This can also help shed light on problems that more homogenous teams have been stuck on and unable to resolve.

But attracting diverse talent is only the start. The biggest advantage of inclusive leadership is that inclusive leaders know how to unleash individual potential and create an environment where all talent can thrive and grow.

A 2019 Korn Ferry Institute survey of talent management, HR, and diversity and inclusion experts identified some of the key ways inclusive leaders can unlock individual potential. Among those surveyed, there was almost universal agreement that inclusive leaders:

  • Enable individuals to feel free to bring their authentic selves to work
  • Provide individuals with a sense of empowerment to take risks
  • Reassure individuals that there is equity and fairness and that they will be challenged with job stretch opportunities

Research shows that leaders who are seen as fair and respectful, encourage collaboration, and value different ideas and opinions are 2.5 times more likely to have effective employees on their teams. In other words, the ability to unlock individual potential benefits everyone that is led by an inclusive leader, but it benefits underrepresented talent even more. Why?

Individuals from traditionally underrepresented groups face additional biases and barriers to their professional development. If they do not feel included in an organization, they are unlikely to reach their full potential. Inclusive leaders help underrepresented people understand that they have the power to take ownership of their own careers and equip them with the specific insights, strategies, and tools they need to drive their development forward.

They do this through mentoring, sponsorship and coaching, and they are advocates for individuals who they think are being treated unfairly. They also help individuals develop greater self-agency, encouraging them to speak up, be heard, and optimize their contributions.

Team benefits of inclusive leadership: unlocking collective intelligence

A study by the Canadian researcher N. J. Adler has revealed that, while diverse teams do indeed outperform and out-innovate homogenous teams, they can also at times be significantly less effective.

 

Image Source: Nancy J. Adler, International Dimensions of Organizational Behavior, 4th ed. (Cincinnati, OH: Thomson South-Western, 2002).

Why? Because diversity will only lead to better results if it is skillfully managed in an inclusive way. Without inclusion, diverse teams have a high chance of becoming chaotic, leading to lower productivity and engagement, higher turnover, and litigation. It is, after all, much easier to manage a group of people with similar backgrounds and experiences than it is to convince teams made up of diverse individuals to understand their varying thought patterns and behaviors and value them at a deep and personal level.

Even when diverse teams are managed by skilled inclusive leaders, they may be outperformed by homogenous teams in the early stages of working together because disruption and conflict can result when different perspectives, experiences, backgrounds, thinking, and communication styles are brought into a team.

 

Image Source: Charlotte Sweeney and Fleur Bothwick, Inclusive Leadership: Defining Guide to Developing and Executing an Impactful Diversity and Inclusion Strategy (London: Pearson Education, 2016), 171. Graph is adapted from Katherine W. Phillips, “How Diversity Makes Us Smarter,” Scientific American 311, no. 4 (October 2014): 42–47; and Bruce W. Tuckman, “Developmental Sequence in Small Groups,” Psychological Bulletin 63, no. 6 (1965): 384–399.

Given time, however, a well-managed diverse team can significantly outperform a well-managed homogenous one. The key is having a leader who is a self-aware advocate for diversity and has the inclusive skills to leverage the differences within the team to achieve better performance. This is one of the most important benefits of inclusive leadership for your organization.

Organizational benefits of inclusive leadership: driving innovation and growth

There have been many different studies into the relationship between diversity and inclusion and company performance, and almost all of them have come to the same conclusion. Put simply: diversity and inclusion is good for business.

When compared with their peers, organizations that are truly diverse and inclusive are:

  • 70% more likely to capture new markets, Chief Executive for Corporate Purpose (CECP)
  • 75% more likely to see ideas become productized , Center for Talent Innovation (2013)
  • 19% more likely to see higher innovation revenue , Boston Consulting Group
  • 87% more likely to make better decisions , Korn Ferry Research

Inclusive leaders underpin this competitive advantage. They are the ones bringing organizations closer to their aspirations of being equitable, inclusive, and diverse. They are the ones leading the effort to design systems that unleash the potential of all their talent. They are the ones championing diversity initiatives and affinity groups, advocating for structural changes, acting as role models, and holding other leaders accountable for increasing the pipeline of underrepresented talent. Most important, they aren’t just in it for the short term — they are continuously driving and managing changes that make the organization more inclusive and diverse.

In this way, inclusive leaders are fundamental to company success. The greatest challenge for any business right now is to create growth. And, as the diagram below illustrates, the solution starts with inclusive leaders.

 

Image Source: Andrés T. Tapia and Alina Polonskaia, The Five Disciplines of Inclusive Leaders White Paper (Korn Ferry, 2020).

Conclusion

Inclusive leaders are critical to success. They unlock individual potential, enhance the collective power of teams, and support your organization’s ability to innovate and grow.

Unsurprisingly, demand for inclusive leadership at all levels of organizations is steadily growing, but finding these leaders is another matter. We recently analyzed 24,000 leadership assessments to find out what proportion of leaders today could be classified as inclusive leaders. The answer? Barely 5%.

The good news is that inclusive leadership attributes can be defined, measured, assess, coached, and developed. So even if your inclusive leader ratio is only 1 in 20 today, tomorrow it could be 2 in 20. Or 5 in 20. Or even 20 in 20.

To find out how you, and other people in your organization can develop your inclusive leadership skills, read our article, “The Journey to Becoming a More Inclusive Leader”.