“Diversity management” means consciously using employees’ varied backgrounds in an advantageous and positive way and integrating them into the company. This allows all employees to develop their full potential. Diversity management is becoming increasingly important due to various influencing factors such as demographic change, immigration, globalization and technological progress. Increasing competitive pressure as well as the market’s dynamics and complexity also awaken additional potential for change. To be successful in the market, companies must break new ground and focus on the differences and diversity of their employees.
Influencing factors and change
Demographic change is an important diversity factor. In Germany, that change is characterized in particular by an aging population and a declining birth rate. As a result, there will already be a shortage of more than 6.5 million skilled workers on the labor market in 2025, since 24 million workers (born between 1947 and 1967) will be leaving the labor market and only a maximum of 15 million (born between 1992 and 2012) will be entering it. Besides demographic change, immigration is also influencing the trend. Immigration affords a way to address labor shortages. Companies are therefore increasingly focusing on diversity and integration management. One challenge of such management is dealing with prejudice. For example, a study conducted in the Western cultural sphere found that non-White* applicants are 25-50% more likely to receive a rejection. Likewise, Black* employees report being underpaid, which negatively impacted the productivity of these employees. Diversity does not refer exclusively to origin, however. Prejudice also concerns gender. According to another study, women tend to be seen as followers in the company, which can have a negative impact on their professional development in the contexts of further education. According to a 2020 report by the German Federal Ministry for Family Affairs, Senior Citizens, Women and Youth, the proportion of women in general management positions is 31%. If we look at middle management, the proportion of women already drops down to 15%. At the board level, based on the 200 largest companies in Germany, the proportion of women is only 3%. If we compare these figures with the proportion of women among university graduates, which is 51%, the explosive nature of the issue becomes even clearer.
In addition to origin, gender and age, physical and mental limitations also harbor the potential for discrimination. Affected persons report disadvantages in the workplace, especially regarding pay, promotion and professional development.
LGBTQ employees also quite frequently report being less integrated in the team and therefore less likely considered for promotions. As these studies reveal, there exist different levels of diversity and discrimination. Prejudices like those mentioned above simplify the thinking and actions of individuals. Prejudices arise from automatic thinking and are a kind of filter that unconsciously influences an individual’s own perception. Prejudices are stereotypical ideas that people apply to an individual, and such ideas often have negative connotations. All this makes diversity management especially important in counteracting these trends, especially in the work environment.
Psychological basis: The two systems by which we think
Psychology offers many accounts of how persons think. One of the best-known approaches is that of Daniel Kahnemann. According to Kahnemann, two cognitive thinking systems determine an individual’s thought processes.
The first system is responsible for fast thinking. Fast thinking pertains to actions that happen “just like that,” i.e. are automated. Accordingly, the individual need not exert much effort to perform the action. The abilities in question are innate, learned, or acquired through routine practice. An example is entering a cell phone pin or credit card pin without much thought when paying at the supermarket checkout. Such activities are usually performed intuitively. This system is thus characterized by fast, automatic, instinctive and emotional thinking. These characteristics make fast thinking, in contrast to slow thinking, more prone to error and can lead to wrong decisions and faulty judgments.
The second system is the opposite of the first one and is responsible for slow thinking. In this system, actions don’t happen intuitively but in a controlled way. It’s characterized by a rational, slow, complex decision-making process, and involves logical reasoning.
Both types of thinking take place in an automated way and must work together, and therefore cannot be considered as two separate systems. System 1 (fast thinking) is the starting point of our thought processes and system 2 (slow thinking) takes over when needed. The dangers of fast thinking lie in emotional reactions that cannot be influenced or “turned off”. System 2, on the other hand, harbors the danger of following the path of least resistance. These systems of thinking can then create unconscious biases in the workplace. We must overcome these same prejudices in order to integrate diversity management into the corporate culture.
Integration management with regard to diversity
Diversity management has three central roots: ethical-moral values, political practice and economic competitive advantages. The core idea of diversity management is to create a working environment in which all employees can fully develop and contribute their individual potential and performance in a work climate characterized by appreciation, recognition and openness, regardless of personal characteristics. The characteristics of an open and inclusive organization are:
- Pluralism and appreciation of diversity
- Structural and informal integration of all employees
- Reduction of prejudice and discrimination, especially in HR policy criteria, procedures and practices
- Minor intergroup conflicts
Diversity management promotes efficient handling of change situations as well as cooperation and exchanges among employees. The diverse experiences, qualifications, and expertise of employees enhance these exchanges. Work groups should be as diverse as possible, since the diversity of individuals leads to greater creativity and flexibility. A diverse network can then arise with new resources, ideas, and opportunities. SAP SuccessFactors modules offer a variety of features that can help you move diversity management forward strategically and operationally.
How can SAP SuccessFactors HXM Suite help you with diversity management?
Should you decide to integrate inclusion and diversity management as a core component in your corporate culture, SAP SuccessFactors HXM Suite can help. Throughout the various phases of the employee life cycle, the cloud solution is there to support you.
The employee life cycle begins with the application and hiring process. The hiring process is shaped by the applicant’s experience during the recruitment and onboarding processes. SAP SuccessFactors Recruiting will help you reinforce diversity management: a global career site available in multiple languages will help you reach quality professionals and especially diverse candidates. On your career page, you can showcase your values, initiatives and achievements so as to make your corporate culture transparent to candidates at first glance. Be sure also to use gender-appropriate language when designing the job posting.
With SAP SuccessFactors Onboarding 2.0, you can positively influence new employees’ experiences during the integration process. To address applicant inclusion, SAP offers a personalized name pronunciation feature for properly addressing individuals.
The module’s integrated functions will familiarize new employees with information before their first day of work and also help them establish contact with important people even beforehand. Through these functions, the cloud solution can efficiently support inclusion and protect against information overload.
With the help of SAP SuccessFactors Learning, you can provide your employees with mandatory training regarding cultural self-perception and behavior management. A special feature here is the possibility of providing training in various languages.
Performance & Goals Management
Employee performance reviews should be presented in a transparent way. SAP SuccessFactors Performance & Goals can transparently depict these assessments and feedback based on goals and competency requirements. This function is purely objective, since no biases are involved and the assessments are wholly limited to employee skills. The calibration sessions enable the consideration of entire organizational units and eliminate subjective bias.
Succession & Development
SAP SuccessFactors also gives you the opportunity to establish transparent succession planning in your company. A succession organizational chart provides a transparent view of succession planning, providing you with information on which employees are suitable successors for key positions. These strategic decisions are based on competence requirements and skills. Suitable successors are directly identifiable so that you can counteract any work restrictions based on gender, origin, attitude, etc.
Salary & Bonus
With the help of the SAP SuccessFactors Variable Pay and Compensation modules, the processes of payment and compensation can also be integrated into diversity and inclusion management.
An objective cloud solution can help uncover unconscious bias in calibration and compensation decisions, and external employee data enable better-informed salary decisions. Through objectivity, the cloud solution can detect, prevent and eliminate unconscious bias. This can go a long way towards achieving your company’s goal of making decisions objectively and free of bias.
What should be the focus of your company’s diversity management?
Diversity and inclusion management should therefore focus on integrating managers into the process and entrusting them with responsibility. It’s important that key decisions of the employee cycle are unbiased and that you take all possible measures to prevent, detect and eliminate prejudices. SAP SuccessFactors HXM Suite can support this endeavor with the entirety of its functions. Make your procedure transparent and keep your employees informed of progress while sharing best practice examples with them.
Diversity and inclusion management play an important role in changing corporate culture. Employee diversity fosters creativity and flexibility. All participating parties can make the most of their potential. SAP SuccessFactors supports you in implementing strategic and sustainable diversity management. The HXM Suite helps you integrate new employees through SAP SuccessFactors Onboarding. To benefit from the applicant diversity, you can use the recruiting module to create appealing job ads in gender-neutral language. In combination with the other talent processes, it can ensure objective performance evaluation and succession planning. The various features and tools of the cloud solution will help you reduce the occurrence of biased decisions as well as objectify performance measurements. Targeted diversity and inclusion management counteracts the influence of prejudice on decision-making in the company.
* In this regard, we would like to point out that “White” and “Black” do not denote biological characteristics or actual skin colors, but refer rather to political and social constructions. “Black” and “White” are capitalized in order to make clear that these are constructed assignment patterns and not some real characteristics attributable to skin color.