Inclusive leadership: Why it matters more than ever
It isn't just a trend—it’s a key driver of business success
Despite the evolution of diversity and inclusion in Australian workplaces, change is still slower than most would hope. Many leaders and companies genuinely building inclusive environments face resistance, scepticism and, more recently, outright pushback.
You've probably heard some dismiss these efforts as a passing trend ("this will change"), as unnecessary ("the gaps are not real") or just a political movement (it's about "wokeism").
Is this true? Short answer: No. Embracing inclusivity isn't just the right thing to do—it's a smart business move. Now, let's go for the long answer.
The Business Case
Time and again, studies show that companies with diverse teams outperform less diverse competitors. According to McKinsey & Company, organisations with gender-diverse executive teams are 39% more likely to outperform companies with low diversity. When the same study looks at ethnic and cultural diversity, the numbers are the same: a 39% boost in financial performance likelihood.
The logic is that inclusive companies tap into a wider talent pool, bringing together varied perspectives that can lead to more creative problem-solving and better decision-making. Also, when employees feel genuinely valued and included, they're usually more engaged, productive, and loyal.
The external impact also influences results. Today's consumers are increasingly mindful of corporate values, and many choose to buy from businesses that reflect their own.
The Issue is Still Here
Despite the progress so far, companies still face many hurdles. Gender disparity in top roles is still significant. The Workplace Gender Equality Agency reports that women hold less than 20% of CEO positions in Australia's largest companies. If we look at the tech sector, women comprise less than 30% of the workforce, even though they represent 44% of the broader working market.
Cultural diversity in leadership is another challenge. Only 6.6% of ASX 300 CEOscome from non-European backgrounds.
Then, there's the persistent issue of pay gaps and uneven career progression. On average, Australian women earn 21.8% less than men annually; and if you're a woman from a diverse cultural background, you're likely facing even steeper obstacles in your career.
Practical Steps
What can companies do about this, particularly when diversity and inclusion are increasingly—and wrongly—portrayed as inefficient or politically motivated?
One crucial step is to abandon the persistent misconception that prioritising diversity and inclusion somehow means compromising on competency.
Many critics say focusing on inclusivity means hiring less qualified candidates. This stems from a narrow view of merit and capacity, often based on traditional career paths and experiences rather than actual skills and potential. By defining successful experiences too rigidly, businesses risk missing out on highly capable individuals whose backgrounds don't fit conventional moulds.
Left unchallenged, traditional recruitment methods tend to reinforce existing biases without us even realising it.
For instance, implementing blind resume screening—removing names, gender, and other identifiers—ensures candidates are judged on their skills and experience. Diverse interview panels are another way to promote fairer decision-making by incorporating viewpoints that challenge our natural tendency toward homogeneity.
Testing skills and abilities through practical exercises, tests or role playing can help identify actual abilities that may not be anticipated by a curriculum or the school someone attended.
Technology can be another powerful ally if used well. Artificial intelligence and machine learning tools can help identify and address biases in hiring, promotions, and performance reviews that might otherwise go unnoticed.
AI-driven platforms can assess applications impartially, flag biased language in job postings, or ensure promotions based on objective criteria rather than subjective impressions.
Change to Last
True inclusivity goes beyond building diverse teams; it demands a cultural shift where all employees feel genuinely valued and empowered. This involves rethinking leadership styles, decision-making processes, and communication methods.
Flexibility is also key. Studies indicate that over 50% of women in technology leave the industry before age 35, often due to inflexible work policies that make balancing career and personal life nearly impossible. Companies with flexible schedules, remote work options, and robust parental leave policies consistently see higher retention rates of diverse talent.
Embracing diversity and inclusion won't solve all the challenges companies face and is not the only dimension leaders have to work on to have great teams.
But it's not just a passing trend that will fade with the next management philosophy; it's a business strategy that will only become more important in a complex world.
As this approach is more scrutinised and criticised, leaders will need to show genuine commitment to action and measurement. They also will have to be ready to challenge existing norms, track progress honestly, face criticism and hold themselves accountable.
It's not easy, but it's the best they can do for business success.