TED Talks Daily - What DEI gets wrong — and how to do it right | Paolo Gaudiano

Episode Date: June 10, 2024

Social entrepreneur Paolo Gaudiano explains why many companies are taking the wrong approach to diversity, equity and inclusion (DEI) initiatives — by overly focusing on one thing. To avoid backlash and costly turnover, he shows the key change leaders can make to create thriving, equitable workplaces while also increasing profits.

TED Audio Collective. You're listening to TED Talks Daily, where we bring you new ideas to spark your curiosity every day. I'm your host, Elise Hu. For a good while there, diversity, equity, and inclusion at the workplace or other organizations were ideas that did not attract controversy or backlash. But times and the political environment have changed. Social entrepreneur Paolo Godiano takes on this

challenge to DEI head on by unpacking what seems to ring hollow in the efforts merely to diversify workplaces without making the I part of DEI at the forefront after a short break. Support for this show comes from Airbnb. If you know me, you know I love staying in Airbnbs when I travel. They make my family feel most at home when we're away from home. As we settled down at our Airbnb during a recent vacation to Palm Springs, I pictured my own home sitting empty. Wouldn't it be smart and better put to use welcoming a family like mine by hosting it on Airbnb? It feels like the practical

thing to do, and with the extra income, I could save up for renovations to make the space even more inviting for ourselves and for future guests. Your home might be worth more than you think. Find out how much at airbnb.ca slash host. AI keeping you up at night? Wondering what it means for your business? Don't miss the latest season of Disruptors, the podcast that takes a closer look at the innovations reshaping our economy. Join RBC's John Stackhouse and Sonia Sinek from Creative Destruction Lab as they ask bold questions like, why is Canada lagging in AI adoption and how to catch up? Don't get left behind. Listen to Disruptors, the innovation era, and stay ahead of the game in this fast-changing world. Follow Disruptors on Apple Podcasts, Spotify, or your favorite podcast platform.

And now, our TED Talk of the day. I'm Paolo Gaudiano, and I always like to start by addressing a couple of elephants in the room. The first one is the white elephant, and it's me. What is a white, cisgender, heterosexual, fully privileged guy talking about diversity and inclusion. Now, I normally tell people about my history, how I was really interested in diversity and inclusion, how eight years ago I figured out that I could actually tie my research work to find a way to have a proper impact. So I feel a bit like an imposter being here today, but I hope that you'll just let me get away with that. Now, the second elephant in the room is that I'm making this a little bit light-hearted start, but the reality is that there is major backlash going on against the AI right now and I think that's a huge problem. And I want to tell

you about some of the research that I've done and how it leads me to understand why we're seeing the backlash because I think that until we really understand it it's gonna be very difficult to make progress. I believe that until we really understand it, it's going to be very difficult to make progress. I believe that one of the reasons, unfortunately, why we're seeing the backlash is because for five decades now or more, people in business that have been talking about DEI have been focused entirely on the D. I call it the diversity disconnect.

We focus entirely on representation. And we sometimes forget about the E and the I. And this, however, is a very big problem because the D actually creates a few problems including backlash. And let me explain what I mean by that. First of all, the D is a problem because we don't have any tools that can tell us for one organization what will happen if they make the organization more diverse. Which is very interesting, because if you think about other areas where we manage assets, and I like to think of people in a company as being assets, we know that diversification works.

We diversify our financial assets so that we make more money. We diversify our marketing assets so that we make more money. We diversify our marketing assets so that we sell more products. But if I were to go to a company that was primarily white and male and I asked them what will happen if I could wave my magic wand and turn half of the people into people of color or into women, what would happen to your organization? And the answer is we don't know because we have no tools that can help us to quantify the impact of diversifying our human assets. But there is a second problem, which is that unfortunately, the focus on diversity tends to drive backlash because it leads to accusations of reverse discrimination.

Now, you all should be rolling your eyeballs here. And you'd have very good reason to do that. However, I want you to think about it from the perspective of the people that look like me. My CEO just got up on stage today with the chief diversity officer and they said, we have this new plan. We're going to increase the number of people of people of color in our company by 5% and the number of women by 10% in three years.

And you do a quick math and you say, well, that means that you're going to be eliminating 15% white men. And how is that fair? And you can tell me about all the injustices all you want, but the fact is it is unfair and it is discrimination. But it turns out that that's the wrong argument. But it's not the wrong argument because people are interpreting it wrong. It's because the very foundation is flawed. The reason why we need more people of color and more women in organizations is not because we need to stuff more people into the entry level. It's not because we need to go and get a bunch of kids from HBCUs

and invite them into our company to make those numbers look good, only to find out that their managers doesn't know how to deal with them, their leadership doesn't look anything like them, and then they will turn around and leave. No, the reason why we have problems is because when those people get into the organization, they don't stay. McKinsey just released their annual study, and they found that when you look at the ratio of white men, white women, women of color, and men of color in an organization, at the entry level, you have roughly 40 some odd percent white

men, maybe 35 percent, and so on and so forth. By the time you get to the executive level, the number of white men has increased by more than 30%. The number of women and people of color have decreased by more than 30%. Which means that for us to continue to try to stuff people in at the entry levels when our companies are not inclusive is a waste of time. And trying to solve the problem by arguing that we should have higher ratios and setting targets at the company level is a mistake because you're not addressing the problem. I like to joke about the fact that it's as if I walked in the house one day in the wintertime

and I found that it was very cold. Actually, it's very cold in here today. I look at the thermostat and I say, oh my God, look, it says 50 degrees. I know how to fix that. I light a match under the thermostat. And look, the thermostat and I say, oh my God, look, it says 50 degrees. I know how to fix that. I light a match under the thermostat. And look, the thermostat now reads 90 degrees. But in the meantime, the windows are open, the front door is drafty, and the roof is leaking. The problem that we have with diversity, equity, and inclusion leads to what I think of as the definition of DE&I.

Inclusion is about what we do as an organization. Diversity is what we get. In other words, we have to stop trying to fix the symptoms and actually understand what the real problems are. I will also tell you in a minute why I think that equity is what we want. I'll come back to that in a moment. But let's talk about that idea. Inclusion is what you do. Imagine a team that's the perfect team. You cannot get any more performance out of it because each individual performs at their peak and is a team that perform really, really well together. And imagine that now something happens so that one of the people on the team is unable to perform at their peak. What will happen to the performance of the team as a whole? It will decline.

Suppose that now a second person is unable to perform at their peak. Not only is the team gonna lose more performance because of the loss of the second individual, but the rest of the team is gonna get frustrated because they have to pick up the slack, because they'll be late on delivering a project and their manager will say,

oh, we're no longer gonna give you the best projects. That means that pretty soon, the performance of the entire team will decline dramatically because of that problem. Now, I didn't say anything about what the people on the team look like or what they did or why they were not able to work, but it leads to a profoundly important conclusion. Anything that any organization does that causes someone to feel excluded because of their personal characteristics is shooting themselves in the foot. This is a very important point. This is why the third part, which is that equity is what you want. If you have an organization in which you have people that are treated differently and you see it,

because you see that the retention rates are not the same, that the performance is not the same, you are witnessing inequity. You're witnessing in the difference in the outcomes that people experience within your organization. When you see that happen, it means that there are people that are performing below their peak. And just like that example that I gave you, it means that you're making that are performing below their peak.

And just like that example that I gave you, it means that you're making less money because you have less productivity. It also means that those people do not feel that they belong in your organization and they're going to leave. If the retention rate of men in your organization is 90%, but the retention of women is only 80%, that means that you're losing 10% too many women. If your company has 1,000 women, which is not a very big company, and you're paying them an average of $100,000 a year,

and we know that it costs about one year's salary to replace them, it means that you have lost 100 people, and it's going to cost you $100,000 each. That's $10 million a year that you're throwing out the window because you're not treating women inclusively. And the same is true of people of color, people with disabilities, LGBTQ. We have created a way of measuring inclusion, and this is where things get really interesting.

Why are people so obsessed with measuring diversity only? Because it turns out that really, we talk about DI, but look around if you look at any company, they just measure the D. Why? Reason number one, because it's much easier to define. You just ask people, do you belong in this category, in that category, and you count them.

When it comes to inclusion, the most popular definition that I've heard, and there are many out there, was the one given by Vernet Myers, formerly of Netflix, who said, diversity is being invited to a party, inclusion is being asked to dance. I love the definition because it's very intuitive, but if you're running a company, unless it's a party company, it's not going to help you very much. When it came to understanding what I told you earlier, that inclusion is about what you do, and diversity is what you get, and we started to investigate that, we realized something profoundly important. Inclusion is invisible. It's just like privilege. We don't see it. Those of us that are

fortunate enough to have it. And I use the analogy with health. When I introduced myself, I didn't say, hi, I'm Paolo. I'm very healthy today. But if I'd been coughing, if I just had COVID, if I had had, I don't know, a few years ago, I fell off a bike and I had a cast on my shoulder, I might have said something about it. We don't notice when we're healthy. We notice when we're sick. We don't tend to notice when we're included, but we sure as hell notice when we're being excluded. What does that tell you? Well, something very important. If you're very healthy, you tend not to know a lot about diseases. You may not even know the names of the diseases. You don't know the symptoms. You certainly don't know how to cure them. So similarly, if you're very included, you don't know what exclusion means. You don't know the

symptoms and you sure as hell don't know how to fix it. However, if I were to ask people in this audience, if anybody in this audience has ever been sick, probably all of you know what that's like. But if you go in a company and you find out who are the people that are the most included, it's the leaders. It's the ones that look like me who are the least qualified to understand it, to see it, and most importantly, to know what they should do about it. And this is a profound problem. I firmly believe that it's not necessarily that white leaders are evil and they want to keep the power that they've worked so hard to grab.

Yes, some of them do that. There's no question about it. But a lot of them would love to do the right thing. They just don't know how. They don't see it. So my organization helps them to do that by measuring inclusion. And the way that we do that is actually by measuring exclusion. We do workshops in which we talk about some of this work. We show these computer simulations that show relationship between what happens in a company and how the company actually looks and performs.

And then we ask them using a confidential online platform to share specific things that have happened to them that have made them feel uncomfortable in the workplace. And then we also ask him, did this have to do with work-life balance, with compensation, did it have to do with being able to use your skills, and was this something that was because of your manager, your leadership, your policies? And we get a combination of qualitative data in terms of the descriptions of what happens to people, and quantitative data that tells us where to look and who is most impacted. And I want to read you, I brought with me, three examples. We ask people permission to share some of the stories. I want to tell you about some of the

things that people write when we ask them to share experiences. Number one, after introducing myself, I've had individuals ask to speak to a guy who works in IT instead of me. This was a senior engineer who is a woman in a cybersecurity firm. Number two, I was passed over for travel opportunities because I had young kids at home and it was assumed that I couldn't travel even though I was never asked. We hear this kind of stuff all the time. Number three, in a meeting with about 50 people, a vice president said that Martin Luther King Day was not a real holiday

and that we shouldn't take the day off. What's going to happen to these people? They're going to leave and it's going to cost you money and you're going to lose amazing talent. The last thing I want to leave you with is a number, 30. 30 is the ratio between how much money every company in the United States spends in one year on advertising, all forms of advertising. We spend a lot of money advertising, $250 billion a year.

When we look at payroll for the same companies, not all labor costs just payroll, $7.5 trillion a year, 30 times as much. So if you are the CEO of an organization and you have 10 people that work on optimizing your marketing, you should have 300 people working in DI. And if you're not doing that, thank you. If you are not doing that, you are failing your responsibility as a leader to your shareholders. So I don't care whether you do it because you think it's the right thing to do or because

you think it's the right business choice to make. But what I'm going to ask everybody out there is be mindful of the fact that when we think about DE&I, we need to realize that it's not that diversity impacts performance. It's that creating a more inclusive organization is going to lead to organizations that are more diverse, more equitable, and make more money. Thank you. Support for this show comes from Airbnb. If you know me, you know I love staying in Airbnbs when I travel. They make my family feel most at home when we're away from home. As we settled down at our Airbnb during a recent vacation to Palm Springs, I pictured my own home sitting empty. Wouldn't it be smart and better put to use welcoming a family like mine

by hosting it on Airbnb? It feels like the practical thing to do, and with the extra income, I could save up for renovations to make the space even more inviting for ourselves and for future guests. Your home might be worth more than you think. Find out how much at airbnb.ca slash host. That was Paolo Godiano speaking at TEDxHarlem in 2023. If you're curious about TED's curation,

find out more at TED.com slash curation guidelines. And that's it for today. TED Talks Daily is part of the TED Audio Collective. This episode was produced and edited by our team, Martha Estefanos, Oliver Friedman, Brian Green, Autumn Thompson, and Alejandra Salazar. It was mixed by Christopher Fazi-Bogan. Additional support from Emma Taubner,

Daniela Balarezo, and Will Hennessey. I'm Elise Hugh. I'll be back tomorrow with a fresh idea for your feed. Thanks for listening. Looking for a fun challenge to share with your friends and family? TED now has games designed to keep your mind sharp while having fun. Visit TED.com slash games to explore the joy and wonder of TED Games.