Environmental, Social & Governance Briefs

Achieving Better Results with Inclusive Decision-Making

January 16, 2018

Evidence is mounting that diverse and inclusive teams make better decisions that lead to more innovation and better outcomes. Foundations can apply this knowledge of the value of diversity and inclusion to drive better results in grant-making and capacity-building for grantees.

The value of inclusive decision-making

“Inclusive decision-making drives better company performance and gives a decisive competitive advantage.” So concludes a new study by Cloverpop, a cloud-based platform to track, communicate and improve decision making, that is based on an analysis of approximately 600 business decisions made by 200 different business teams in a wide variety of companies over two years. Reported in Forbes, the research shows that “inclusive decision making leads to better business decisions up to 87 percent of the time. Business teams drive decision-making twice as fast with half the meetings. Decision outcomes can improve by 60 percent.”

Similarly, McKinsey concluded that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.” Additional evidence provided by Scott Page in his new book Diversity Bonuses and the Business Case shows that “diversity can produce bonuses,” leading to “higher profits, larger market shares, and faster rates of innovation.”

Improving foundation giving with inclusive decision-making

With a deeper awareness of the value of inclusive decision-making, foundations can strengthen their impact in a number of ways. They can:

1. Build their own teams with employees and advisors from diverse backgrounds and perspectives. People who bring insights from a variety of life experiences as well as areas of expertise will help ensure that good decisions are made in choosing where and how to deploy finite resources.
2. Evaluate prospective grantees based on the diversity of backgrounds and perspectives among their board members, funders, advisors, employees, and clients.
3. Enlist experts to help establish cultures that are inclusive, so that the value of teams is fully optimized.
4. Feature case studies of grants that yielded strong results due to inclusive decision-making.
5. Fund studies to measure the value of inclusive decision-making among their grantees. This can include evaluations of more diverse and inclusive boards of directors as well as employees.

Companies and communities are tackling daunting challenges in addressing poverty, education, healthcare, climate change, human rights, gender equity, and more. And companies are understanding that it’s in their interests to be successful in finding innovative and effective solutions. As a result, it is essential for businesses to maximize the value of their community investments by ensuring that the right people are at the table.