C-suite leaders are making a big assumption about their workforce - and it's bleeding the economy of $1.05 trillion
- New research by Accenture found that 98% of leaders think employees feel their company is inclusive. In other words, leaders think employees can bring their whole, authentic selves to work.
- But only 80% of employees actually report feeling included in their workplaces.
- This gap of about 20 percentage points is called the "perception gap."
- Closing the "perception gap," or making more employees feel included, could save employers millions and boost US company profits by a whopping $1.05 trillion.
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US companies are leaving $1.05 trillion dollars on the table by not being more inclusive, according to a new report from global professional services company Accenture. That missed financial opportunity comes down to not enough companies prioritizing inclusion.
C-suite level executives think their organizations are inclusive, or that the overwhelming majority of their employees can be authentic and bring their whole selves to work, but employees don't exactly agree.
Accenture polled about 1,700 senior leaders, and 30,300 employees on a number of inclusion topics, including the ability to fail without fear, the ability to report harassment, and the flexibility to work from home. Senior leaders estimated that 98% of their employees felt included on the job. But in reality, only 80% of employees reported feeling included at work.
In other words, there's about a 20 percentage point gap between employees who feel included and leaders who think their employees feel included. Accenture labeled this difference between how leaders and employees see things as "the perception gap."
Closing the perception gap, or making more employees feel included at work, would result in a whopping $1.05 trillion more in profits due to increased productivity and savings from lower turnover for US companies, Accenture found.
"If leaders prioritize a culture of equality now, they will see that doing so helps generate the financial results they want and need," Accenture CEO Julie Sweet wrote in the report.
Analysts found that companies where many employees felt engaged were more likely to demonstrate higher profit growth. Closing the gap by 50%, or making employees feel more included, pointed to a 33% increase in global profit growth for businesses. For US companies, that looks like a profit increase of about $1.05 trillion. Analysts found this number by using regression models and simulations to calculate profit increase as well as savings due to lower employee turnover.
For example, increasing the retention rate of women by 5% would save a company employing 50,000 employees up to $8 million per year.
"If leaders prioritize a culture of equality now, they will create an environment that is more likely to produce the financial results they want and need," Sweet wrote.
Research supports Accenture's findings. A 2017 Gallup report found that engaged employees are more productive, more attuned to the needs of customers, and more observant of company standards.
"When taken together, the behaviors of highly engaged business units result in 21% greater profitability," the Gallup report reads.
A 2018 Gallup report found that business units with more engaged employees saw significantly less turnover.
"The reality is, people want to work for a company that aligns with their personal core values, where their differences will be embraced and where they will be able to reach their goals," Nellie Borrero, managing director, senior global inclusion and diversity lead at Accenture, told Business Insider.
"Diversity is a business advantage," she added.
What are some tangible goals leaders can strive for to make their work environment empowering and inclusive? According to Accenture, an empowering environment has these qualities (and several more): Employees feel comfortable reporting sexual discrimination/harassment, employees feel trusted and are given responsibility, employees have the freedom to be creative and innovative, and virtual/remote working is widely available and common practice.
"Eventually, leaders will evolve to see profit and culture not as separate endeavors at all, but as tightly interdependent goals, equally crucial to success," Sweet wrote.
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