The Foundation for a Culture of Inclusion:

Character Reputation of the Senior Team

A culture of inclusion is built upon the patterns of interaction (character habits) the senior team
establishes with the workforce. Return on Character research 1 provides evidence to support
this claim.

Diversity has long been talked about in the corporate world. Decades ago, many large
business organizations began to name chief diversity officers. The initial focus for these
individuals was to recruit employees who brought diversity on external dimensions, such as
race and gender. Enlightened HR executives quickly understood that diversity is a much
broader concept than this. In addition to demographics, diversity applies to talent, skills, points
of view, and experience.

More recently, the idea of inclusion has surfaced. This is the idea that diversity doesnt matter
much unless the organization has a culture that supports inclusiona culture where
diverse talents, skills, viewpoints, and experience are leveraged. An organization made up of
isolated subgroups does not add much value unless the lines between the subgroups are
blurred. Diverse groups of people need to work together to achieve the vision for the
organization.

Definitions
Diversity is a way to describe the workforce on many different dimensions. Some dimensions,
such as race, gender, and age are external and easily observed. Others, such as talent, skill,
viewpoints, level of mental complexity, degree of emotional intelligence, and character habits
are more difficult to recognize. All dimensions are important to consider in a diverse workforce.

Inclusion is the conscious act of welcoming and valuing diversity. Its creating a safe
environment where all kinds of people are invited to participate and influence choices.

Tiffany Jana put it, Diversity is what you have; inclusion is what you do. Another writer, Verna
Myers, said, Diversity is being invited to the party; inclusion is being asked to dance.

Virtuoso is descriptive of senior teams who have a strong character reputation with their
workforce. Strong character is further defined as acting consistently with forgiveness,
compassion, integrity, and responsibility.

1
Our research is reported in Return on Character: The Real Reason Leaders and Their Companies Win.
Harvard Business Review Press, April, 2015.

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Self-Focused is used to describe senior teams who have a weak character reputation with
their workforce. Weak character is further defined as acting about 50 % of the time or less with
forgiveness, compassion, integrity, and responsibility.

Important to Note: Character reputation can only be measured via workforce input. A full 86%
of senior leaders cannot accurately self-assess their character reputation because they
base it on their intent. Intent is usually positive, but does not reflect behavior. Additionally,
nearly seven out of ten senior leaders are completely in the dark with regard to how the
workforce views them.

In Groups and Out Groups

Surveys on workforce engagement report remarkably similar results in all parts of the global
economy. Most workers do not profess to feel engaged or included by their workplace. In
North America and Europe, 70% or more of the workforce consistently reports feeling
disengaged. Effectively, they are not members of the in group in their place of employment.

In groups in organizational life take on the form of silos. Organizational subunits are a fact of
life. Large, complex organizations could not succeed without having specialized departments
who do specific things. However, organizational success is compromised when these subunits
or silos fail to communicate, cooperate, or even collaborate with each other. Silos are a fact of
life in the biological world. Ones heart and lungs represent two silos, but they are wired to
collaborate. If they fail to do so, death quickly ensues. Organizational death is not as quick nor
as certain when silos fail to collaborate. Organizational success is clearly compromised
when the various departments fail to work together for the benefit of the whole
organization.

Gillian Tett, PhD, is a cultural anthropologist and US Managing Editor & Columnist at the
Financial Times. In Tetts book, The Silo Effect: The Peril of Expertise and the Promise of
Breaking Down Barriers, she explains that silos are inevitable. Tett states, Mastering silos is
not a task that is ever truly completed. It is always a work in progress. Tett describes many
organizations who have mastered the silo effect and offers some ideas about what one can do
to ameliorate it:

1. Keep the boundaries of teams flexible and fluid

2. Use pay systems that reward collaboration
3. Create a culture that allows different interpretations of information to be heard
4. Periodically reimagine the taxonomies teams use to organize the worldexperiment with
alternatives
5. Use technology to challenge silos (Computers have no indelible mental biases.)

Steven Pinker, Harvard Psychologist and writer of many books on human nature, discusses the
universal human trait of identifying with an in group in his 2012 book, The Better Angels of
Our Nature: Why Violence Has Declined. Pinker observes that identifying and bonding with
those closest to youyour family, clan, tribe, or coworkersis wired into human DNA. Conflict

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between in groups or tribal warfare is as old as the human race. Does this mean that we are
doomed to live with rampant, rigid, and siloed organizations?

Fortunately, the answer to this question is a resounding No! It turns out that this DNA wiring is
relatively weak and can be easily rewired. All it takes is a few emotional connections with
someone quite different from ourselves to form a bond. In fact, the stronger the shared
emotional experience, the greater the bond. In spite of diversity in race, education, and life
experience, bonds formed by soldiers in combat are often stronger than their familial bonds.
Additionally, bonds between soldiers often last a lifetime.

The definition of ones in group is quite plastic and can easily be expanded. For example,
people whose parents and grandparents slaughtered each other seventy or eighty years ago,
now live side by side peacefully while identifying with a new and larger in group called
Europeans. One cannot blame human nature for this global phenomenon of workforce
disengagement. There is a deeper cause, with roots starting at the senior team level.

Widespread disengagement is fueled by the subtle patterns of interaction the senior team
establishes with the workforce. These patterns are called the character habits. When
senior team habits are based on a solid foundation of strong character, workforce engagement
soars upward.

Evidence
As mentioned in the opening sentence of this piece, a culture of inclusion is a reflection of
the character habits of the senior team in any organization. KRW has uncovered evidence
to support this claim.

During the seven-year Return on Character research project, KRW gathered data from nearly
eighty-five hundred randomly selected employees about how they viewed their senior teams.
Groundbreaking facts were discovered.

First, consistently senior teams viewed as having a strong character reputation by the
workforce average +26% higher levels of employee engagement and achieve a stronger
bottom line. Return on assets is nearly 5x greater for senior teams with strong character
reputation.

When weak-character teams are in charge, their habits create a culture that makes it clear that
it is not safe to tell the truth to senior management. There is little trust in organization fairness.
People do not feel treated as people but as production units. Key employees are seldom
consulted nor asked for input on relevant decisions. In essence, they encourage an
environment where employees are frequently put into the out group.

Strong-character teams do not behave this way. They create a culture of inclusion, where
people are treated fairly, where it is safe to express ones honest opinion, and where
management asks people for their opinions. People are treated as people, not objects.
Employees are encouraged to be pulled into the in group.

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From Return on Character research, we find a significant difference in the prevalence of
inclusive organizational behaviors when led by Virtuoso vs. Self-Focused senior teams.
See Figure 1 below.

Figure 1

Virtuoso teams are rated as demonstrating these inclusive organizational behaviors almost
always or frequently. In contrast, Self-Focused teams are rated as demonstrating these
about half of the time. In other words, with regard to Self-Focused senior teams:
About half of the time, its not safe to tell the truth to senior management;
Employees are not cared for as individuals with private livesinstead are seen as
production units about half of the time;
or, About half of the time, employees are not treated fairly, and so on.

Our conclusion: A strong senior team character reputation is the principal factor in
establishing a culture of inclusion.

For more than twenty-five years, KRW International has helped Fortune 500 senior executives and their
teams build organizational effectiveness through leadership excellence and mission alignment. KRWs
rigorous data gathering and customized development process provides executives with transformative
feedback.

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