The human equity advantage: many businesses talk about creating diversity within their organization. As valuable as this can be, it's worth taking a step further.

In today's global economy, there is decreasing product, service, price or technological differentiation. Now, human capital is one of the few opportunities left for producing marketplace differentiation. Winning or losing in global markets is about people--attracting, retaining and effectively using the best available talent.

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Businesses must be able to attract, retain, motivate and develop high potential employees regardless of race, culture, age, sexual orientation, education, economic class or thinking style. A successful diversity management program that builds and supports an equitable and inclusive workplace, where the unique talents of all employees are recognized and nurtured, can make this happen.

The equity difference

Equity shouldn't be confused with equality. Equality is about ignoring differences and treating people the same. Equity, on the other hand, is about acknowledging the differences and seeing them as an advantage. Recognizing the value of human capital regardless of the "packaging" is what could be referred to as the business case for diversity.

Just as there is a relationship between equity and capital in the world of finance, there is also a relationship between human equity and human capital. If human capital is about return on investment (ROI), human equity is about maximizing ROI in employees. Organizations that create equitable environments seek to maximize their human capital investment, reducing costs, improving productivity and customer satisfaction and increasing profitability.

For organizations competing globally, there is a direct link between an equitable and inclusive workplace and success in the marketplace. The challenge facing today's corporate leaders is fostering an organizational culture that values any differences and maximizes the potential of all employees. In other words, managers must learn to manage equitably rather than equally.

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In today's politically correct environment, diversity has become a code word for equal opportunity, affirmative action, employment equity, human rights and non-discrimination. Some diversity management practitioners would argue that the prime reason to manage diversity is to remedy past discrimination and redress historical wrongs by giving special preference to particular groups of individuals. However, this is not real equity. Equity cannot be extended selectively. Any system that tries to be fairer to one group than another is still an inequitable system. True equity seeks to create a system that is equitable for everyone.

An equitable workplace should link the equity strategy to business objectives. It should include all employees and protect the merit principle to avoid tokenism or any type of discrimination.

The Equity Continuum underpins one approach to assessing equitable work environments. The concept is based on work by Felice Shwartz, who rated organizations on a five-point scale in terms of how they treated female employees. Here, we extend the concept to measure how organizations deal with issues of fairness for all employees. I consider it a gold standard for measuring an organization's progress toward an equitable and inclusive work environment.

The Equity Continuum

0 -- Think they are a five

These organizations are not motivated to pursue equity in the workplace and don't see any problems with that.

1 -- Compliance

These organizations are motivated by compliance with employment equity and affirmative action legislation and avoidance of legal action.

2 -- Moving beyond compliance

The driving force for these organizations is the belief that aiming recruitment towards historically disadvantaged groups is the right thing to do.

3 -- The Business Case

These organizations are driven by the bottom-line benefits that result from an equitable and inclusive workplace.

4 -- Integrated Equity

These organizations believe in equity as a core organizational value that is fully integrated and sustainable.

5 -- Inclusive and equitable organizations

The driving force with these organizations is the desire to leverage equity with internal and external stake-holders and to be recognized as leaders in diversity and equity.

The Research Unit on Work and Productivity in the organizational psychology department at The University of Western Ontario (UWO) has identified specific human equity practices that have had a positive effect on operating costs and profits. The lower costs likely result from reduced employee turnover, reduction in recruitment costs, and lower legal fees as a result of court settlements. The increased profits most likely relate to a more diverse and talented sales force that more accurately serves the communities in which it operates.

Gradual growth

Most organizations that I work with are in the process of moving from a two to a three on the continuum above. This is what I call the Human Capital Shift--moving from an organization that has neither articulated nor communicated a compelling business case in support of equity, to an organization with an audit-proof business case that is communicated to all and clearly defines the bottom line benefits of an inclusive and equitable organization.

Yet, the more difficult move is the human equity shift that characterizes organizations moving from a three to a four. While organizations operating at a level three recognize the value of their human capital, organizations operating at a level four are maximizing the ROI in their human capital through innovative selection and development processes that focus on identifying and capitalizing on employee strengths. These organizations understand that when each employee is provided with the opportunity to do what they do best, the organization reaps financial benefits.

To help organizational and human resource leaders assess where they are on the equity continuum and what strategies are required to move a company closer to an ideal work environment, it's useful to explore and answer a series of questions, what I call the "Total Equity Solution." Exploring these questions, and building up your understanding and application of equitable practices, can gradually create an equitable work environment.

Step 1: Visioning -- What is your ideal workplace?

Does the organization have a vision of its ideal workplace? Does that vision integrate the concept of diversity and the fair treatment of all employees? Does senior management understand and share the vision? Have they clearly articulated a compelling business case for diversity?

This first stage in the change process responds to these questions. The audience is senior management, and the goal is to launch a paradigm shift away from a philosophy based on "equality" to a new philosophy based on "equity."

Step 2: Validation -- Where are you today?

Once the organization has a vision of its ideal work environment, the next question is "Where are we now in relation to that vision?" Stage two is dedicated to gathering information to answer this question.

This involves collecting existing data and conducting a preliminary state-of-the-nation review. Most organizations already have access to information such as compliance reports or data gathered from employee surveys, but there are often a lot of gaps in this information. Most organizations haven't explored data collection through a diversity lens. As a result, the key question to ask is, "What do we need to know that will identify areas of inequity in the workplace?" Inequities can exist because an organization's policies and practices are unfair; they can also exist because people treat others unfairly. An effective validation process must assess both of these areas.

Step 3: Opportunity -- Where would you like to be?

Once an organization has solidified a vision of its ideal future and has solid information describing where it is today, it must determine where it wants to be. Stage three is dedicated to setting goals and developing strategies to achieve these goals.

It's important here to distinguish between a company's vision, which is timeless and represents an ideal future state; its goals, which have specific end results and timetables; strategies, which outline how goals will be accomplished; and plans, which include detailed action items to implement strategies. Goals and strategies are the focus of stage three; action plans are addressed in stage four.

The opportunity stage involves reviewing and prioritizing red flags identified in the data analysis. Representation statistics are quantitative red flags that point to an inability to attract and retain diverse talent. Qualitative indicators determine how employees feel about the diversity climate of the organization and their opportunities for personal growth and advancement.

Once the red flags have been identified, strategies must be built to address them. We use something called the Equity Index to do this. It provides the framework for goal setting and accountability and covers four types of diversity goals required for a total solution: internal quantitative, internal qualitative, performance management goals, and external benchmarks. Once a template is created from considering these four areas, organizations should have established goals and strategies for the top red flags; agreement on priorities and weighting; and an accountability framework to chart progress.

Step 4: Transformation -- How can you get there?

The next step is to develop an action plan that details what can be done to achieve the goals. During this stage, a roadmap is built. Roadmaps will vary depending on strategies, but there are seven common elements that are included in every transformational plan.

These are:

* Action plans showing who is responsible, accountable, consulted and informed;

* A coalition of champions--the infrastructure required to deliver transformational plans;

* Training for managers and employees--programs that build awareness and increase knowledge and skills;

* A strategic plan integrated with regular communication vehicles;

* Measurements for success--an integrated Equity Index to track progress;

* Benchmarking to the level five organization--regular reviews of best practices; and

* Benchmarking to the level five leader--training and coaching future equitable leaders.

Step 5: Realignment -- How can you sustain success?

The final stage involves monitoring and continuous improvement. Now that the organization has built strategies, put plans in place, and identified milestones to track progress, the challenge is to stay on course. This can be supported through a quarterly tracking of results.

We recommend organizations reassess their position on the equity continuum every 12-18 months and update employee opinion surveys on a 1-2 year schedule. The specific timing for review and realignment will be established by your organization when your Equity Index is finalized.

Human equity is about the ability to compete globally with the best available talent. The concept of human capital has been a huge step forward for HR practitioners in demonstrating the value of the HR asset. Human equity takes this idea one step further to maximize human capital ROI.

Trevor Wilson is president and CEO of TWI Inc. (www.diversityatwork.com).