Becoming more diverse and inclusive is beyond the corporate moral obligation — it makes good business sense according to John Schlifske, CEO of Northwestern Mutual.
The company gathered more than 120 leaders from the corporate world, nonprofits, government and health care for “Gather Against the Gap” to talk about the importance of addressing the racial wealth gap on Oct. 26.
“It’s not easy, it takes a lot of work. But just like any business initiative, there’s a payoff,” Schlifske said. “We’re not doing this because we have to. We really, honestly, sincerely, believe that this is in the best interest of the company.”
Here’s what Schlifske said he learned about prioritizing a diverse and inclusive workplace:
Personal commitment to diversity is needed from top company leadership
Initiatives involving diversity, equity and inclusion may sound good to employees and other stakeholders, but unless it gets buy-in from the top executives, it might not work.
“You can’t just expect it to happen because you said it,” Schlifske said. “What I learned that if I’m not involved in it, it’s not going to happen… I thought it would happen on its own and I had to be more involved than I thought I would have to be.”
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Execution follows commitment
When Northwestern Mutual decided to build its tower downtown, the company signed an agreement with the city to include unemployed or underemployed individuals on the project. Along with small business enterprises subcontractors on the project.
Schlifske said people had their doubts about meeting the goals and thought the company was “committing to something that wasn’t possible.”
“I admit, we didn’t know how we were going to do it,” Schlifske said. “What I’m trying to stress here is the commitment to do it lead to us doing it. It didn’t just happen by accident. It took a lot of work and we had to work a little harder to find some of these (subcontractors), to find some of these employees, but this notion of committing to something from an action-oriented perspective lead us fulfilling, in fact we exceeded what we promised the city we would do.”
The tower was completed in 2017 and 43.5% of the workers on the project were unemployed or underemployed Milwaukee residents and more than 25% of subcontractors were disadvantaged small businesses.
According to Northwestern Mutual’s 2022 Sustainability Report, 29% of its employees are people of color and 32% of new hires are also people of color. Roughly 49% of employees in the corporate office are women.
According to the 2021 Diversity and Inclusion report, during the previous three years the company experienced a 57% increase of women in leadership positions and a 103% increase of people of color in leadership positions.
In the 2021 report, the company states it conducted 10 market research studies, involving more than 5,000 Black consumers, and its goal “is to fully understand who we are serving and how to meet their needs as a partner in growing generational wealth.”
Try things and know the results might not be there at first
What may work for one business might not work for another, so Schlifske emphasized companies should try different approaches to find the one that works best for them.
Schlifske said when he became CEO in 2010, he pushed the company to implement a 15-year plan to become more diverse.
“The first five or seven years, there was a lot more (focus) around the environment. We wanted to build an environment that felt inclusive,” Schlifske said. “And I think we accomplished that. But what was frustrating to me was that I wasn’t seeing the results the way I wanted to, in terms of the number of people that were working here that were people of color and women and things like that.”
With enough effort, the policies will become a natural part of the business.
“The goal here is that, over time, it just bleeds into our strategy. That it’s not a separate racial thing, that it’s part of our goals strategy,” Schlifske said. “Like anything, not everything has worked out. We tried some things, they failed, that’s OK. Try something else.”
Diversity is also an opportunity for growth
With low unemployment, businesses are fighting to find new employees and customers.
Schlifske said Northwestern Mutual’s “growth has accelerated” as the company has expanded into different markets.
“I think there’s a huge market opportunity here and what we’ve experienced at Northwestern Mutual is the more we’ve leaned into this, the more we’ve talked about growing our footprint in the African American community, growing more African American advisers, growing more African American leaders, growing more African American customers,” Schlifske said. “The more we’ve leaned into the notion of diversity from a commercial perspective, the more we grow. I always argue, you can do it because it’s the right thing to do from an altruistic perspective, but the commercial side is just as compelling. It’s actually more exciting because there’s a growth opportunity.”
Embracing diversity for the benefit of the company
There are still skeptics who believe in the misconception that companies that try to be more diverse, equitable and inclusive, suffer financially.
Schlifske said Northwestern Mutual has added more non-white male employees in the last five years and it became a major source of growth.
“It means we have to recruit people. We have to recruit African Americans; we have to recruit Hispanic Americans; we have to recruit women,” Schlifske said. “What we found is we’re able to recruit and we’re not compromising anything.”
From 2020 to 2021, the company stated “offices that have prioritized (diversity and inclusion) are realizing a higher return on investment year over year.” During that same period diverse recruits was up 33%, retention was up 21% and productivity as evidenced by first year commissions was up 51%.
“It’s not like somebody gets something, and somebody else doesn’t get something. This notion that it’s excluding somebody else just doesn’t fit in the mindset if you think about it from a growth perspective.”