The Inclusion Dividend

Have you ever wondered why some companies seem to thrive on innovation, creativity, and engagement—while others struggle to keep pace even with talented people on board? In The Inclusion Dividend, Mark Kaplan and Mason Donovan argue that the missing ingredient is not just diversity, but inclusion. Diversity, they contend, is merely the presence of difference—who is in the room. Inclusion, on the other hand, is how those differences are valued, leveraged, and integrated into everything the organization does. When organizations intentionally invest in inclusion, they yield what the authors call the inclusion dividend: measurable returns in innovation, profitability, customer loyalty, and employee engagement.

Kaplan and Donovan fuse decades of consulting and corporate experience to show that inclusion is not just moral or cultural—it’s a strategic business imperative. Through compelling stories—from Asha, a pharmaceutical executive who learns that investing in diversity has the same compounding effects as her 401(k), to companies like Frito-Lay and Apple that transformed markets by embracing inclusiveness—they argue that inclusion, much like any other investment, requires time, patience, and strategy. Their core question for leaders is simple but provocative: If diversity is already present in your workplace, how are you ensuring inclusion to unlock meritocracy and maximize results?

The Book’s Central Argument

At its heart, the book maintains that diversity without inclusion delivers little value. A company can boast statistics showing gender and racial representation, yet fail to engage those employees equitably in day-to-day decisions, innovation, and leadership. Kaplan and Donovan distinguish between two complementary forces: diversity as raw potential, and inclusion as the mechanism that transforms potential into performance. Inclusion leads to what they call a systemic meritocracy—a fair system where rewards and opportunities truly depend on ability and contribution rather than unconscious biases or insider privilege.

They also warn that most organizations mistakenly approach diversity and inclusion as temporary HR projects or compliance checkboxes. This oversight means leaders focus on intent—wanting to be fair—without realizing their impact may still exclude or marginalize others. The authors highlight this disconnect repeatedly through examples of managers who unintentionally hire and promote “comfort fits,” preserving sameness instead of capability.

Core Concepts Explored

Throughout the book, Kaplan and Donovan weave together four essential frameworks that guide organizations toward sustainable inclusion:

• Unconscious Bias – Recognizing and mitigating the subtle preferences that shape decisions without awareness, drawn from research at Harvard’s Project Implicit and work by psychologists like Daniel Kahneman (in Thinking, Fast and Slow).
• Insider–Outsider Dynamics – Understanding the social power patterns that privilege certain groups and unintentionally marginalize others.
• Levels of Systems Framework – Structuring change across four layers—individual, group, organization, and marketplace.
• Critical Leadership Competencies – Developing awareness, self-management, empathy, and the courage to create real meritocracies.

These frameworks connect diversity efforts from introspective personal awareness to global strategy, making inclusion both actionable and measurable. Kaplan and Donovan insist that inclusion must not reside merely in HR—rather, it belongs at the core of leadership development, business operations, and market expansion.

Why Inclusion Matters Now

The authors situate their argument within broad demographic and societal shifts—expanding racial and cultural pluralism, advancing gender representation, generational turnover, and global interconnectivity. Simply put, the world’s workforce and customer base have become more diverse than ever before. Yet, many leaders still cling to myths of corporate meritocracy—believing talent and effort alone determine success. Kaplan and Donovan dismantle this myth, using data from Catalyst and the Level Playing Field Institute to show how insider–outsider dynamics, stereotypes, and systemic biases prevent true equity of opportunity.

They position inclusion as an investment—like Asha’s 401(k)—that compounds over time, if leaders consistently nurture it through policies, training, and cultural evolution. The return on investment shows up in tangible dividends: better retention, higher engagement, innovative collaborations, and stronger performance across diverse teams. The inclusion dividend, therefore, becomes a metaphor for strategic foresight—those willing to invest long term will outperform competitors clinging to homogeny and complacency.

What You’ll Learn Ahead

In the chapters summarized below, you’ll discover how unconscious bias hides inside everyday decisions—from résumé screening to performance reviews—and how practical systems can minimize its effects. You’ll learn to navigate insider–outsider group dynamics, seeing inclusion as both an emotional and structural challenge. You’ll understand the leadership competencies required to transform intent into impact, and the strategic phases for embedding inclusion across an organization’s DNA. Finally, you’ll examine concrete dimensions of difference—gender, age, race, ableness, culture, and sexual orientation—and how each represents both challenge and opportunity.

Whether you lead a team, run an organization, or simply want to improve workplace culture, The Inclusion Dividend provides a roadmap for creating the kind of meritocracy most companies claim to believe in but rarely achieve. Kaplan and Donovan redefine diversity work as a growth strategy—not a moral obligation—and make clear that inclusion, when practiced deliberately, pays off exponentially in human and financial returns.

Kaplan and Donovan make a powerful argument: you wouldn’t invest in an outdated technology or marketing method, so why invest in a workplace that fails to adapt to its evolving demographic reality? They show that inclusion isn’t just a human ideal—it’s a rigorous business practice that produces quantifiable results. In this chapter, they explore how inclusion drives profitability, innovation, and talent sustainability, both internally and externally.

Internal Drivers of Profitability

Inside the organization, inclusion increases talent acquisition, retention, and productivity. Recruiting inclusively expands the talent pool, especially as specialized expertise becomes scarce—according to the authors, global talent shortages force companies to look beyond traditional networks and demographics. Without an inclusive brand and hiring practices, organizations lose skilled candidates before they even apply. For example, the insurance industry, as Chief Diversity Officer Lorie Valle-Yanez notes, tends to recycle talent within narrow circles, which stifles innovation and diversity of thought.

Retention also proves a crucial metric. Kaplan and Donovan cite turnover research showing that lack of belonging drives attrition far more than compensation does. Companies lose billions annually due to employees—particularly women and people of color—leaving cultures that undervalue them. Inclusion becomes the antidote, connecting individual purpose with corporate engagement. When employees feel recognized and respected for their uniqueness, morale and loyalty surge. In inclusive environments, productivity increases by over 20 percent and innovation by almost 60 percent (similar figures appear in Forbes Insights’ surveys on corporate innovation).

External Engagement: The Marketplace Dividend

Externally, inclusion affects client and customer relationships. Diversity increasingly defines markets, and the authors show that financial performance and brand reputation rise when companies reflect and respect the variety of their customer base. Using their RADIX™ model—Reach, Acquire, Develop, Inspire, and eXit—they explain the customer relationship lifecycle. Without inclusion, the “reach” phase misfires, such as companies using stereotypical or tone-deaf advertising campaigns. Inclusive companies, however, recognize cultural nuances and speak authentically to consumers. Avon’s success creating Latina- and African American-targeted product lines exemplifies how representation drives growth.

The business case intensifies in client acquisition. As more corporations require suppliers to mirror their own diversity goals, partnering firms that lack inclusive policies find themselves excluded from contracts. Fortune 500 companies now assess partners’ inclusion efforts directly—a policy Kaplan and Donovan call the “accountability chain.” For example, Exelon evaluates service partners partly on their commitment to diversity. Decisions once driven by price and performance now hinge on values alignment. Inclusion, therefore, becomes both market necessity and competitive advantage.

Innovating Through Difference

Diversity fuels innovation only when inclusion provides the climate for creative exchange. Stifled voices lead to stagnant ideas, as seen in RecruitXMe.com’s collapse—a dot-com giant undone by homogeneous leadership that failed to engage difference as a source of new insight. Kaplan and Donovan contrast this with Frito-Lay and MTV, where employee resource groups generated breakthrough products and marketing campaigns. In inclusive spaces, friction transforms into creativity; people challenge assumptions constructively rather than conforming to insider norms.

The Real ROI: Measuring Dividends

The authors present inclusion as an investment with compound returns: it lowers turnover costs, enhances innovation, expands market reach, and strengthens the brand. Money invested in training, culture-building, and equitable systems yields measurable dividends in revenue per employee and engagement rates. Frito-Lay’s $100 million Hispanic market expansion or Microsoft’s $646,000 revenue per employee are cited as examples of companies realizing quantifiable rewards from diversity-driven innovation. In contrast, companies ignoring inclusion lose ground to newcomers with fresher, more adaptive cultures.

Key Reflection

Inclusion isn’t charity—it’s smart business. Kaplan and Donovan remind you that true meritocracy doesn’t exist until all capable voices participate fully. Investing in inclusivity today pays exponential dividends tomorrow.

If you’ve ever trusted your gut instinct while hiring or evaluating someone, you’ve already experienced the power—and peril—of unconscious bias. Kaplan and Donovan dedicate an entire chapter to this invisible force shaping organizational behavior. They draw on groundbreaking research by Harvard psychologists Mahzarin Banaji and Anthony Greenwald from Project Implicit, and Daniel Kahneman’s dual-system theory of thinking. Together, these insights reveal how 90 percent of our decisions occur subconsciously—often guided by stereotypes stored in our mental “hard drives.”

The Nature of Unconscious Bias

Bias is not a moral flaw—it’s a cognitive shortcut. You categorize, prime, and confirm information to manage overwhelming data, but these shortcuts misfire when applied to people. The authors classify biases into three types:

• Priming bias – Being influenced by others’ opinions or reputation before making your own judgment.
• Affinity bias – Feeling a stronger connection and trust toward people similar to yourself.
• Confirmation bias – Interpreting data to reinforce existing stereotypes.

These biases show up in the smallest acts—how you choose lunch companions, whose ideas you praise first, or which résumé feels “right.” Marian Bertrand and Sendhil Mullainathan’s résumé experiment demonstrates this impact vividly: applicants with Caucasian-sounding names were 50 percent more likely to get interviews than equally qualified applicants with African American-sounding names. When leaders make hundreds of micro-decisions daily, these small inequities scale into massive systemic disadvantages.

Systemic Bias: When Structures Reinforce the Individual

Unconscious bias doesn’t stop at personal perception—it embeds itself in organizational systems. Kaplan and Donovan define systemic bias as prejudice institutionalized through policy, culture, or hierarchy. For instance, when hiring teams consist mostly of similar backgrounds, their comfort and affinity reinforce homogenous selections. Decisions about “fit” often mirror insider norms. Historical examples, like IBM’s early dress code demanding dark suits, exposed how informal traditions can marginalize entire demographics until consciously reformed.

To mitigate these biases, the authors propose creating “System 2 moments”—structured pauses during decision-making that force critical reflection. Before interviewing, ask what biases you might hold toward the candidate. During performance reviews, involve multisource feedback and diverse panels to balance perceptions. Creating process interruptions transforms quick, emotional judgments into deliberate evaluation.

Breaking the Cycle

Bias feeds on repetition. Once an assumption influences your behavior, it elicits confirming reactions that reinforce the original stereotype. The way to break this cycle is exposure and feedback. Regularly interact with individuals different from yourself—especially peers or leaders—to challenge mental shortcuts. Create environments where feedback from outsiders is safe and valued. Kaplan recounts his own embarrassment when a colleague pointed out his unconscious tendency to prioritize men’s ideas in group sessions. Only through open dialogue could he recalibrate his awareness and behavior.

Moving From Awareness to Action

To truly reduce unconscious bias, you must combine awareness with intentional design. The authors recommend practical methods: blind résumé reviews, mixed interview panels, transparent promotion criteria, and coaching across difference. They emphasize that these tools are not punitive—they’re developmental. The goal is not to find “bad people” but to create systems that support better choices.

Insight Worth Keeping

You cannot eradicate bias—but you can outsmart it. Awareness paired with structured practice turns instinctive disadvantage into deliberate inclusion.

Even if you’ve never thought about it explicitly, you know the insider–outsider dynamic—it’s the invisible social hierarchy that determines who holds power and whose voice goes unheard. Kaplan and Donovan argue that understanding this dynamic is essential to creating authentic inclusion. They show that good intentions alone fail because power usually resides with insiders who are least aware of exclusion’s costs.

Defining Insider–Outsider Relationships

Insiders are the dominant groups in any context—by identity or position—those who set norms without realizing it. Outsiders are those whose difference creates barriers, making success harder regardless of skill. The authors use a memorable metaphor: ask what life is like for right-handed people versus left-handed people. Right-handers rarely think about their privilege; left-handers navigate awkward tools, seating, and even assumptions about their handwriting. In corporate terms, that creates parallel realities between insiders and outsiders.

Sarah’s story, a female engineer joining a male-dominated firm, illustrates this vividly. Despite competence and enthusiasm, subtle behaviors—like being asked to fetch donuts or being introduced as “beautiful addition to the team”—made her feel alienated. No one intended harm, but the cumulative micro-inequities drove her to leave. The firm lost a talented engineer because insiders failed to notice their own cultural walls.

The Four Dynamics at Play

Kaplan and Donovan identify recurring patterns:

• Awareness gap – Insiders are blind to difference; outsiders constantly notice it.
• Experience mismatch – Insiders enjoy smoother paths and “benefit of the doubt”; outsiders face skepticism.
• Communication divide – Outsiders hesitate to speak up, fearing backlash; insiders misread silence as contentment.
• Norm-setting imbalance – Insiders define what success looks like, forcing outsiders to adapt behaviors rather than express authenticity.

These dynamics form what the authors call the “cycle of status quo.” Outsiders know what’s wrong but lack power to change it; insiders hold power but lack perspective. Without intentional leadership intervention, this cycle perpetuates inequality indefinitely.

Breaking the Cycle

The solution begins, paradoxically, with insiders using their power to amplify outsider voices. Leaders need to create safe environments for open dialogue—welcoming uncomfortable truths rather than silencing them. Kaplan and Donovan recommend conducting dual interviews: one set with insiders to gauge awareness, another with outsiders to capture lived experience. Comparing both perspectives produces creative tension that reveals blind spots and motivates action (echoing Peter Senge’s “learning organizations”).

Symbolic shifts matter too. When insider leaders sponsor diversity efforts or advocacy groups, outsiders see inclusion as organizational, not personal charity. In one political example, New Hampshire’s gubernatorial campaign gained traction when male leaders endorsed women’s rights—proof that insider voices magnify change.

The Leadership Lesson

Inclusion lives or dies by leaders’ willingness to see beyond their comfort zone. Insiders must invite feedback, challenge tradition, and make learning about difference part of daily leadership. Outsiders can model resilience and dialogue rather than withdrawal. When power and awareness converge—when insiders learn and outsiders speak up—the workplace begins to approach genuine meritocracy.

Key Takeaway

Power and perspective rarely coexist. Inclusion means bridging that gap so all voices shape the culture, not just those already in charge.

Creating an inclusive culture isn’t a one-off project—it’s a long-term transformation similar to building organizational safety programs or technological upgrades. Kaplan and Donovan use this analogy to show that sustainable inclusion requires systemic change across individuals, teams, structures, and markets. Like a good financial strategist, you must diversify your efforts across multiple levels to ensure long-term return.

Four Levels of Systems

Borrowing from the Gestalt Institute of Cleveland’s Levels of Systems model, the authors describe inclusion as operating on four levels:

• Individual level – Personal awareness and skills to treat others equitably.
• Group/team level – Managing dynamics of difference and insider–outsider patterns.
• Organizational level – Aligning policies, practices, and culture with inclusive values.
• Marketplace level – Extending inclusion to customers, suppliers, and communities.

Each level both influences and reinforces the others. A company that trains individuals but ignores cultural norms will relapse into exclusivity. A marketplace strategy disconnected from internal equity will ring hollow. Sustainable inclusion integrates all four levels cohesively.

From Awareness to Alignment

Many companies stop at awareness training—Kaplan and Donovan call this “activity-itis.” These programs may build empathy but fail to change systems. True sustainability comes from alignment: where employee behaviors, team processes, HR systems, and market actions support the same inclusive principle. They offer examples of organizations altering travel policies, dress codes, and meeting times once they examined their hidden barriers. Even small shifts—like changing early meeting norms that excluded parents and commuters—produced meaningful results.

The authors argue that inclusion isn’t about erasing culture but adjusting it. Korean Air’s transformation serves as a metaphor: by revising cockpit culture from hierarchical to collaborative, they turned a history of crashes into a world-class safety record. Similarly, leaders must tweak cultural assumptions to fit modern realities without losing their organizational “soul.”

Building Organizational Accountability

To sustain inclusion, systems must reward inclusive behavior. Recognition, feedback, and performance metrics should reinforce the desired impact. When leaders link promotion and appraisal to inclusion practices, employees treat inclusion as a professional skill, not a social nicety. Metrics such as increased diversity in hiring pools, reduced turnover among outsider groups, and positive engagement surveys become tangible indicators of success.

The Long-Term View

As with Asha’s investment analogy from the introduction, sustainable inclusion compounds with time. You can’t impose culture change overnight; you cultivate it daily through training, dialogue, and structural reform. Kaplan and Donovan encourage leaders to consider inclusion as recurring maintenance rather than a periodic fix. Like safety or technology, inclusion requires vigilance and evolution—because workplaces, markets, and people constantly change.

Core Message

Lasting inclusion is achieved when intent, systems, and strategy align—when everyone from the intern to the CEO embodies inclusion as daily practice, not annual rhetoric.

Kaplan and Donovan argue that inclusion isn’t an HR sideline—it’s a core leadership competency. They identify four fundamental abilities leaders must master to create genuinely inclusive environments: individual awareness, embracing group identity, envisioning positive change, and fostering true meritocracy. Each competency builds from self-awareness to systemic influence, reflecting the journey from personal intent to organizational impact.

1. Individual Awareness and Self-Management

The first competency centers on emotional intelligence. Leaders must recognize how their words and actions shape inclusion far more than their stated intentions do. Kaplan and Donovan introduce tools like self-audits—writing down direct reports, assessing relationship openness, and examining diversity of one’s network. Leaders often discover their inner circles mirror their own demographics, inadvertently limiting perspective. The authors encourage challenging “comfort zones,” building trust across difference, and seeking candid feedback despite power imbalances. (Comparable research in Brené Brown’s Dare to Lead similarly links vulnerability with effective leadership.)

2. Embrace the Paradox of Individuality and Group Identity

Leaders must learn to treat people both as individuals and as members of groups whose identities affect experience. For example, noticing patterns—like who dominates meetings or gets promoted—reveals systemic inequities invisible to insiders. The authors recommend factoring group identities into development plans. Certain outsider groups may need enhanced mentoring to overcome stereotype threat: the unconscious fear of confirming negative stereotypes. Recognizing these dynamics allows fair treatment without condescension.

3. Envision and Frame Positive Change

Inclusion conversations often evoke guilt and defensiveness. Leaders can overcome these reactions by reframing inclusion as growth, not correction. They suggest creating a compelling vision: imagine being interviewed by Harvard Business Review about your company’s inclusive success. What would you say? This vision should emphasize the business advantage of inclusion—expanded innovation, engagement, and profitability—not compliance or quotas. Articulating a clear “why” mobilizes change.

4. Foster True Meritocracy

Meritocracy exists only when systems consciously manage bias. Leaders must review what “fit” means, challenge outdated performance metrics, and measure success inclusively. A perfect meritocracy, the authors admit, is an ongoing pursuit—like the “more perfect union.” To approximate it, leaders should ensure transparent feedback, equitable access to networks, and systemic correction of informal advantage. One leader’s realization that company promotion norms were based on obsolete traits led to redefining “leadership potential” and diversifying advancement.

Through these competencies, leadership becomes inclusion’s driving force. It’s not about saying the right words—it’s about being the change Gandhi called for: aligning behavior, system, and value so inclusion becomes synonymous with excellence.

Leadership Reflection

Leaders rarely lack good intent—but inclusion demands translating that intent into impact. Mastering these competencies turns aspiration into transformation.

Even the most well-intentioned leaders falter when they fail to see how different dimensions of identity shape workplace experience. Kaplan and Donovan show that inclusion requires recognizing six core dimensions—gender, age, race, culture, ableness, and sexual orientation—along with emerging ones like religion and socioeconomic class. Understanding these differences allows companies to design environments where everyone thrives without conformity.

Visible vs. Invisible Differences

Differences fall into categories: visible (like race or gender) and invisible (like sexual orientation or disability). Visible differences activate unconscious bias instantly; invisible ones create dilemmas about disclosure. For example, LGBTQ+ employees often calculate risk before mentioning partners. Organizations must make disclosure safe, normalizing authenticity through inclusive policies—such as equal spousal benefits and open dialogue.

Cultural and Gender Dynamics

Cultural diversity, especially in global companies, produces friction and misunderstanding. The authors recount an Israeli consultant misread as aggressive by peers from other cultures—a clash of norms amplified by power dynamics. The lesson: cultural awareness alone isn’t enough; leaders must learn flexibility and empathy, not expertise in every culture. Gender dynamics follow similar patterns. Despite progress, women continue to face credibility gaps rooted in socialization that equates leadership with masculinity. The book highlights Catalyst research showing stagnant advancement of women despite increased representation, underscoring persistent unseen barriers.

Race, Ableness, and Sexual Orientation

Race remains the hardest topic for most organizations, particularly in Western cultures that value “color blindness.” The authors challenge this avoidance, noting that silence sustains inequality. Bias operates in performance evaluations, promotion assumptions, and daily interactions. Similarly, ableness diversity—physical, sensory, and cognitive—requires reframing disability as capability. A blind executive’s heightened listening skill exemplifies how difference enriches contribution. Sexual orientation debates advance this argument further: inclusion isn’t about private life, but about authenticity. When employees hide core aspects of self, engagement and productivity suffer.

The Role of Affinity Groups

Affinity networks—groups for women, racial minorities, veterans, LGBTQ+ employees, and others—can serve as vital anchors for inclusion. While they often start as advocacy spaces, the authors urge moving them toward business alignment. These networks help identify barriers, mentor members, and supply insight into diverse markets. When executives visibly sponsor them, they transform from identity safe zones into strategic innovation hubs.

Essential Lesson

Inclusion isn’t about ignoring difference—it’s about recognizing and leveraging it. Diversity becomes an engine of innovation when identities are acknowledged, not erased.

How does a company transform inclusion from good intent into measurable results? Kaplan and Donovan close their framework with pragmatic strategies for lasting change. They present the Inclusion Initiative Phases (IIP) model—a four-phase process that converts data into strategy, activity into integration, and momentum into measurement.

Phase 1: Research and Needs Identification

Effective inclusion begins with evidence. Leaders must gather quantitative and qualitative data through engagement surveys, HR metrics, focus groups, and customer feedback. Patterns expose inequities that individual anecdotes miss—like disproportionate turnover among women or lower promotion rates for outsiders. Ensuring confidentiality encourages honesty. Importantly, Kaplan and Donovan caution against collecting data without action; doing so breeds cynicism. Research must feed business strategy, not just awareness.

Phase 2: Strategy Creation

Once data clarifies challenges, a dedicated diversity council crafts the strategy. Powered by executive sponsorship, this council bridges theory and practice. It should set realistic goals, define accountability, and articulate inclusion as a growth driver. The authors stress connecting metrics to profitability—since leaders prioritize what directly affects results. They warn, however, against reducing inclusion to quotas. Numbers reveal patterns but shouldn’t replace cultural transformation.

Phase 3: Implementation and Integration

Kaplan and Donovan emphasize action: training, leadership development, affinity networks, and meritocracy reviews. Awareness workshops are valuable when part of a larger plan—not isolated events. Inclusion must integrate into hiring, performance management, and marketing. Employee resource groups evolve from social clubs into strategic tools. HR departments partner with diversity officers to embed inclusion into every system, while marketing extends the message to clients and the marketplace.

Phase 4: Measurement and Recalibration

Inclusion is a cycle, not a destination. Companies must track impact through metrics like engagement, retention, and market share, then iterate. Activities that produce results scale up; those that don’t evolve. Accountability anchors the process—leaders should have diversity goals tied to performance evaluations. The authors call this “making it stick.” Leaders who model inclusive behavior inspire replication across hierarchy, ensuring sustainability.

Kaplan and Donovan’s IIP model turns lofty ideals into tangible progress. It’s the practical framework leaders need to future-proof their organizations in an increasingly diverse and dynamic world.

Strategic Insight

Inclusion succeeds when culture change is treated like any core business investment—researched, planned, implemented, and measured until results become routine.