Companies around the globe are investing billions of dollars in Diversity, Equity, and Inclusion (DEI) programs to maximize their ROI.
However, many of these strategic initiatives are undermined by failing to integrate DEI initiatives into the business's overall strategy. Based on PWC report, it’s clear there is a big disconnect between what leaders set out to achieve and what’s actually done.
If your organization wants to attract top talent, achieve better business outcomes, and stay relevant in today’s market, DEI should be one of the business priorities.
In this article, we will cover why organizations shouldn’t ignore the impact of DEI strategy on business value, how to avoid common DEI mistakes, and share additional tips to help you build an effective DEI strategy for your organization.
How Do DEI Initiatives Impact Business Value?
Diversity, equity, and inclusion are increasingly crucial for businesses that want to stand out from competitors and build high-performing teams. Here are some of the benefits that DEI initiatives can have on your business:
For your people
A solid DEI strategy should help you create a better employee experience. It can foster a sense of belonging, accountability, and higher engagement if taken seriously. This leads to more cohesive relationships and better performance.
Companies with a diverse workforce emphasizing equity and inclusion also experience lower staff turnover and higher retention rates. CNBC survey confirmed that most employees prefer to work at an organization that prioritizes diversity and inclusion.
From a human resources perspective, the new normal of hybrid and remote work after the Covid19 has made inclusion, diversity, and equity, even more critical.
This is even more important for companies that want to retain diverse top talent in competitive industries like healthcare, tech, and financial services.
For your bottom line
Diverse and inclusive management teams positively impact business performance and profitability. The diversity of ideas and perspectives that come with it helps boost innovation, create better strategies, and a culture that can quickly adapt to any scenario.
Additionally, as found in McKinsey analysis, “the penalty for lagging on gender diversity is growing.” Companies with higher scores in gender diversity were 25% more likely to outperform the industry average financially. On top of that, teams that scored higher in ethnic diversity were 36% more likely to achieve financial outperformance.
For your brand
Companies are starting to realize that their DEI initiatives can have long-lasting impacts on revenue and overall public perception. For example, looking at the effect of DEI on consumer behavior, Accenture found that:
- 70% of consumers believe that diverse representation within the companies they support is important.
- 43% of consumers say they will walk away from a brand if disappointed by its words or actions on a social issue.
- 54% of brand promoters believe that the companies they shop with should leave them “net better off.”
When done correctly, a diversity, equity, and inclusion culture can add to your business’s competitive edge and boost your company’s credibility in the market.
5 Mistakes to Avoid with DEI strategy
While many companies think DEI is central to their organization's values and processes, this isn't always the case. Here are some mistakes you should avoid when planning and implementing DEI initiatives.
Not treating DEI as a part of your business strategy
This approach fails to recognize that biases are inevitable in business systems and that by doing nothing, we automatically enable inequitable outcomes.
Meaningful DEI initiatives require an organization-wide commitment and a shift in business processes and workplace culture. The ideal DEI strategy will address unconscious bias and root out inequity across departments, demographics, and hierarchies in the workplace.
"Bias is embedded in the key business processes and practices—from recruiting to marketing, to product development, and so on. It is only rational to expect this problem to be tackled by changing the business systems." - Erica Santoni, ex-principal of DEI at Intuit and Head of People Strategy&Analytics at ZipRecruiter
Underestimating the importance of DEI
It is important for business leaders to recognize that employees, customers, and communities place a high value on ethical business practices.
From a surface level, DEI may seem like an internal people-focused initiative. However, it can also impact your entire ecosystem of business stakeholders.
A company that doesn't meet the expected inclusion, diversity, and equity standards is bound to suffer negative consequences. For example, suppliers may refuse to do business with you, loyal customers may boycott your products, or your long-term employees may start leaving in droves.
DEI strategy is a PR stunt
As Erica Santoni explained in her talk for World Strategy Day, there is a case of companies that fall into the trap of the so-called performative DEI.
“They over-index on donations and public statements in support of a certain cause but fail to do the hard work required to make meaningful change.” - Erica Santoni, ex-principal of DEI at Intuit and Head of People Strategy&Analytics at ZipRecruiter
For example, a company changing its branding during Pride Month or using the hashtag #blackhistorymonth or #blacklivesmatter on your company's social media page.
Avoid treating diversity, equity, and inclusion in a disengaged manner like this at all costs. Posting a message of support for LGBTQIA+ rights on your company’s LinkedIn page for likes and shares is not a good idea unless you plan to actively support or donate to their cause.
Stakeholders and consumers can tell when a company’s DEI activities are true or just another PR campaign. Creating a DEI strategy for the sake of publicity can damage your business’s reputation and won’t result in real change.
DEI initiatives should be part of a long-term DEI strategy and not ad hoc projects to jump on social media trends.
Relying on one-off training and conversations
While one-off DEI training sessions, webinars, and conversations can be a good starting point, they aren’t enough to have an impact. Companies that treat these activities as static, one-off events will never reap the full benefits of DEI in their business.
DEI is not a box-checking exercise but an ongoing endeavor that your organization undertakes daily. Part of this process requires a reflective, consistent, and dynamic approach to making DEI a part of your organization's day-to-day operations.
Not following through on DEI commitments
Following through on commitments and goals is particularly important when it comes to DEI initiatives. Failing to do so can seriously affect staff retention, employee engagement, and overall trust.
In a 2021 survey, Deloitte found that 40% of people would consider leaving if they couldn't trust their company to fulfill its DEI commitments.
Therefore, leaders, teams, and organizations must be consistent in their approach to improving DEI within their organization and cultivating an inclusive work environment.
6 Tips to Plan and Execute DEI Strategy
Connect DEI with your company's vision, mission, and values
It's vital to link your DEI goals to your company's existing vision, mission, and values.
This will help your organization understand the relevance of your DEI strategy in the broader context of its business activities.
If your company values strong leadership, frame your DEI initiative to show the value it can offer in enhancing management practices.
Creating a link between DEI and your organization's broader goals will inform, convince, and motivate all role players to deliver the value a diverse workforce can add.
It will also help leaders and people to see DEI strategy for what it is—a fundamental part of the company's overall success.
Put data at the center of your strategy
Leverage quantitative information and metrics whenever you can. Whether we’re talking about representation, diversity, or hiring processes, data is instrumental to set a baseline, identifying key priorities, setting goals, and benchmarking the success of your DEI efforts.
According to the Harvard Business Review, utilizing organizational data in your DEI strategy and execution has several benefits, including:
- Setting meaningful DEI goals and fostering accountability.
- Highlighting focus areas that need attention.
- Empowering the right people to act.
Also, don’t neglect the qualitative data. Run interviews or surveys with your employees, customers, and other involved stakeholders to complement quantitative data.
This will help you assess your current state to improve strategic planning. On the other hand, you need to be able to measure progress and identify if your strategy is delivering on promised results.
If you want to have full visibility into your performance without getting bogged down in endless spreadsheets, head over to Cascade. Using a strategy execution platform, you will have access to real-time data so you can make more informed and faster decisions.
Focus on all three dimensions of DEI
"Representation is very important but cannot be pursued in a silo. True diversity cannot exist and be durable if there is no equity [or] if there is no inclusion." - Erica Santoni, ex-principal of DEI at Intuit and Head of People Strategy&Analytics at ZipRecruiter
Many companies tend to focus on one area, such as diversity or representation, at the expense of inclusion or equity. However, it's crucial to build a DEI strategy and strategic plan that emphasizes all aspects of DEI.
A DEI strategic plan that focuses on diversity but neglects equity & inclusion won't have the same impact as a strategy that encompasses all three aspects. Why? Because diversity, inclusion, and equity have a synergistic effect on one another.
For example, a report by Accenture found that inclusive teams perform up to 30% better in high-diversity environments.
Similarly, another study by Deloitte Australia found that employees are 80% more likely to believe they work in a high-performing organization when their companies have a dual focus on diversity and inclusion.
Identify levers that will drive strategy execution
A strategic approach to DEI entails finding and following the best paths and methods. As part of this, you’ll need to identify which efforts you should focus on for your employees, customers, and the broader community.
- For employees, think about enhancing diversity, equity, and inclusion through organizational processes such as hiring, learning & development, onboarding, or performance evaluation.
- Consider how your products and services are designed, produced, and marketed for customers. Then, look at the other businesses you work with daily and see if there are areas where you can integrate DEI initiatives.
- Think about your business's place in the broader community and how you interact with people, companies, and other groups. What can your business do to positively impact the community where it operates?
Lean on traditional change management elements
Just because DEI is a relatively new concept for businesses, this doesn't mean that you can't use existing transformation or change management strategies to support it. Traditional change management ideas, systems, and processes should be part of your toolkit when planning, executing and monitoring your DEI strategy.
Successful DEI strategy requires organizational enablers such as a solid internal communication strategy, dedicated workstreams, steering committees, and buy-in from senior leaders.
On top of this, collaboration and input from various stakeholders across your organization can be immensely helpful in the planning phase of your strategy.
Build employee trust in the program
Trust is crucial to creating an inclusive workplace and ensuring the success of your DEI strategy. People expect accountability, transparency, and follow-through from leaders and management regarding DEI initiatives.
That’s why it’s so important to have a system to measure progress and impact on business and employees. Be transparent and share reports with employees.
Additionally, honesty is key to building confidence around DEI plans and progress. Even if you've missed targets or results aren't favorable, sharing this information and action plan with your stakeholder demonstrate your commitment to making the initiative successful.
Execute your DEI strategy the right way
The steps we've outlined above should offer you a good starting point so you can formulate your winning DEI strategy that will positively impact your company, people, and community.
However, a clear DEI strategy and a plan are just half the battle. You need to turn your plan into reality so you can avoid wasting money on initiatives that never get off the ground.
How are you going to measure progress and performance without losing time in weekly review meetings and manual progress reports?
Excel, PowerPoint, and Google Sheets? You deserve better - a digital platform like Cascade that will keep your plans, goals, and KPIs in one place.
Are you ready to give it a spin? Sign up for free and try it out. No credit card and no sales talk until you feel ready to hit goals faster.
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