Making DEI a Business Imperative
For decades, businesses have aspired to create more diverse workforces, more equitable outcomes for employees and a more inclusive workplace culture. We’ve hired consultants, read books, conducted surveys and studied best practices. We’ve invited underrepresented employees to form groups and councils so we might benefit from their insights and ideas. There has been no shortage of efforts and still we’ve failed to realize meaningful and sustainable progress. What’s more, some leaders have yet to formulate a clear and actionable point of view on what sustainable progress looks like. And, as Marian Wright Edelman once said, “You can’t be what you can’t see.”
What should we consider “meaningful progress” on DEI (diversity, equity and inclusion), anyway? When asked for a definition, Denise Hamilton, founder and CEO of WatchHerWork, admits that while we are unlikely to eliminate discrimination in our lifetime, progress on DEI would include removing the institutional reinforcement of it. “Meaningful progress will take, in part, changing policies, removing toxic bad actors—even if they are superstars in the organization—and applying intentional remediation of past harms.”
While that sounds good, we can all name companies that have implemented at least some of those ideas without much to show for it. Why is that? We’ve long blamed our stagnation on too little time and too few resources, and that was before a pandemic challenged everything we know about business and work. If we didn’t have the time and resources before, how can we prioritize DEI now, while we’re rethinking value propositions, reinventing supply chains and shifting to remote or hybrid work?
COVID-19 has created more complexity and added more stress to companies and employees alike. It’s admittedly hard to cultivate corporate culture remotely. Add the wear and tear from two years of nonstop change, and employees are less tolerant of workplace turmoil they may have been battling for years. For Black and brown people, that turmoil includes microaggressions, trauma, isolation and masking, or altering themselves to fit in. It’s a lot.
Daisy Auger-Domínguez, chief people officer at Vice Media, states it plainly: “Black and brown people have had enough. They want real change. And they’re keeping score.”
If underrepresented talent is keeping score, U.S.-based corporations are losing. Though women enter the workforce at 47 percent, they comprise just 24 percent of C-suite roles, with women of color accounting for only 4 percent of top jobs, according to the latest Women in the Workplace report. from McKinsey and LeanIn.Org, In fact, every talent segment, other than white men, experiences a decrease in opportunity as their careers progress, and there has been little change since the first Women in the Workplace report in 2015.
If you’ve been paying attention, you know that diversity and inclusion leads to better business results, because the world’s leading consultancies have been presenting the business case for years. In 2018, Boston Consulting Group found that companies with above average total diversity had 19 percent higher innovation revenues than companies that did not—and that diverse management boosted revenue by the same margin. In 2017, Cloverpop analyzed 600 business decisions made by 200 teams across a range of companies and found that business decisions made by diverse teams outperformed those made by individual leaders 87 percent of the time. In 2018, a McKinsey study revealed that 43 percent of companies with diverse boards saw significantly higher profits.
These statistics are just the tip of the DEI-in-business iceberg.
Data, combined with the popular notion that “DEI is the right thing to do,” has inspired countless leaders to claim DEI as a business imperative. It’s an admirable declaration, but the evidence does not support the claim.
So, what’s happening? Why would an effort defined as a “business imperative” fail to produce results after years of trying?
In many cases, the DEI path many leaders have been traveling has been destined to fail. This isn’t just pessimism. It’s simply acknowledging what any good leader already knows: True business imperatives do not rely on natural progression, town hall conversations or hopeful intentions. As we’ve all heard before, hope is not a strategy. And since COVID-19 has eliminated office pop-ups and social gatherings—where we once shared ideas without the pressure of an “impending Zoom”—it’s even harder to galvanize people to do something new.
WatchHerWork’s Denise Hamilton thinks COVID-19 may have done DEI a service: “I think any crisis reveals fault lines of frailty in systems. COVID-19 did that for culture work. Consequently, disparities have been more clearly revealed, which has given us an opportunity to address them.”
The first step is indeed to acknowledge that which we have failed to acknowledge—our companies are not diverse, equitable and inclusive. Not yet, anyway. Being honest about your starting point is a crucial part of getting anywhere. But our push toward a more diverse, equitable and inclusive workplace will continue to meet resistance until we stop saying DEI is a business imperative and start treating it like one. This is not rocket science, and yet, our discomfort with attaching goals and measurements to DEI efforts has rendered countless leaders dazed and confused.
“The DEI problem we’re trying to solve is, at its core, about addressing racial and gender dynamics, harm in the workplace and power imbalances. Organizations need clear policies, equitable and fair processes and accountability measures,” says Vice Media’s Daisy Auger-Domínguez.
We are goal-setters and goal-getters in any other context, yet this one trips us up. But if there was revenue or a profit-based business priority tied to your organizational health, how would you guarantee success? You would set clear goals, ensure accountable leadership, create thoughtful plans and define measurable criteria. If it sounds simple, that’s because it is. We make it hard.
Business leaders do not expect to achieve business performance without goals, but when it comes to DEI, many get stuck in the goal-setting process. Even those willing to take this step are not sure what their benchmark should be, how to define an end state or which elements of their DEI work can and should be measured. The short answer is, anything you aim to achieve can be measured, whether in numbers, participation, sentiment or outcomes.
Here Are a Few Ways to Think About Goal-Setting:
• Establish an increase in representation of specific talent groups by a percentage, or in line with your consumer demographics, or to mirror population data.
• Declare pay and opportunity parity—across talent segments—as must-haves.
• Define the workplace culture you want to cultivate—in employee experiences and leadership behaviors—so that everyone recognizes what they should be moving toward.
Clear goals are as important to sustainable DEI progress as they are to any business priority. You cannot reach your destination if you don’t know where you’re going and what you aim to accomplish.
Can you imagine kicking off an enterprise-wide business initiative with a team of one or two? It’s hard to digest, but this is exactly how many companies have been treating DEI—expecting one person or a small team to help reconstitute their workforce and redefine their culture without the resources that lasting change requires: money, people, information and influence. What’s more, we often forget to engage the middle.
“Managers play an important role in revolutionizing workplaces,” says Auger-Domínguez. “Most organizations operate from a top-down (the C-Suite) or bottom-up (junior talent) to launching wide-scale initiatives. I believe it’s the everyday actions of the often-overlooked mid-level manager that produce the most transformational organizational change.”
If we want to make real progress, the responsibility for DEI must belong to every leader and it must be resourced appropriately. A few ways we can share responsibility for DEI include accountability metrics and rewards, quarterly monitoring and multi-directional feedback.
Share Responsibility for DEI:
• Accountability metrics should follow goals and each leader should be held accountable to them. Rewards work, but corrective action is sometimes appropriate too.
• Reporting results to the CEO or to the board quarterly creates urgency and ensures sustained attention. Without monitoring, DEI progress takes a backseat to revenue, profit and customer priorities, often seen as the “real” business imperatives.
• Multi-directional feedback is a critical component of workplace culture evolution. There are toxic (or simply ineffective) leaders in every workplace. When we don’t gather feedback on every employee regularly, bad actors can inflict harm unchecked. And as is true in any systemic construct, toxicity always harms marginalized people the most.
Most DEI strategies include action plans, but thoughtful plans are relevant to your company’s purpose, your proven (not assumed) employee experience and your business goals.
• Purpose: The value you provide externally in products and services should be available to your own employees too. If your company purpose is tied to social justice, for example, your internal policies and plans should be as just.
• Experience: Let your employee experience help you prioritize. If equal access to opportunity is a problem in the eyes of your talent, prioritize solutions to that problem.
• Business Goals: Your DEI plans should support your long-term business goals. If you aim to increase market share, your plans should connect marketplace trends and your workforce’s ability to meet emerging needs.
Do not build plans based on best practices. Clients always want to know what other firms are doing so they can do the same. This is understandable, but a shortcut that may turn out to be not so short. If your action plans are thoughtfully connected to your current reality, they are more likely to succeed.
Measurable Success Criteria
We can and should measure all three dimensions of DEI if we want to make sustainable progress. Diversity can be a proxy for representation but shouldn’t stop at counting heads. Equity can be measured in equal pay and opportunity but is also connected to appreciation as a recognition tool. And inclusion is about much more than making sure people can “bring their authentic self to work.” No matter how you choose to measure, remember the important part is to engage in, establish goals for and measure all aspects of DEI simultaneously.
Once we’ve established guiding principles for the work, such as why we’re doing it, how we define diversity and whom to engage and hold accountable, we can build on that foundation with actionable signs of progress.
Measure representation against goals across intersections of race, gender, generation, tenure, leadership level and more, so you can glean a detailed picture of where your gaps are. Also measure progress on key steps along your talent journey, like how successfully you diversify your candidate slates or retention of diverse talent past the first three years.
Equity is defined as equal access to opportunity, which translates to feeling valued and treated fairly. People are most likely to stay at companies that treat them equitably. Since feeling valued is part pay, part opportunity and part appreciation for hard work, you can measure equity a few ways: Set pay equity goals and audit, measure opportunity by tracking promotion rates across talent segments and use surveys to track sentiment.
The fruit of a truly inclusive workplace culture is innovation, and the precursor to inclusion is psychological safety. Employees who feel psychologically safe are more likely to share ideas and raise concerns. According to Catalyst’s 2019 study, people who feel different based on race or gender are less likely to be creative at work. A company where some cannot contribute fully and freely will not only fail to achieve business results but will also struggle to retain top talent.
The biggest diversity, equity and inclusion mistake we make in our pursuit of progress is sequencing work that should be integrated. We focus on recruiting new employees without placing equal emphasis on keeping them. We invest in equitable outcomes for communities without ensuring the same for our own employees. And we portray our companies as caring and inclusive while our employees suffer in silence. The dissonance is deeply felt inside our own walls, and it is high time we treat DEI work as work—not as a box-checking exercise. It is the front on which we will continue to fight the talent war. So suit up, survey the land and make a game plan you can commit to because, with 87 percent of Gen Z stating that DEI are very important in the workplace, your future depends on it.