Why is Diversity, Equity, and Inclusion Important to Organizational Success?
There was a time when diversity, equity, and inclusion (DEI) was just a group of buzzwords. With a few exceptions, organizations gave little more than lip service to DEI. It was a checkbox on a form somewhere. Those days are over.
Here’s why. People drive business, organizations, and organizational change. As it turns out, the people poised to shape the future are more diverse than ever. According to research from Pew Research Center, the “post-millennial” generations entering the workforce will be the most diverse in history. McKinsey & Company estimates that, through 2030, 160 million women may need to change jobs thanks to automation.
These are large groups of people, behind large and powerful workforce trends, that cannot be ignored. According to the same McKinsey & Company insights, there is $12 trillion in additional GDP on the table if we can find a way to close the gender gap by 2025. And there’s $2 billion in potential revenue if we can expand “financial inclusion efforts” to extend more services to black Americans.
As an organizational imperative, DEI is here to stay.
What is DEI?
Lack of awareness is often a major barrier to progress in the realm of DEI. Diversity and inclusion expert Josh Bersin estimates that “70% of companies believe they are advanced in this area, only 11% truly understand the depth of the problem.” So, what is DEI? Here’s a quick refresher on what we mean when we talk about diversity, equity, and inclusion.
We like to define diversity as the understanding, acceptance, and valuing of differences between people inside and outside an organization. This might include differences in:
- Religious beliefs
- Disabilities and special needs
- Sexual orientation
- Education, experience, and skill sets
- Personality and background
The list goes on. And though this is a serviceable definition of diversity generally speaking, it’s important to note the different perceptions that people have about the term “diversity.” In our Diversity And Inclusion: A Complete Guide For HR Professionals, for example, we mention research from Deloitte that revealed some interesting generational insights.
Take millennials, who tend to view workplace diversity from the perspective of organizational advantage or change. Gen Xers and Boomers, for their part, tend to consider workplace diversity from the perspective of equal representation. While we certainly see the connection between elevating diversity and ongoing organizational success, we find that both of these perceptions are to a certain extent true.
Here’s another term whose definition might be a little different from company to company. Broadly speaking, equity is about safeguarding fairness and impartiality for all people. Organizations with mature DEI programs build equal access to opportunities and advancement, for example, into their operational DNA, from hiring processes to compensation. This might also include a close examination of the external indicators, such as societal inequities or educational barriers, that ought to be considered and addressed.
Typically an inclusive work environment is collaborative, supportive, and respectful. It’s built to increase the participation and contribution of all employees and backed by company structure and policy designed to remove all barriers, discrimination, and intolerance.
3 reasons for elevating your diversity, equity, and inclusion initiatives
As powerful as each of its components are on their own, DEI is about a more comprehensive, “operationalized” strategy. A company committed to elevating DEI initiatives reflects that commitment in its mission, strategies, and business practices. These companies not only protect diversity, equity, and inclusion, but move DEI forward in the name of competitive business advantage.
Here are three primary ways that organizations benefit from developing and supporting their DEI programs.
1. It helps businesses attract top talent
The benefits of an organization’s commitment to DEI tend to compound over time. Many develop a magnetic reputation that helps them attract and retain top talent. This isn’t particularly surprising, when you consider that 67% of job seekers use diversity as an important factor when considering companies and job offers. Simply put, people want to work in diverse, equitable, and inclusive organizations!
2. It will help your company grow and innovate
Our own research has shown that companies that create diverse and inclusive work environments are more adaptable and creative. But don’t just take our word for it. Gartner predicts that 75% of organizations “with frontline decision-making teams reflecting a diverse and inclusive culture” will outstrip their financial goals. Research from Weber Shandwick indicates that 66% of executives agree that DEI is a key driver of financial performance. is an important driver of company financial performance. Turns out, they’re right: according to a report from BCG, companies with more diverse leadership teams have 45% higher innovation revenue versus those who don’t.
3. Workplace discrimination is expensive
Beyond its moral and ethical consequences (doing wrong by your staff, for example, and sending that kind of message to existing and prospective employees), failing to elevate DEI—or enabling outright discrimination—can be very detrimental. The Center for American Progress estimates that workplace discrimination costs businesses $64 billion annually.
Ready to make diversity, equity, and inclusion a priority? Here’s how.
The data around demographic shifts, generational perceptions, and business impact are there. In terms of actionable next steps, here’s what we recommend:
Make the case to your business decision-makers
From chief executive on down to the shot callers in human resources and IT, people need to see a business case before jumping headlong into a fully-fledged DEI program. This will include qualitative rationale, supporting research, and analysis. In terms of rollout, the leadership will need a clear understanding of timeline and budget, technical considerations, and the stakeholders and business units that will need to be involved. For more details on making a detailed business case, read Diversity And Inclusion: A Business Case.
Build DEI into your hiring and recruiting processes
Your human resources management and recruiting staff will be most closely impacted by DEI initiatives, on a daily basis. Recruitment, in particular, is an essential step in building workplace diversity. This includes close scrutiny of the way you write job descriptions, screen resumes, source talent and conduct candidate interviews. For more information on building DEI into recruiting and hiring, read Diversity Hiring: 6 Steps To Hiring More Diverse Candidates.
Finally, consider technology and automation software built specifically for talent acquisition and DEI. Today, AI-powered solutions such as Ideal recruitment software can screen millions of candidates with reduced bias. For larger organizations hoping to scale their DEI programs, this kind of software is a must.