Talking to allies and champions of Diversity, Equity and Inclusion (DEI) across a variety of organizations of different sizes and industries, we find many share a common challenge. They have trouble convincing their leadership to invest adequate resources and allocate budget to DEI efforts. This is not surprising. While many leaders believe in DEI as the right thing to do and may be willing to make statements to that effect, their main duty to their key stakeholders is to ensure they are successful in meeting the organization’s strategic priorities and operational goals. Despite a significant body of research on the business outcomes and benefits of having an inclusive workplace, admittedly it’s often difficult to convince skeptics of the direct applicability of this data to the specific circumstances of their organization because of factors such as size, industry, geography and key business drivers.
Over the years, we have found a few key themes that are likely to convince most executives to invest in DEI and reap the benefits and realize the associated Return on Investment (ROI). Let’s review the generally available data and then focus on strategies that you can use within your own organization.
The Diversity Dividend
Diversity Dividend refers to financial benefits of a workforce with diverse attributes, including gender identity, ethnicity/race, sexual orientation, disability, veteran status, age and lived experiences:
- Top quartile diverse companies are more likely to financially outperform their national industry medians, by 35% for ethnic diversity and 15% for gender diversity (McKinsey)
- Diverse management teams deliver 19% higher revenues from innovation compared to their less diverse counterparts (Boston Consulting Group)
- Organizations with a diverse set of employees enjoy 2.3 times higher cash flow per employee (Bersin)
- In the UK, for every 10% increase in gender diversity of the senior executive team, EBIT rose by 3.5 percent (McKinsey)
While these traditional measures of ROI are significant and important, they only correlate hard diversity numbers — often expressed in terms of % representation of different groups — with hard business outcomes, like revenues, profitability and cash flow.
Return on Inclusion (the new ROI)
The equally important measures of inclusion and their correlation with the employee experience and related outcomes have not been as widely reported as the Diversity Dividend. However, significant data from highly credible sources have been emerging in recent years:
- Employees in highly diverse and inclusive organizations show 26% more team collaboration and 18% more team commitment than those in non-inclusive organizations (CEB/Gartner)
- Employees who feel their voice is heard at work are 4.6x more likely to feel empowered to perform their best work (Salesforce)
- Teams that follow an inclusive process make decisions 2 X faster with 1/2 the meetings (Forbes)
- Diverse and inclusive workforces demonstrate 1.12 x more discretionary effort, 1.19 x greater intent to stay, 1.42 x greater team commitment, and 1.57 x more collaboration among teams. (CEB / Gartner)
- Over 80% of millennial candidates consider their future employer’s DEI policies when making a decision. (PWC)
- Inclusive organizations are 3 x more likely to retain millennials 5+ years (Deloitte)
These and similar emerging studies point to “inclusion” as the key objective to focus on for leaders and their organizations.
Benefits of Belonging
Belonging happens in a culture when each member of the organization can bring his/her whole self to the workplace and contribute fully, without fear of any kind. It has been difficult to correlate belonging with business measures. But there is new data emerging now linking high belonging with a “56% increase in job performance, a 50% drop in turnover risk, and a 75% reduction in sick days” according to HBR. There was also a reported 167% increase in employees willingness to recommend their organization to others for employees that felt a high degree of belonging. It turns out these employees also received “double the raises, and 18 times more promotions.”
Gartner data shows that consistently low levels of employee engagement have persisted over the last two decades, inching up slightly from about 26% in the year 2000 to about 36% in 2021 and dropping to 34% in 2022. Meanwhile, one OurOffice customer who began to focus on DEI saw year over year improvement of 217% in employee engagement. This medium size company in the midwest had been struggling with employee engagement over the prior years.
The Competition
One of the best ways to motivate leadership to take action and invest in any initiative is the competition! There are various ways to do this. For example, you can leverage anecdotal data about actions being taken by other leaders in your industry or in your region to advance DEI in their organizations. A quick internet search for awards they may have won, or information that they highlight on their website may quickly yield the data that you need.
There are also structured assessments and benchmark data that you can leverage. OurOffice provides a DEI Maturity Model survey which delivers four DEI scores in the areas of strategy, talent diversity, inclusivity, communications and engagement, as well as an overall rating of Aware, Focused, Progressive or World-class. The survey only takes 15 minutes to complete to get your scores and overall rating, as well as the associated best in class Benchmark scores for your industry.
Many allies and champions have found competitive comparisons to help craft a convincing argument for executives when they are shown where and to what extent they may be lagging the competition.
Strategic Priorities
All organizations have specific goals and strategic priorities to achieve, even if they are not written down in a formal document. They are specifically tasked to shepherd the workforce, activities and resources of their organization towards achieving those goals and priorities. Although it’s not done very often, we have found that the most effective way to convince your boss to invest in DEI is to link it with their goals and priorities.
Here is an example where the Human Resources Vice President (HRVP) at a small e-commerce company wanted to start a focused effort on DEI, but did not have adequate funding or resources. The HRVP focused on the company’s strategic priority of expanding markets and partnered with the Chief Marketing officer (CMO) to define DEI objectives that could contribute to it. Together they were able to pool their resources to fund DEI actions which included expanding and leveraging their internal talent diversity. As a result, the company estimated that they reached their market expansion objectives in half the time that they had expected (50% faster).
In another example, a medium size manufacturing company needed to be responsive to their customers requirements for supplier diversity. However, they were having a hard time identifying and hiring diverse talent, especially at the first line and middle management levels. So they defined DEI actions to assess their hiring processes as well as their internal career development processes. By leveraging DEI analytics, they were able to identify and address gaps in both processes. While they had been focused on sourcing diverse talent, they found that the main issue in the hiring pipeline was instead at the interview stage. As they reviewed performance and promotions data, they found that a disproportionately high percentage of their female employees had outstanding performance ratings, while they were underrepresented in promotions. These insights helped them effectively address the issues and reach the needed talent diversity to meet their customers’ requirements.
How to Get Started
Building a culture of inclusion starts with aligning the leadership. The good news is that the hard work of convincing your leadership is well worth it as DEI has been shown to deliver an ROI of about eight times (8X). The other encouraging factor is that there are more resources and experts available than ever before to help you if you are too busy or simply overwhelmed with the effort.
Please feel free to connect with us at DEI@ouroffice.io, if you’d like to discuss your specific challenges in DEI and getting your leadership buy-in.
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