The reality, however, is that DEI has been around for much longer than many may think. The framework first took root in the 1960’s during the civil rights movement in the United States, following the introduction of equal employment laws and affirmative action.
Over decades it has become more and more mainstream, pushed to the forefront of global debate with movements such as #MeToo, #BlackLivesMatter, #StopAAPIHate and #LoveisLove. In fact, as it has grown DEI has broadened its scope to include different groups and identities, operating from an intersectional lens that includes gender identity, sexual orientation, religion, race/ethnicity, culture, etc.. DEI strives to ensure that everyone represented by these different groups feels valued, respected, treated fairly and supported when it comes to being their authentic selves.
So how does this relate back to companies? Why should they care?
Because the business case for DEI is stronger than ever.
Employees Want DEI
Not only are a company’s efforts towards creating an inclusive environment an important factor for individuals deciding where to work, but amplifying DEI efforts are also significant drivers of talent retention. According to a Deloitte survey in the United States, 80% of respondents indicated that inclusion is important when choosing an employer, and half of employees wish their companies would invest more in DEI.1 Europeans share a very similar sentiment. According to ManpowerGroup’s study Diversity at Work, 1 in 3 professionals reported choosing a job offer based on the companies’ inclusion policies.2
Equally noteworthy, feelings of inclusion have a direct correlation with employee engagement, according to the 2020 Global Human Capital Trends report. 93% of respondents view belonging as an important driver of workplace performance, one of the highest rates of consensus seen in over a decade of publishing these reports.3 And it makes complete sense. The more an employee perceives their needs are being met, the more satisfied and loyal they will feel towards their employer. This leads to lower employee turnover rates and increased employee development, optimizing commitment and stimulating productivity.
Belonging goes beyond DEI; it is essential to a company’s long term growth.
Top leaders of multinationals agree. “Diversity, equity, and inclusion accelerate innovation, attract top talent, deepen employee engagement and improve the bottom line. Capturing such benefits requires fostering that culture throughout the industry,” explains Pat Gelsinger, CEO of Intel.4
DEI is Financially Beneficial for Businesses
What at one point in time might have been a controversial statement, today is accepted as a universal fact: diverse and inclusive organizations find greater financial success. Over the course of five years and three global reports, with data encompassing 15 countries and more than 1,000 large companies, McKinsey found that racially, ethnically and gender-diverse teams consecutively outperformed their industry’s median financial returns.5 Specifically, their 2019 analysis revealed that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile – up from 21 percent in 2017 and 15 percent in 2014 (Figure 1).
Figure 1. Likelihood of Financial Outperformance
Source: www.mckinsey.com
In the case of ethnic and cultural diversity, their findings were equally as compelling. In 2019, top-quartile companies outperformed those in the bottom one by 36% in profitability, slightly up from 33% in 2017 and 35% in 2014.
Many other studies have published similar results. According to ManpowerGroup’s report, 8 out of 10 Europeans affirmed that a diverse and inclusive environment is, by definition, more productive, and promotes innovation and intrapreneurship.2 Furthermore, its results demonstrated that diversity has a direct impact on productivity. 51.54% of LGBTQI+ respondents claimed that coming out would enhance their productivity at work because it would enable them to stop making efforts to pretend or separate their personal and professional life. This figure rose to 62.02% for respondents who had already come out in their working environment. The impact of diversity on innovation was even more pronounced, with 82.52% of all respondents stating that diverse environments are more innovative.
Indeed, the promotion of DEI is becoming increasingly important for the successful performance of organizations, whatever their size.
More and more companies are realizing that having diverse workforces and teams, from different cultures, genders, sexual orientations, backgrounds and ways of thinking, supports their creative processes and positively impacts their profitability.
With the shortage of talent at its highest level, it is more important than ever to have the right tools to attract and retain the best diverse workforce. As we continue to grow and evolve as society, organizations must be receptive to the changes that lie ahead and the needs of their employees. The following are a selection of areas of action that are leading the evolution of DEI advancements in 2023:
- Increased Use of DataWorldwide, only 1 in 5 companies has a way to measure the business impact and perceived value of DEI, according to a Workday study.7 Collecting DEI data and comparing it with the organization’s ESG goals, mission and objectives is paramount to measure success and develop new strategies for action. Deep diving into an entity’s data can also help shed light on problem areas that may otherwise go undetected, such as diversity in management and leadership, hiring practices, pay equity, retention rates, training and development opportunities, etc..
- Supporting Employees’ Mental Health Employee mental health and well-being have increased and will continue to do so in 2023. The COVID-19 pandemic contributed to a worldwide rise in mental health issues, including stress, depression, anxiety, and isolation. Providing resources to support individuals experiencing mental health challenges creates a nurturing environment that makes them feel safe and accepted, in addition to helping them get the care they need.
- Commitment to Transparency More and more companies are expected to be transparent about their DEI goals and progress, both by customers and their employees alike. Fostering an environment that allows for open communication and transparency is key for DEI programs to be effective. There has been a rise in organizations choosing to disclose their workforce representation data, resulting in honest conversations and more robust strategies that lead to measurable improvements across sectors.
- Artificial Intelligence (AI) and Virtual Reality Technology can be a powerful tool for promoting DEI, and organizations are looking to utilize technology in new and innovative ways to advance their DEI initiatives, including using AI to eliminate bias in hiring processes by removing subjective information such as names and address, or employing virtual reality to create immersive diversity training experiences.
Ready to take action? At Gain we want to be part of the solution with our InsightLinks service. We believe that the future of DEI lies in the individual steps taken by each organization to transform their company from the inside out. That’s why we have connected with external consultants on the front line of DEI implementation in order to provide concrete actions, feedback and guidelines for our clients to apply to their specific context, creating effective strategies and inclusive environments.
InsightLinks is ready to equip you with the tools you need to become a leader in the DEI space. Contact us to learn more about how we can help you take the first step.
References
- DeHaas DL, Bachus B, Horn E. Unleashing the Power of Inclusion: Attracting and Engaging the Evolving Workforce. Deloitte. 2017. Accessed July 24, 2023. Learn more.
- Diversity at Work. ManpowerGroup. 2021.. Accessed July 24, 2023. Learn more.
- Volini E, Schwartz J, Denny B, Mallon D. 2020 Global Human Capital Trends Report. Deloitte. 2021. Accessed July 24, 2023. Learn more.
- Reiss R. I asked the world’s top CEOS if they’re taking diversity seriously. Here’s why their answers could change your life. Fortune. November 23, 2022. Accessed July 24, 2023. Learn more.
- Dixon-Fyle S, Dolan K, Hunt DV, Prince S. Diversity Wins: How Inclusion Matters. McKinsey & Company. May 19, 2020. Accessed August 4, 2023. Learn more.
- Panou P. Dei in 2023 – how the new DEI initiatives will shape the future of work. Brainz Magazine. February 27, 2023. Accessed July 25, 2023. Learn more.
- Top 5 trends in DEI for 2023. Purdue Global. May 19, 2023. Accessed July 25, 2023. Learn more.
