DEIB - The Business Case for Diversity
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Why do organizations implement diversity initiatives? They are not new, and they have been around for decades. In Lawrence M. Baytos’ book Designing & Implementing Successful Diversity Programs, he outlined seven business drivers for diversity. Those drivers underlie the business case for diversity and are still relevant. Let’s examine them in the context of today’s economy.
Workforce Demographics and Changing Markets
What does your workforce look like, but more importantly, what should it look like? There is an abundance of data about population demographics available from the U.S. Census filtered by all types of subsets and updated every 10 years. Government contractors rely on this data for their affirmative action plans for information about the availability of talent by geography and EEO Occupational Codes, as two examples of the data they use.
The demographics of customers and clients also continue to change. Savvy organizations will want their employee populations to reflect their client and customer base to better understand and attract them and relate to their needs.
Demographic changes lead to the emergence of new products and the expansion into new markets. Customers and clients are no longer just local or regional. Technology has allowed organizations to operate around the globe and in many lines of business.
Consider Amazon, which officially opened for business on July 16, 1995, as an online bookseller and is now a multinational technology company focusing on e-commerce, cloud computing, online advertising, digital streaming, and artificial intelligence (AI).
With all these changes, HR has to work with marketing and marketing research teams to understand the dynamics of these market changes. Diversity, equity and inclusion (DEI) initiatives are not the sole responsibility of HR. Everyone and every organizational function must be involved.
READ: How Does the End of Affirmative Action Impact Workplaces?
Recruitment Needs
Not only do workforce demographics change. The characteristics of the generations in the workforce change as well. Organizations are more dependent on the younger generations of workers to fill their needs, so it’s important to understand their expectations to attract them.
According to research by Glassdoor, when employees and job seekers aged 18 to 34 are considering a new job, 80% say that diversity, equity, and inclusion are very or somewhat important to them. This is a huge difference compared to the number of individuals aged 55 to 64 (67%) and 65-plus (61%).
Benevity, in their survey about The State of Workplace DEI, found that 95% of people weigh a prospective employer’s DEI efforts when choosing between job offers with similar salary and benefits and that 78% would not consider working for a company that fails to commit significant resources to DEI initiatives.
Research compiled by Indeed Hiring Lab and Glassdoor Economic Research shed light on what the coming years will bring to the labor market, and how these trends will impact employers, employees, and the future of work. The top long-term trend they found was that a tight labor supply will continue to impact hiring. Not only will hiring be more difficult, but workers will be better positioned to expect changes. In addition, the pandemic resulted in more older workers vacating jobs leaving more younger workers in the available pool. Younger workers expect DEI initiatives along with a commitment to social justice.
READ: HR Guide to DEI
Talent Retention
You’ve attracted candidates by having an inclusive culture. That culture and your DEI efforts will also help you to retain those individuals who have accepted your offers of employment. Great Place to Work’s research on company culture shows that when employees trust that they, and their colleagues, will be treated fairly regardless of race, gender, sexual orientation or age, they are 5.4 times more likely to want to stay with the organization.
Workhuman’s research in Prioritizing DEI in Times of Economic Uncertainty, shows that 72% of employees say DEI is important to them in terms of staying at their job. The report also emphasizes that employees who leave a toxic work environment take their abilities and knowledge with them along with their networks which can be a source of future recruitment.
Younger generations of workers are looking for more than financial incentives and stability. They are looking for a job with purpose, meaning, and connection. They place great emphasis on working for organizations that reflect their values, and they place a high value on DEI efforts. In fact, a 2022 survey by Robert Half found that 71% of workers said they’d leave an organization whose values do not align with their own.
As noted in an editorial in the Washington Post on Sept. 4, 2023, "The overwhelming message is people do want to work—when they’re paid well and respected. Gen Z has rejected the suits and office rituals of their older colleagues. They care more about inequality, climate change, and mental health. But they are hard-working. We’re all better for it."
Recognizing the values that younger generations of workers bring and expect should make DEI the heart of your recruitment and retention strategy.
Enhanced Teamwork
Return to the office, or else—the mandates that executives are imposing on their workforces in this post-pandemic period. According to an article in the Washington Post, executives are citing fewer opportunities for spontaneous collaboration, mentorship, and connection-building in hybrid working arrangements as the rationale for wanting employees to return to the office at least part of the week. Touting the need for collaboration should indicate the value that executives are placing on teamwork.
The following question was posed in the Harvard Business Review article, "Why Companies Can and Should Recommit to DEI in the Wake of the SCOTUS Decision: Do diverse teams benefit organizational performance?" The response was that "Ample research shows that they make smarter decisions and better investments, are more adaptable, and drive innovation when the corporate culture in which they operate is a supportive, psychologically safe one. Diverse and well-trained workforces and leadership teams are also better suited to interact with diverse employees, customers and vendors. Thus, there is still both a moral and a business case for supporting DEI efforts."
As reported in CIO.com, diverse and inclusive teams are better at decision making. Cognitive diversity is estimated to enhance team innovation by up to 20%. People with multiple perspectives from a variety of backgrounds, cultures, and experiences are more likely to solve problems and be innovative. This article also cites research from Gartner that inclusive teams perform up to 30% better especially in high-diversity environments.
Productivity
Talent retention and enhanced teamwork are integral to employee engagement, and employee engagement drives profitability and productivity. In 2020, Gallup performed it’s tenth meta-analysis, which verified once again that employee engagement relates to the 11 performance outcomes it studies: customer loyalty/engagement, profitability, productivity, turnover, safety incidents, shrinkage/theft, absenteeism, patient safety incidents, quality/defects, wellbeing/thriving employees, and organizational citizenship/participation.
Gallup also found that increased employee engagement leads to higher earnings per share (EPS) in for-profit organizations. Factors such as EPS, profitability, productivity, and customer ratings are all key indicators in determining a company's health and its potential for growth.
Employees working in an inclusive culture, one that values them and is committed to their wellbeing, will in turn be committed to the organization and its mission. They will take pride in the organization and the work they do for it, contributing to its ongoing success.
WATCH: The New Era of Work - Unleashing the Power of Global Diversity
Globalization and Adaptation to Many Cultures
We recall hearing the late Madeleine Albright speak and someone asked, "How do you stop globalization?" Her response was simple, "You don’t." So beyond employee engagement, organizations have to embrace the cultures of a global economy.
Consider the work that Amazon Web Services is doing to maximize their global inclusion, diversity, and equity strategies. They created a program that encourages employees to serve as inclusion ambassadors who are allies, advocates and change agents speaking out on the importance of inclusion, diversity, and equity and promoting programming, trainings and events in their regions—such as hosting a STEAM (science, technology, engineering, the arts and mathematics) summer camp for young students in Ghana.
Another example: Their account teams help customers harness the power of the cloud for good by looking for strategic partnership opportunities with customers to address the needs of underrepresented populations. These partnerships leverage employees’ expertise for the betterment of communities and cultures—work that employees find rewarding and a plus for retention.
Expansion into global markets means that organizations must have a better understanding of customers and clients all over the world, and they must think differently about the products and services they provide to better meet their needs. That means they must have a greater understanding of the various global cultures—various systemic issues and cultural contexts—of the regions they are targeting.
READ: Big HR Solutions by Cornelia Gamlem and Barbara Mitchell
Legal and Compliance Issues
Organizations are concerned with workplace representation, equal employment opportunity compliance, and, for government contractors, affirmative action. While legal and compliance issues are often comingled with diversity, as discussed in our recent article Affirmative Action and Diversity—Myths and Facts, diversity is much broader and touches many aspects of our lives. In the world of work and business, it’s creating cultures of respect and inclusion.
While diversity initiatives have changed and morphed over time, many still consider them business imperatives, which is why so much justification continues to exist for them. Yet, in our current climate they continue to be under attack by politicians. As the result of a law banning diversity training in the state, Texas A&M University dropped what had been a required lesson on "respect & inclusion." It’s a sad commentary that students are prohibited from learning about respectful and inclusive communities, knowledge and information that is extremely important as citizens of their current academic community, but will be critical when they leave academia and enter the world of work.
