Creating a culture that values individual differences among coworkers is a recipe for business success. It’s not just about fairness, though. The benefits of DEI in the workplace provide a legitimate competitive advantage.
Equal opportunity employment has made serious strides since the 1960s, when civil rights legislation first criminalized discrimination based on color, national origin, race, religion, or sex in the United States. But the road to equality in (and out) of the workplace is long, and it still faces hurdles globally.
Today, these efforts are often summed up as diversity, equity, and inclusion (DEI)—the idea of valuing individual differences among coworkers on equal terms as a recipe for business success. It’s not just about fairness, though. The benefits of DEI in the workplace provide a legitimate competitive advantage.
In its 2020 report Diversity Wins, McKinsey & Company analyzed 1,000 large companies in fifteen countries and found that the relationship between C-Suite diversity and financial outperformance grows stronger over time. The report also underscored DEI as a significant driver of business performance. Despite that, overall growth in DEI has been slow. Operational and fiscal challenges arising from the COVID-19 pandemic inevitably placed corporate DEI efforts on the back burner.
Diversity, equity, and inclusion in the workplace — also known as DEI in the workplace — relates to the actions taken to establish awareness and transform mindsets, behaviors, and practices to create and sustain a diverse, equitable, and inclusive environment.
DEI the umbrella term for the programs, policies, strategies, and practices that implement a company’s mission to create and sustain a diverse, equitable, and inclusive environment that respects and accommodates every employee’s:
The appreciation and prioritization of different backgrounds, demographics, identities, and experiences collectively and as individuals. It emphasizes the need for representation of communities that are systemically underrepresented and under-resourced.
Acknowledges that not all people or communities are starting from the same place due to historic and current systems of oppression. Equity is the effort to provide different levels of support based on the needs of an individual or group to achieve fairness in outcomes. Equity actionably empowers communities most impacted by systemic oppression and requires the redistribution of resources, power, and opportunity to those communities.
A state of belonging where people of different backgrounds, experiences, and identities are valued, integrated, and welcomed equitably as decision-makers, collaborators, and colleagues. Ultimately, inclusion is the environment that organizations create to allow these differences to thrive. Diversity and inclusion maximize competitive advantage through innovation, effectiveness, and adaptability.
DEI is also seen as a competency and an asset. Rohini Anand, former Chief Diversity Officer at Sodexo and Mary-Frances Winters of The Winters Group, Inc., Academy of Management Learning & Education told Forbes, “The assumption is no longer that only certain groups need training (e.g., white men or minorities), but rather that all employees need to be more cross-culturally competent in an increasingly global world.” DEI is for everyone and must involve employees at every level of an organization, regardless of their differences.
DEI goes far beyond checking off boxes and setting goals. It makes good business sense by:
Promoting a shared experience
Providing broader perspectives
Nurturing a more positive workplace
Understanding customers better
Adding integrity to the team
Putting actions behind words
Giving opportunities to all
Mirroring the market
Generating fresh insights
Gaining global appeal
Diversity and inclusion are more than policies, programs, or head-counts. Equitable employers outpace their competitors by respecting the unique needs, perspectives, and potential of all their team members. As a result, diverse and inclusive workplaces earn deeper trust and more commitment from their employees.
When employees feel included as an important part of your company, they feel more inclined to do their best. It’s no surprise a greater engagement and sense of belonging result in higher quality work and productivity.
In fact, research confirms that DEI in the workplace highly impacts job performance:
And you know that DEI also attracts more talent? When you open your doors to all kinds of candidates, you’re defining how they view your company.
According to research by Glassdoor, 76% of people consider DEI in the workplace to be a very important factor when evaluating a job offer or looking for new career opportunities.
A diverse group can offer a wider variety of ideas, and consequently, reach a wider range of potential customers. In truth, it’s clear that mixing different ways of thinking and working can only provide a higher chance of innovation for your company.
Research by Harvard Business Review confirmed that companies that reinforced DEI in the workplace had 19% higher innovation revenues.
Research also shows that diversity at work and financial performance are linked. According to McKinsey & Company’s study, gender and ethnic diversity are correlated with profitability, and companies committed to DEI can attract top talent, enhance customer and employee satisfaction, and improve decision-making.
McKinsey & Company's study also found that on a global scale, the top-quartile companies on executive-level gender diversity had a 21 percent likelihood of outperforming their fourth-quartile industry peers on EBIT (earnings before interest and taxes) margin and had a 27 percent likelihood of outperforming fourth-quartile peers on value creation. The study also found that companies with the most ethnically diverse executive teams are 33 percent more likely to outperform their competitors on profitability.
DEI efforts are incredibly important for retention. Companies with highly inclusive cultures are more likely to hit their financial target goals by up to 120%, so there are very strong business reasons for prioritizing DEI.
Focusing on diversity isn’t just the right thing to do. It’s good for your business. Diversity of gender, race, nationality, creed, sexuality and anything else means you’re better representing what the world looks like, your customer base, and whomever you cater to. It also means a wealth of ideas and input you may not have thought of. It elevates at every level.
It's so important for businesses to encourage their employees to bring their whole selves to work and celebrate them for all that they are. Promoting and highlighting DEI efforts helps employees feel safe, respected, and more connected, which can lead to a stronger sense of community and increased productivity. This drives happier, more engaged humans, which is paramount right now.
DEI efforts offer countless benefits, but employees should also recognize their economic impact. Studies show that organizations with diverse leaders and employees innovate at a faster rate, as diversity of thought fuels new product development and generates opportunity for everyone.
DEI breeds creativity, innovation, enhanced employee belonging, and engagement overall. Ultimately, these all drive improved business outcomes and success, including revenue growth and improved profitability—not to mention happier team members!
At Cooleaf, we feel strongly that diversity, equity and inclusion efforts help cultivate an environment where employees feel a sense of belonging. With that sense of belonging, employees then seem to feel the openness and safety to contribute their ideas. These ideas brought to the table from diverse mindsets become a driving force by which organizations innovate, evolve, and thrive.
Employee support for DEI is absolutely critical, especially for the purpose of promoting belonging across the business. Explaining where the existing workforce fits into DEI initiatives helps illuminate the myriad benefits for everyone, including the creation and development of a culture where all employees are welcomed and encouraged to thrive.
Innovation comes from diversity of thought and experience. Creating an environment where diversity can flourish allows organizations in the digital economy to be more innovative, which is key to sustaining a competitive advantage. Innovation is unleashed when individuals convey respect for different perspectives, listen with an open mind, and foster inclusion and sharing.
With teams working remotely, employees strongly feel a lack of a sense of inclusion/belonging, which is critical for employee engagement and effectiveness. Companies need to adopt an empathetic view of WFH burnout and encourage teams to focus on inclusion. Teams are already diverse, remote, or even global. Focusing on inclusion will help them overcome and combat WFH burnout.
DEI in the workplace goes beyond training modules, mentorship programs, and new policies. Equitable employers create diverse and inclusive workplaces where employees share unique perspectives, respect one another’s individual needs, and reach their full potential without barriers.
As a result, inclusive workplaces see greater innovation and financial returns, outperform competitors, and improve employee experiences.
Organizations have the power to create flexible work environments, recruit diverse teams, train employees to identify and prevent internal discrimination, and offer everyone equal opportunities at work. As a result of these efforts, organizations will experience supplementary benefits.
DEI programs are an essential aspect of building engaged and happy employees. Organizations with strong DEI initiatives are more likely to have employees with increased job satisfaction, higher levels of trust, and are more engaged. But it’s not just morale that lifts when DEI programs are made a priority, there are benefits that can be seen at every level of the business.
Teams are 158% more likely to understand target customers when they have at least one member who represents their target’s gender, race, age, sexual orientation, or culture.
Companies with higher diversity in management earned, on average, 38% more revenue than companies with lower diversity. That could be because diversity of gender, country of origin, career path, and industry background are highly correlated to innovation.
Organizations in the top 25% when it comes to gender diversity among executive leadership teams are 21% more likely to be profitable and 27% better at creating value.
Simply put, reinforcing robust DEI programs helps every employee to show up each day without fear of being their true selves. This fosters higher degrees of engagement, productivity, and innovation that contribute to increased revenue.
Leaders have an incredible responsibility to enact objectives, strategies, and accountability programs that create an inclusive organization and measure DEI in the workplace. Leaders must take several actionable steps to enact organizational transformation and produce real results.
Pauline Hoffmann, Associate Professor for St. Bonaventure University’s Master’s in Leadership program says “DEI certainly took center stage as a result of unrest, the pandemic, among other factors. What organizations are finally realizing is that they cannot continue as they did by hiring and retaining the same slate of characters. They recognize in a global economy that having diverse talent at the decision-making table enhances their bottom line as well as their corporate culture and employee morale.”
Hoffmann regards DEI as an essential component to business success, rather than just a passing trend. She says, “I believe companies have also realized that DEI isn’t just the fad du jour, it is something that needs to be incorporated and embedded into the organization’s structure and framework.”
The first step to foster DEI in the workplace is to create a company vision. Leadership and management teams should involve employees at every level of the organization to encourage alignment and adoption. Sharing the company’s vision of DEI initiatives and communicating this vision with teams will support accountability. A company vision should include a mission statement, vision statement, core values, and key differentiators. Although a company vision may encapsulate a series of goals, DEI should be included in a company’s overarching values.
Like any business objective, pursuing DEI in the workplace must be measured and tracked using data. Leaders must identify objectives related to DEI and key value drivers. For example, organizations can measure DEI by surveying employees about their perception of inclusion in the workplace, tracking diversity in recruiting efforts, and using annual employee engagement surveys. Data and analytics are helpful tools to collect, analyze, and report key performance indicators (KPIs) related to DEI over time.
A strategy is a roadmap designed to reach organizational goals successfully. A DEI strategy must define the company’s purpose, mission, and values. In addition to outlining the company vision, a strategy must list the relevant metrics, establish a governance body that will “own” the DEI initiatives, define leadership roles, and encourage teams to align and adopt the strategy. For example, an organization may add workforce training and skilling to a DEI strategy and include quarterly reviews to ensure employees are actively engaging with training modules.
Organizational change requires constant iteration and refinement. Leadership and management teams must schedule checkpoints to track progress and ensure their DEI initiatives are leading to change. In many cases, leaders may need to refine the original strategy to meet their goals. For example, in the wake of COVID-19, many organizations moved to new work-from-home models that led to unexplored work environments. It’s okay to experiment with innovative training, mentorship programs, or flexible work models and use employee feedback to improve policies and procedures over time.
DEI in the workplace is not a buzzword or a trend. DEI should always be top-of-mind for leaders, and change doesn’t happen overnight. Leaders must continuously revisit the state of diversity, equity, and inclusion in the workplace to assure employees that organizational transformation is underway. Diversifying leadership teams is essential to ensure people from various backgrounds lead teams to a more equitable workplace. In most business settings, change starts at the top, and the right leaders have the power to inspire teams to champion diversity initiatives in the workplace.
Building a diverse workforce and inclusive workplace reflects society’s own acceptance of and openness to individual differences. Fostering a company culture where every voice is heard and respected starts at the top—the executive team needs to lead by example and prioritize DEI.
Consistently listening to employee feedback and implementing measurable KPIs and benchmarking related to DEI can also help companies determine which strategies and ideas are working. This includes utilizing inclusive language in the workplace, setting up employee resource groups (such as LGBTQIA+ groups), creating safe spaces for breastfeeding mothers, and of course, DEI training.
Continuous support and inclusion initiatives engage and involve an entire organization in DEI goals. It’s also a collaborative way to build a strong company culture that will accommodate DEI in the workplace for years to come.
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