You have likely seen many articles and stories in the media about how corporations are taking steps to increase diversity, equity and inclusion (DEI) within their workforce. This change has been driven by increased pressure from various groups including boards of directors, investors, media, and society as a whole. While some corporations may push back against this pressure, it is important to understand that diversity within a workforce is not only the right thing for a company to do, but it is simply a good business decision. Research has been conducted that shows a focus on DEI leads to a more effective workplace, greater innovation, and better business returns. In spite of knowing this information, many CEO’s admit they are still struggling with how to best make changes in regards to DEI.
A 2021 study from Summit Leadership Partners surveyed 200 CEO’s and over 95% of the participants stated that DEI is something they would like to focus on over the next few years. However, 2 out of 5 of these CEOs claimed that they did not have a strategy for DEI changes and those that did have a plan had not yet figured out how to implement their DEI strategies.
Why DEI is Crucial For a Business to Thrive
A report from McKinsey & Company discovered that gender diverse executive teams are 21% more likely to experience above-average profitability, and ethnically diverse executive teams are 36% more likely to experience above-average profitability. Companies that rank near the top for gender and ethnic inclusivity were shown to be 12% more likely to outperform profitability predictions. Companies that implement successful DEI strategies are also much more likely to retain talent within their workforce and see a higher amount of financial and customer success.
Covid-19 has disrupted the economy and the way companies do business, and adding people to your teams that may have different perspectives and ideas can help solve the complex problems that companies are facing. Essentially, companies that place a focus on DEI are just doing smart business and are more likely to succeed.
Diversity Within Company Boards
While many companies are interested in DEI initiatives, it is moving at a glacial pace in the grand scheme of things. Implementing DEI at the highest level is just as important as increasing the diversity of your general workforce. Companies need the proper infrastructure to be successful with DEI. Knowledge and accountability are more important than compliance, quotas or check-the-box exercises. You must change company culture from the top down. My leadership advisory firm has found that preparing leaders first, then hiring diverse talent, is the most impactful approach.
Companies need leaders who are willing to advocate for a variety of different people. Being an inclusive leader means having self-awareness and learning through experiences. Inclusive leaders are also aware of their biases and preferences and seek other perspectives to inform better decision-making. They engage with everybody and foster a culture where people can feel comfortable expressing their ideas and opinions.
How CEOs Can Make DEI a Priority
CEOs that are serious about DEI initiatives should consider the following:
- Get the DEI initiative started. Many companies that fail to implement DEI practices think big and then want to start big. Thinking big is great, but starting small is generally a more effective way to see the fruits of your ideas mature into something tangible. You can easily refine your strategies over time if you take things one step at a time.
- Work closely with management teams. DEI strategies need to be adopted at every level of a company. The CEO and board of directors can make grand plans but if the management teams do not have the guidance to implement these plans, the whole thing can fall apart. Set DEI metrics as a management team and hold team members accountable, recognizing them when they achieve their goals.
- Stay on top of DEI progress. It’s easy to put DEI on the agenda but it’s also very easy to let it fall by the wayside. Successful companies need to regularly discuss DEI progress and make sure benchmarks are being hit. If things are going well, you will see the positive effects DEI has on the company and skeptics will be convinced on the value a diverse and inclusive workplace has on the business as a whole.
- Be open to change and growth. No one is going to have all the answers or the perfect solution to implementing better DEI practices, but it is important to be open to suggestions and feedback. Every business is going to see results at different paces and may do things differently. As long as the end goal is creating a diverse and equitable environment, you will see the positive results of those efforts in due time.