Since the beginning of my career, thinking about diversity, equity and inclusion wasn’t a luxury side quest — it was my everyday experience. For me, Diversity, Equity and Inclusion has never been a nice-to-have, it’s been an absolute imperative.
As we enter a challenging 2023, with increasing rates of inflation, a deepening energy crisis and the threat of an impending recession, businesses will be asking themselves where they can cut back on budgets. Diversity, Equity and Inclusion cannot be an area where companies cut back on. Here’s why:
It has been well documented that Diversity, Equity and Inclusion is more than a ‘nice-to-have’, it’s imperative for business growth. More diverse companies have proven to have better financial performance and deliver increased value for their shareholders. McKinsey’s 2019 analysis found that companies with the highest gender diversity were 25 percent more likely to have higher profitability. Similarly, companies with the highest ethnic and cultural diversity outperformed those with the lowest by 36 percent.
If DEI directly leads to business growth, it would be counter-intuitive for companies to stop or slow down the rate of investment in DEI. In fact, investing in DEI is the very thing that can build company resilience in the face of tough times. Companies with diverse leaders in decision making rooms will lead to new solutions to pressing problems.
This is complex stuff
Disadvantage, racism and oppression cannot be neatly boxed away into a DEI initiative — they are the lived experience of millions of people around the world.
It’s clear that companies can no longer stay silent as political events threaten the rights of their staff.
Earlier this year, LGBTQ+ workers at Disney staged a walk-out in protest of the corporation’s response to the Don’t Say Gay Bill. The impact of this should not be taken lightly. CEO Bob Chapek publicly condemned the bill and paused political donations in the state, which resulted in Disney being stripped of its special tax status in Florida. He also apologised to Disney staff for his initial silence, and has committed to conducting a global listening tour and establishing an LGBTQ+ taskforce to ensure that Disney is a force for good for LGBTQ+ staff and communities.
Companies are beginning to understand their responsibility to respond to worldwide political events.
This pressure will intensify as a new generation of workers demand a duty of care from their employers amidst uncertain political backdrops which directly influence their lives. We can see this clearly in the example of Disney. We can also see this in the swathe of companies ranging from Nike to Microsoft to Amazon responding to the reversal of Roe V Wade which made access to abortion illegal across a number of states in the US.
Standing with your employees and with historically marginalised people is not always easy work. It requires a commitment and a willingness to sacrifice the things that do not benefit a company’s staff or its consumers. As we move into increasingly complex political times, now is the time to build consistent frameworks that embed DEI principles into the heart of businesses so that they can adequately respond to challenging external events.
We’re not there yet
While we should celebrate the successes we have made, we must not get complacent. The Covid pandemic was a stark reminder that progress is by no means linear. Women’s jobs were 1.8 times more vulnerable to the crisis than men’s jobs, and though women made up 39 percent of the workforce, they accounted for 54 percent of overall job losses.
The road to embedding genuine equity in an organisation is long, winding and tough. In the five years that UK companies have had to disclose their gender pay gaps, there has been minimal change. While some companies such as NatWest bank have disclosed their Ethnicity pay gaps, only 64 organisations in the UK disclosed their ethnicity pay gaps in 2021 (down from 129 in 2020). Companies are also beginning to interrogate how they track and disclose their socio-economic diversity gap, with companies such as KPMG and PwC pioneering this voluntary reporting. Yet very few organisations have begun to truly interrogate how to collect, measure and track their socio-economic diversity data.
Diversity, Equity and Inclusion therefore requires constant review, reflection and iteration. Any commitment to DEI must understand the long term nature of achieving systems change, and this requires consistent attention, budgets and senior level support.
Employee Resource Groups are one of the most valuable assets a company can have. They help build staff engagement, drive culture change, and hold senior leadership to account. However, underinvestment and overreliance on ERGs to run a company’s DEI programme will lead to fatigue and burnout. While companies such as LinkedIn have committed to financially compensating their ERG leads $10,000 for each year served, a survey by The Rise Journey found that only 5.6% of surveyed organisations are currently paying their ERG leads.
As we move into 2023, companies need effective ERG Networks and must continually invest in their ERG Leads and members. This will lead to high engagement and retention, and long term culture change.
In sickness and in health
Consumers are increasingly sceptical of companies’ ad hoc DEI commitments and activities. Purpose Union’s Purpose Pulse Report outlined that 68% of gen z and millennials surveyed say companies promoting their diversity and inclusion efforts is integral to building trust. This trust is built through consistency. Ice Cream company Ben and Jerry’s started its racial equity journey back in 2016. From then, they have continually engaged with efforts to embed anti-racism across their company and in wider society. Each year they cement their genuine and authentic efforts to create a more inclusive world.
Companies have made serious pledges and commitments to tackle DEI, and they have a responsibility to their staff, their investors and their wider stakeholders to uphold those commitments. To do this, they must continually engage with DEI, in sickness and in health.
Companies should view the challenging year ahead as their opportunity to showcase to their staff, investors and customers that their commitment to DEI extends beyond warm words and ad hoc initiatives into long term, strategic change.
In 2023, DEI must sit at the top of the corporate agenda.
Featured image: Miles Peacock / Unsplash