Diversity, equity, and inclusion (DEI) is an important focus in today’s workplace. In fact, companies are expected these days—largely in response to political and cultural events in recent years—to actively work toward breaking down systemic barriers and nurturing more equitable and inclusive work environments.
At least a few DEI initiatives are likely incorporated at your company. But you may not understand all the ways such efforts benefit your employees, customers, and business.
You probably know that DEI strategies prioritize fairness and equal opportunity, and promote a workplace culture that values diversity, empowers individuals, and fosters a sense of belonging. But did you know that by emphasizing DEI initiatives, companies can create a more just and inclusive society, and lead the way in boosting positive change for all?
While cultural, social, and ethical benefits are the primary goal of DEI initiatives—and rightly so—organizations with effective DEI strategies also benefit financially. In fact, to reference just one statistic, companies in the top quartile for ethnic and cultural diversity on their executive teams are 35% more likely to have above-average profitability as compared to companies in the bottom quartile.
Let’s explore four ways effective DEI initiatives benefit people, boost output, and contribute to your company’s long-term financial success.
1. Improve employee retention
More than 50% of employees want their workplaces to increase diversity. By creating an equitable workplace, businesses foster higher levels of employee satisfaction and engagement, leading to elevated employee retention and loyalty. Companies with higher retention rates expend fewer resources and less energy on frequent hiring and training, resulting in lower overall costs.
In 2015, Salesforce conducted a pay-equity analysis and found significant disparities in salaries among its employees, especially women and underrepresented minorities. In response, the customer relationship management firm invested $6 million to adjust and eliminate pay gaps. Salesforce’s intentional, proactive approach to inclusivity models how companies can leverage technology to find and address inequities.
Today, women represent 36% of Salesforce employees globally, and since 2015, the company has spent $16.2 million in equal-pay initiatives. That investment led to a variety of cost savings, including reduced turnover, and improved employee morale and productivity. In addition, Salesforce’s commitment to pay equity and diversity has helped attract top talent and improve its reputation among customers and investors—both of which contribute to its financial success.
2. Diversify the talent pool
Businesses that prioritize DEI initiatives can benefit from access to more diverse employees. These team members bring a range of perspectives that can lead to increased productivity and improved business performance. Their varied viewpoints also frequently offer better decision-making and reduce the risk of groupthink, in which a herd mentality replaces creativity, critical thinking, and individual responsibility. According to a study by Boston Consulting Group, companies with more diverse management teams have 19% higher revenue due to innovation compared to companies with below-average diversity.
To promote diversity and inclusion within its organization, research firm McKinsey & Company established affinity groups and networks for employees from underrepresented groups; these include the Black Network, the Hispanic Latino Network, and GLAM, the company’s LGBTQ+ Network. Employees from diverse backgrounds benefit from networking opportunities, mentoring, and professional development. In addition, the McKinsey Academy offers training programs for employees to develop their skills and advance their careers. Over 2,500 organizations, representing more than 750,000 employees, participate. Impressively, employees have given the program a 95% recommendation rate.
3. Access new markets
By understanding and catering to diverse customer segments, businesses can expand their customer base and tap new markets. Employees with a variety of lived experiences offer a better understanding of these diverse customer segments. A study by Deloitte, a global consulting and financial services firm, found that companies with a diverse customer base have a 45% increase in market share. Moreover, firms with strong DEI programs and a positive reputation for diversity and inclusivity attract customers looking for brands that align with their values. And this, of course, leads to increased brand loyalty and improved financial performance.
Airbnb, for example, an online marketplace for short-term rentals, recognizes the importance of catering to diverse customer segments. Its Airbnb Community Compact outlines the San Francisco-based company’s commitment to promoting diversity and inclusion. Over a decade ago, the company launched the Airbnb Open Homes program, which provides free temporary housing to people in need, including refugees, disaster survivors, and medical patients. These initiatives help Airbnb attract diverse customers, expand into new markets, and experience increased financial success.
4. Reduce legal expenses
A company that values DEI may also be keen to offer diverse and inclusive policies and practices that comply with legal requirements and regulations. These can include antidiscrimination policies, fair-pay practices, and reasonable accommodations for employees with disabilities. Global beverage giant Coca-Cola, for example, has implemented several such initiatives, including a focus on diversity in its workforce, among its suppliers, and incorporated into its marketing. In addition, the company set targets for increasing the representation of women, people of color, and members of the LGBTQ+ community in leadership positions. It also designed training programs to ensure employees understand the importance of complying with equal-opportunity and nondiscrimination laws and regulations. Thanks to these steps, Coca-Cola has created a more inclusive workplace and built stronger relationships with diverse customer segments.
In addition to improving pressing systemic inequities, DEI initiatives offer clear and proven business benefits. Companies that prioritize DEI initiatives are more likely to have above-average profitability, improved employee retention, increased access to a diverse talent network, and an improved bottom line. Furthermore, businesses that cater to diverse customer segments access new markets, increase revenue, and improve brand loyalty.
What other business strategies offer your company the opportunity to create a more equitable, inclusive society—alongside long-term financial success?
Repubished with author’s permission from the original post.
