Many organizations are renewing their focus on diversity, equity, and inclusion (DE&I) this year, but some HR teams face pushback from within. Senior executive buy-in is essential to the success of any companywide initiative. However, McLean reports that only 42% of organizations have leaders committed to modeling inclusive behavior and championing DE&I in 2022. When C-suite fails to realize the value of DE&I in the workplace, the consequences are vast.
In an era when people expect more from their employers and want their organization to share their values, HR has the task of convincing skeptical CEOs that investing in DE&I is vital to the company’s interest. How seriously your organization takes diversity, equity, and inclusion may determine how likely employees are to stay and candidates are to apply. DE&I also leads to higher profits and colors how investors and the public view your organization.
1. Employees and candidates care about diversity, equity, and inclusion.
76% of employees and job seekers say a diverse workforce is important when evaluating companies and job offers, and 32% wouldn’t apply to a job if the organization lacked diversity. With a tight talent pool, HR is spending more time on recruiting in 2022, but they could be spending less time backfilling positions if their CEO supports DE&I. Studies show companies that don’t focus on DE&I see 1.6X more voluntary turnover, and 68% of workers would consider leaving their job for an employer that takes a stronger stand on the cultural and societal issues they care about.
How your employees feel about the state of your overall program directly influences candidates too. Only 6% of people trust recruiters when they talk about their organization’s DE&I progress, but 66% trust an employee to share the truth about what it’s really like to work at a company when it comes to diversity, equity, and inclusion.
2. DE&I leads to higher profits.
If CEOs care about anything, it’s the profitability of the company. Diverse, inclusive teams are better at solving complex problems 87% of the time, giving organizations that embrace DE&I an advantage. This could be the difference between getting to market first with a new product or saving thousands of dollars a day because your team fixed a problem faster. Companies with above-average diversity also report 19% higher innovation revenue, and those with greater gender diversity specifically are 25% more likely to have above-average profitability.
Another benefit is that an employee group whose makeup represents your customers can offer better service, solutions, and support. This increases the likelihood your patrons will be satisfied and come back. Different perspectives are valuable in business. Having a team of people from all different backgrounds is the best way to generate a plethora of unique ideas and insights.
3. More investors want to back companies committed to DE&I.
A more recent development following the last few years of social unrest is that more investors are committed to backing organizations that take diversity, equity, and inclusion seriously. Unfortunately, as of 2021, few companies had the data to show investors where they stood. Many organizations weren’t—and many still aren’t—tracking their DE&I data, meaning they couldn’t prove growth. CEOs who don’t make DE&I a priority will likely have a more challenging time wooing investors because 64% of stakeholders invest based on their beliefs and values, according to the Edelman Trust Barometer 2022.
Although companies in the private sector with at least 100 workers are required to disclose the composition of their workforce annually to the Equal Employment Opportunity Commission, very few do. Bloomberg reports that only 4% of organizations disclose the complete data, including their workforce’s racial, ethnic, and gender makeup. There’s also been an uptick in asset management companies demanding diversity disclosures from organizations. Their clients want to invest in diverse, inclusive, equitable companies too.
4. The public cares about DE&I, which impacts buying decisions.
Whether a company chooses to take a stand on societal issues continues to have a mounting influence on buyer purchasing patterns. The Ipsos Global Trends 2021 report discovered that seven out of ten people tend to buy from brands that share their values. McKinsey’s research echoed this sentiment with similar findings and added that 45% of consumers believe retailers should support Black-owned businesses. With DE&I top of mind for many customers, committing to do better is imperative from a sales perspective.
While other issues inevitably dominate the news cycle from time to time, don’t expect the demand for DE&I in all facets of business—such as how a company uses its impact for good—to disappear. Each generation has become more invested in diversity and inclusion, with Generation Z, the most diverse age group in US history, now globally the largest generation. Growing up in a world where the internet connects everyone and everything has made them more sensitive to and aware of cultural issues, like DE&I. What you stand for as an organization matters to consumers, and that will only become truer as Generation Z gains spending power.
Pivot to DE&I
People care about DE&I, and if your CEO believes hiring and retention, profits, investors, and customer sentiment matter, then they must make DE&I a priority. The fact is companies with the most successful DE&I programs are significantly more likely to set diversity goals with executives and board members because their buy-in is critical to success. C-suite needs to support HR’s efforts to make your organization a more welcoming and inclusive place.
Read the ebook “Create a Culture Built on DE&I to Attract and Retain Your Workers” and explore the accompanying infographic to learn how your organization can leverage your commitment to diversity, equity, and inclusion to strengthen your pipeline of candidates and keep high-performing employees.
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