How to build the business case for your DEI strategy
Now is the time to invest in building a diverse, equitable, and inclusive workforce. Here’s how to speak the language of your leadership team to get buy-in for your DEI program.
Successfully building a diverse, equitable, and inclusive workforce gives your company a competitive advantage and enables you to better attract and retain the best talent. But how do you sway a leadership team to invest in DEI initiatives, especially in times of financial uncertainty? We share seven tips for building your business case – and why now is the time to take action.
What is diversity, equity, and inclusion (DEI)?
Diversity, equity, and inclusion – frequently referred to as DEI – is the umbrella term for the programs, policies, strategies, and practices that execute a company’s mission to create and sustain a diverse, equitable, and inclusive workplace.
A culture of equity and inclusion is not only critical to the success of diversity efforts, but creating an equitable and inclusive workplace also creates a positive employee experience.
What are the benefits of DEI in the workplace?
A diverse, equitable, and inclusive organization ensures all voices are heard. Through representation, organizations foster a socially- and morally-adept workplace. These are wins in and of themselves. Workforce DEI can also benefit an organization’s bottom line by creating a competitive advantage in many ways.
Here are some of the benefits of a diverse, equitable, and inclusive workforce:
- Bolsters financial performance. A study conducted by McKinsey & Company found that ethnically diverse companies are 35% more likely to have financial returns above their respective national industry medians. Gender diverse companies are 15% more likely to outperform their respective national industry medians.
- Highlights your organization as an employer of choice. According to Glassdoor, 67% of job seekers view a diverse workforce as an important factor when evaluating companies and considering job offers.
- Fosters innovation and growth. Harvard Business Review found that diverse companies are 70% likelier to capture a new market. They’re also 45% more likely to report increased market share year-over-year.
- Increases employee engagement. 83% of millennials report being actively engaged when they believe their organization fosters an inclusive workplace culture. That percentage drops to 60% when their organization does not foster an inclusive culture. (A Gallup study has assessed the cost of disengaged employees at up to $350 billion per year in lost productivity.)
- Supports powerful decision-making. Teams that are inclusive make better decisions up to 87% of the time, according to a study conducted by Forbes.
Diverse, equitable, and inclusive workplaces are only going to take on greater importance as younger generations – including millennials and Generation Z – become the dominant groups within the workforce. These demographics are set to be more culturally diverse than ever before, and are motivated by values, purpose, and experience. Organizations that prioritize DEI values now will rise to the top for future generations of talent.
DEI is a powerful competitive advantage when it comes to hiring. Companies that recruit a diversity of candidates – and create inclusive and equitable work environments that encourage diverse employees to stay – will win the war for talent.
Why should organizations invest in DEI now?
Organizations are grappling with concurrent social crises – tearing down institutional bias while also supporting employees during a pandemic.
Many employees report feeling anger, stress, and fear around the pervasive and repetitive injustices against the Black community. Add to that the fears over COVID-19 and the outlook for the economy, it's clear that many employees are being deeply affected by issues happening outside of the workplace.
So, is now the time to double-down on investing in DEI? According to McKinsey and Company, the answer is a resounding yes.
Companies whose leaders welcome diverse talents and include multiple perspectives are likely to emerge from the COVID-19 crisis stronger.
And if organizations don’t prioritize – or worse, deprioritize – DEI right now? “The impact will be felt not just on the bottom line but in people’s lives.”
A report published by McKinsey, the third in a series investigating the business case for diversity in the workplace, found “ample evidence that diverse and inclusive companies are more likely to make better, bolder decisions – a critical capability in the crisis.”
Tips for building a business case for investing in DEI
Workforce DEI gives your organization a competitive advantage, but how do you translate those benefits into a program your leadership team wants to invest in?
Here are seven tips for building a business case for investing in DEI.
Tip #1: Engage with your stakeholders early.
Keeping a finger on the pulse of what your leadership team is dealing with (and when) will help clue you into their priorities.
Tip #2: Lead with why.
In your business case, aim to answer the questions:
- Why now? (Hint: We helped answer that one for you, above.)
- Why take this specific approach to DEI?
- Why is it important to the organization’s success?
Also, take the time to understand your key stakeholders’ “why” – and shape your presentation to address their priorities.
Tip #3: Speak to return on investment (ROI).
Leveraging the benefits mentioned earlier, build your business case around high-level data that point directly to ROI.
Tip #4: Include experience data in your proposal.
Incorporating experience data, or X-data, into your proposal allows you to go from anecdotal stories to data-driven insights that paint a compelling story from an overall point of view.
Tip #5: Show your audience what the organization would look like without a DEI strategy.
What would the impact on the business be if you did nothing around diversity, equity, and inclusion? Include statistics around financial performance as well as employee engagement to explain these points. Talk about what your competitors are doing, as well.
A visible commitment to [DEI] during the COVID-19 crisis is likely to strengthen companies’ global image and license to operate.
Tip #6: Tie your DEI strategy to other key initiatives.
Demonstrate how a DEI strategy will support or strengthen other key HR or business initiatives, such as employee retention or capturing a new market.
Tip #7: Focus on sustainable change.
Achieving equality is a continuous struggle. Prioritize iterative and stable progress over long periods of time. In fast-moving corporate contexts, it’s easy to prioritize short-term fixes that may potentially cause harm later.
Real change requires many smaller adjustments, sustained over a long period of time. Recognize that multiple cumulative changes will have a snowball effect, impacting other components of the organization system, either positively or negatively.
With the current state of the world, there has never been a more clear need for organizations to take sustained action. HR leaders are uniquely positioned to articulate the competitive advantage workforce diversity, equity, and inclusion creates – and translate those benefits into a DEI program that drives better business outcomes.
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