The term “DEI” inspires many different ideas for different people. The idea of diversity, equity and inclusion is certainly not new. It emerged in the 1960s civil rights movement in the form of equal employment laws and practices, and it has evolved to include more identifying factors, including gender, ethnicity, religion, abilities and sexual orientation.
Diversity is the makeup of the workforce. Some examples include gender diversity, ethnic diversity and age diversity. Equity refers to fair treatment of all people in organizational norms, practices and policies. Inclusion is the extent to which companies embrace and include all employees. Some organizations add “belonging,” which centers around employees feeling accepted, to create the acronym DEIB.
In recent times, the United States saw an uptick in DEI initiatives and hiring after George Floyd, a Black man, was killed by a Minneapolis police officer during an arrest in May 2020. The nationwide societal response prompted a dramatic increase in DEI positions.
The hiring website Indeed reported a 56.3% increase in such positions from September 2019 to September 2020. LinkedIn reported a dramatic increase in hires for the following roles between 2019 and 2022: chief diversity officer (165.5%), chief people officer (144.3%) and chief growth officer (117.5%).
Today, the pendulum has swung back a bit. LinkedIn reported a 4.51% decline in chief diversity officer hiring from 2021 to 2022. Many organizations that hired DEI officers have eliminated those positions. Financial constraints may certainly be a factor in this downturn, but governmental issues, like some states banning DEI and affirmative action programs at state-funded and educational organizations, are also at play.
The business case for DEI
How important is DEI to organizations going forward, and who should be responsible for the work? Opinions vary, but most DEI professionals point out that the world is becoming more diverse, and companies need to work toward recruiting and retaining people from diverse backgrounds with different points of view. Add to that the expectations of upcoming generations for a focus on DEI, and you’ve got a business case for long-lasting DEI initiatives.
“DEI is about sustainability for for-profit and not-for-profit companies,” said Darlene King-Turner, executive director for the Michigan Diversity Council. “Our country is becoming more diverse relative to our population,” she said. “In nine or 10 years, our country will be more diverse than ever. Organizations are going to be hard-pressed to continue to operate as they always have.”
What’s more, said King-Turner, by 2025, millennials — those born between 1981 and 1996 — will occupy 75% of the workforce. They expect diverse, inclusive, equitable workplaces.
“People can go wherever they want,” said Sandy Harvey, founder and president of Exodus Consulting Group. “Some people are opting not to apply for jobs that don’t show diversity in the workplace.”
“It’s the socially responsible thing to do, but also the right thing to do,” said Gary Abernathy, DEI practice leader for business insurance and benefits provider Marsh McLennan Agency. “DEI started as risk management,” he said, but there is a true business case for it. “Inclusion and diversity drive better results.”
In fact, a 2020 McKinsey & Co. report, “Diversity Wins: How Inclusion Matters,” indicates that companies with the highest gender diversity were 25% more likely to have above-average profitability, and those with the highest ethnic diversity were 36% more likely to have above-average profitability. The study incorporates data from 1,000 large companies.
DEI myths
Perhaps the best way to understand the business case for DEI is to define what it is not. Ovell Barbee, owner and principal of Ovell Rome and Associates, a Grand Rapids, Mich.-based human resources consulting group, explained a few of them.
Case in point: recent studies show that employees often leave their jobs because of a lack of growth and development opportunities. Through the lens of DEI, this may mean organizations need to provide better support to entry-level employees seeking to build skills. This has nothing to do with race or ethnicity, but it applies to a certain group of employees needing equitable treatment.
Diversity doesn’t simply fulfill a need for ethnic representation but deals with true business solutions, Barbee said. He gave the example of the nursing shortage. One healthcare company he knows has an initiative to level the playing field among nurse levels. The company is sending the message that all nurses are valued rather than emphasizing the hierarchy of RNs, LPNs and nurse practitioners, in order to encourage more nurses to apply and stay with the company.
Another myth is that DEI is charitable work. It doesn’t mean giving certain groups jobs, but rather examining policies, processes and systems to create a more diverse and inclusive workplace.
Many see DEI as a political initiative, which it’s not, Barbee said. “It’s an evolutionary process.”
King-Turner echoed Barbee’s sentiments. “You cannot stop the progression of the environment,” she said, noting that those organizations that embrace DEI programs to sustain their workforce are the ones who will succeed.
Finally, said Harvey, “This is not affirmative action.” It doesn’t involve finding so-called minority candidates and checking a box, but rather an examination of internal and external business practices to create a more inclusive environment.
The work of DEI: an executive function
Whether you call your DEI leader a chief diversity officer, DEI officer, people officer or something else, most diversity experts agree DEI must be a dedicated executive function, with the leader reporting to the chief executive officer.
Budget and resources are also important. “A lot of times, chief diversity officers can have very few resources compared to their counterparts,” said Barbee. That not only sends a negative message about the initiative’s importance, but it hampers results.
Abernathy agreed. “The most successful organizations have DEI teams,” he said.
Leadership buy-in is also paramount. “It’s important to have executive leaders as well as mid-level directors on board,” said Abernathy. In fact, he said, “Best-in-class organizations have recognized that every leader has the responsibility to create an inclusive environment.”
Sometimes the DEI leader can be external to the organization, as long as he or she has power and executive buy-in, said Harvey. Her organization, Exodus, helps companies develop long-term diversity, equity and inclusion strategies, and she’s found that external DEI officers can sometimes garner more honest and open responses from employees about workplace culture and practices.
Harvey said she’s often approached with requests for short-term DEI training, which she turns down. “I work with organizations that are ready to do the work,” she said. That means looking at DEI in all aspects of a company.
Exodus’s work starts with an inclusion assessment to understand how people feel. Listening sessions in this stage help enhance two-way communication. From there, the team evaluates internal processes like marketing, diverse sourcing and hiring practices to develop a 24- to 36-month DEI strategy.
Harvey stressed the importance of seeing DEI as a companywide initiative rather than a hiring practice. “You can hire diversely, but it doesn’t mean you have an inclusive organization,” she said.
That’s one of the reasons she doesn’t see DEI as belonging in the human resources department. “It’s not a compliance issue; it’s a culture issue,” she said.
King-Turner agreed. “DEI deals with community, culture, people, products and services,” she said. “DEI must be operational through all departments.” Seeing DEI as a human resources function tends to water it down, when it really needs a broader lens.
The Global Party Alliance 2023 Diversity, Equity and Inclusion Lighthouses report names five factors DEI officers need to succeed. They include: a nuanced understanding of root DEI challenges, a meaningful definition of success, accountable and invested business leaders, a solution designed for the company’s specific context, and rigorous tracking and course correction.
DEI performance
How are we doing with implementing DEI practices? The results are mixed. We’re spending more on DEI efforts. According to a 2021 study by Global Industry Analysts Inc., total dollars spent by companies on DEI efforts was estimated at $7.5 billion in 2020 and is projected to double by 2026, reaching more than $15.4 billion.
However, spending alone doesn’t result in diverse, inclusive and equitable workplaces. A 2023 whitepaper by Affirmity, which provides diversity and inclusion analysis tools and consulting services, points out that there are only six Black CEOs of Fortune 500 companies. One-third of respondents to Affirmity’s survey of 255 North American human resources professionals said women represent 20% or less of their company’s top leadership. Seventy-three percent of respondents said the same is true of racial and ethnic minorities in leadership.
Gender disparities are still prevalent as well. According to the 2022 Global Gender Gap Report by the World Economic Forum, the gender gap has been closed by 68.1% in terms of economic participation and opportunity, educational attainment, health and survival, and political empowerment. If progress continues at the current rate, it will take 132 years to close the gap completely worldwide.
Even in companies with DEI departments and goals, there are challenges. The 2023 World 50 Group Inclusion & Diversity Impact Report, a survey of 138 executives in the World 50 Inclusion & Diversity Impact Community, revealed positive measures like a steady (81%) or increased (49%) inclusion and diversity budget and an increase or dramatic increase in momentum for such initiatives (72%). However, it also revealed challenges like low support from middle management, with just 41% of respondents indicating they feel supported by this group (49% in 2022). Support from the CEO’s direct reports dropped from 92% in 2022 to just 83% in 2023. Accountability also showed room for improvement, with 62% of respondents indicating they don’t believe leaders are effectively held accountable for inclusion and diversity results.
According to the World 50 report, most companies report inclusion and diversity metrics like employee representation, leadership representation, workforce inclusion and belonging, retention disparities, promotion and advancement disparities, pay disparities, recruitment disparities and external recognition. Less measured metrics include supplier inclusion and diversity, and disciplinary disparities.
The Affirmity whitepaper, entitled The Future of Diversity, Equity, Inclusion and Belonging 2023, also revealed room for improvement, stating that only 6% of human resources representatives rate their DEIB efforts as effective, and that just two-fifths of respondents have one or more leadership initiatives focused on improving this area. Two-thirds of respondents said 20% or less of their work week is spent on these initiatives.
Respondents to the Affirmity survey listed five top barriers to DEIB efforts: insufficient prioritization at top leadership levels (44%), lack of metrics to identify insufficient efforts (44%), lack of time (43%) and inadequate training (40%).
The survey also showed that human resources had the primary responsibility for DEIB in an organization, with 46% of respondents indicating the responsibility falls on the human resources department as a whole or a team or person within the department. A quarter of respondents said these initiatives are the responsibility of the chief of DEIB or the DEIB department.
Leandra Stanley, director of diversity & inclusion programs at Comscore, commented on these results: “I think that there is an issue with diversity and inclusion being housed in just HR, since it seems people are expecting HR alone to solve all diversity and inclusion issues. Right now, a lot of companies are still relying heavily on individual contributors to do DEI versus making it a company strategy. I think that that’s where there is a disconnect.”
The World 50 survey showed similar results, with 69% of respondents indicating inclusion and diversity officers report to the chief of human resources, and 12% saying those officers report to the CEO.
The future of DEI
Harvey emphasized the ongoing nature of DEI and the need for continued resources for it. “There’s never an end to this,” she said. “Culture never ends. You always have to be committed to creating an equitable workplace.”
She sees the work of DEI changing over time and hopes to see more collaboration between companies and sharing of best practices.
Barbee said the goals of DEI are to have the workplace represent the larger community’s diversity, but also to have people advocating for each other. “In a perfect world, all of us would be willing to proactively advocate on behalf of someone else,” he said. “I’m hopeful that the work is here to stay, because the outcomes haven’t been reached yet.”
