Diversity, Equity, and Inclusion (DEI) initiatives have become a hot-button topic in politics and at work. While some organizations are doubling down on their commitment to creating inclusive workplaces, others are quietly (or not so quietly) abandoning these efforts. But stepping away from DEI can have significant, and often overlooked, consequences for your business.
While there is an obvious moral argument for DEI, there is also a lasting impact on a company’s profitability, innovation and long-term success. Diversity is a fact. The workforce will be majority non-white and women by 2030. Inclusion is the path to leveraging the full range of talent of a diverse workforce. Equity is about fixing systems to meet historically marginalized people (women, people of color, those with disabilities, LGBTQ+ folks) where they are at with tools and resources to improve their chances of success.
A Case Study on Staying Committed to DEI
One of my clients, Amazon, is seizing the opportunity to double down on their DEI commitments as a competitive advantage, even in a turbulent DEI market. Their recent equity audit found:
- 69% of their 1.5 million US workers are BIPOC (Black, Indigenous or People of Color).
- Their 13 employee-led affinity groups are key to helping employees feel like they are included and belong.
- Men accounted for 73% of senior leaders in the US, down from 77% in 2020.
- 63% of the senior leadership team are white, down from 70% in 2020.
Amazon is facing the reality that the world is becoming more diverse. While their front lines may be majority non-white, like most organizations, it becomes more white at leadership levels. Amazon recognizes that this is a problem because leadership isn’t reflecting the communities, employees and potential customers it hopes to serve. To not diversify leadership and practice DEI is to risk being irrelevant. Amazon, like many global industry leaders, recognizes the long-term value of DEI and is willing to forgo short-term temptations to shy away from their commitment.
How Quitting Hurt The Bottom Line
The latest pushback has centered on the Human Rights Campaign (HRC) and their index that many Fortune 500 companies participate in. In response to recent departures from the HRC index, they find that 72% of LGBTQ+ adults say they would feel less accepted at companies that roll back DEI. Given that 7.6% of US adults identify as LGBTQ+, and the community also has $1.4 trillion in buying power, this is worrisome for companies that have divested in DEI. It is estimated that the cost of exclusion is over $1 trillion on the economy.
Exclusion, whether intentional or unintentional, stifles innovation by limiting the diversity of perspectives and experiences contributing to the creative process. Studies find that decision-making rates are 87% better on diverse led teams. Psychological safety, the ability to feel mentally safe at work, is also the number one predictor of team performance according to Project Aristotle. To forgo DEI is to decrease your chances of being innovative, and hinder your ability to make the best decisions and improve your team’s performance.
McKinsey & Company’s annual DEI report finds profitability rates are 39% higher with diverse leadership. In addition, companies that prioritize diversity and inclusion are twelve times more likely to engage and retain employees, 8.4 times more likely to inspire a sense of belonging and are 8.5 times more likely to satisfy and retain customers. These business results should get the attention of leadership. Quitting on DEI will most certainly hurt the bottom line.
Given the rapidly changing marketplace that is only becoming more diverse, divesting from DEI will hurt the bottom line. Being fickle about DEI is a business risk. Data shows that staying the course on DEI is a competitive advantage.