A 2021 study found that more than 80 percent of organizations were taking steps to enhance diversity, equity, and inclusion (DEI). It is encouraging to see companies putting greater emphasis on their social responsibility, realizing that DEI is an important part of their long-term business strategy. Unfortunately, this progress is now threatened by the near-term inclination for organizations to slash budgets while the economy remains unsettled. The incongruity between short-term and long-term objectives should give companies pause when they determine the value of their DEI initiatives, particularly considering that research shows that inclusive teams make better decisions as much as 87% of the time and decisions made and executed by diverse teams delivered 60% better results. By scaling back on diversity and inclusion efforts, organizations risk falling behind their competition at a time when they can’t afford to.
There are many benefits to be gained by companies that continue their DEI efforts through tough economic times. In this article, we outline five of those benefits.
1. Enhanced Innovation:
According to a study published by Harvard Business Review, the most diverse enterprises are the most innovative, with 19 percent higher innovation revenues and nine percent higher earnings before interest and taxes (EBIT) margins, on average. Diverse teams are, by definition, less myopic than non-diverse teams, and better equipped to draw from a variety of perspectives when analyzing issues and developing strategies and solutions.
2. Attracting Top Talent:
A recent Eagle Hill Consulting survey showed that more than 53 percent of U.S. workers say that diversity, equity, and inclusion are key factors when considering companies for employment. DEI is particularly important for younger workers, with 77 percent of Gen Zers and 63 percent of Millennials saying they are important considerations for them. These data points reflect the fact that potential new hires pay close attention to a company’s values and culture, and companies that remain devoted to their DEI initiatives will gain the edge when seeking top talent.
3. Improved Decision-Making:
Research by Cloverpop shows that inclusive teams make better decisions as much as 87 percent of the time, and decisions made and executed by diverse teams deliver 60 percent better results. The researchers write that, “A focus on diversity often means a focus on hiring, and it takes a long time to turn the tide for companies with thousands of employees. But a focus on inclusion and diversity changes the conversation. By expanding the frame, inclusion highlights an immediate opportunity to activate the decision-making power of the diversity already present in high-performing global workforces.”
4. Better-Suited to Market Trends:
Diverse teams that reflect the complexion of their communities and customer bases are better suited to accurately assess and leverage market trends in their research, product development, and marketing. National demographic trends foreshadow significant economic and social changes in the years ahead as the populace at large ages and the percentage of non-Hispanic white people continues to shrink. For those reasons and others, organizations that develop diverse teams with differing backgrounds, perspectives, and ideas to draw from will be more agile and apt to pivot quickly in response to market conditions.
5. Stronger Team Engagement:
When employees feel included, valued, and equitably treated, they feel a sense of belonging, which tends to increase their engagement and commitment to the company. Research by McKinsey shows that employees who feel included within their organizations are about three times more likely than their peers to feel excited by and committed to their organization’s mission. A whopping 83 percent of Millennials employed by companies that support DEI initiatives report being actively engaged in their work.
Conclusion:
In summary, companies may be tempted to cut budgets, including those for DEI initiatives, during times of economic uncertainty. However, the decision to do so would be considered ‘penny wise and pound foolish’ since backtracking on diversity and inclusion could have serious negative impacts including diminished employee morale, engagement, and retention.
Fostering a diverse and inclusive workplace offers numerous advantages including enhanced innovation and decision-making, a greater capacity to attract and retain top talent, a more complete understanding of current market trends and developments, and higher levels of employee engagement. These benefits help businesses weather tumultuous markets and remain successful over the long term.