Tamika Curry Smith
DEI Strategist and President, The TCS Group, Inc.
Abstract
This article examines corporate Diversity, Equity, and Inclusion (DEI) efforts, exploring the issues that may be unintentionally impeding companies’ desired progress. It considers evidence that demonstrates a consistent gap in representation and other outcomes for underrepresented groups, like women and people of color, in Corporate America. This article leverages research and professional insights to highlight a DEI approach that can be utilized to make more substantial inroads within organizations. The principles and focus areas outlined here can help organizations make the necessary pivots to honestly assess their efforts to date and change their approach to DEI work. This article will be helpful to Chief Executive Officers (CEOs), Chief Diversity Officers (CDOs), and any leaders within companies who are looking to drive DEI progress and achieve sustained results over time.
Keywords: diversity, equity, inclusion, strategies, results
Critical Success Strategies for Diversity, Equity, and Inclusion (DEI) Initiatives
The data and research are clear: diversity drives innovation and creativity and leads to better business outcomes (Picincu, 2020). McKinsey & Company noted that “diverse companies are better able to attract top talent; to improve their customer orientation, employee satisfaction, and decision making; and to secure their license to operate” (Hunt et al., 2018). Catalyst research (2020) also affirmed that diversity and inclusion are key to healthy businesses in areas such as talent, innovation and group performance, reputation and responsibility, and financial performance. Most business leaders acknowledge the research findings. 82% of CEOs in a recent survey stated they believe the data that links diversity to positive business results such as profitability, return on investment, and innovation (The Moxie Exchange, 2018).
However, the pace of change in the Diversity, Equity, and Inclusion (DEI) space in Corporate America has been slow. White men held 96.4% of the Fortune 500 CEO positions in 2000, and still held 85.8% in 2020 (Zweigenhaft, 2020). Furthermore, since most of the seats lost by white men were gained by white women, 92.6% of the Fortune 500 CEOs were still white in 2020 (Zweigenhaft, 2020). In addition, the boards of the 3,000 largest publicly traded companies remain overwhelmingly white. Underrepresented ethnic and racial groups made up 40% of the U.S. population, but just 12.5% of board directors in 2020, up from 10% in 2015 (Jamali, 2020). Additionally, in 2020, nearly 10% of public boards had no women (Jamali, 2020).
In the wake of the murders of George Floyd, Breonna Taylor, Ahmaud Arbery, and others, there has been a flood of job postings and new appointments of Chief Diversity Officers (CDOs). While it is encouraging to see more organizations focusing on DEI, if they want to see true progress and results, it is time to take a different approach. Simply adding a CDO role or changing the person in that role will not be enough. Without a true paradigm shift in the DEI space, CEOs and CDOs run the risk of once again failing to make the progress they desire and have committed to. By altering their approach and adopting the following strategies, organizations, CEOs, and CDOs will position themselves to achieve real change.
Taking a New Approach: Strategic Focus Areas
In this section, I identify several critical strategies for driving successful DEI initiatives. The strategies are based on data and research, as well as the collective experience of numerous DEI leaders who have shared their success stories and lessons learned. Some of these strategies will require a different mindset, organizational structure, and approach to DEI work; however, it is important for organizations to revisit old DEI paradigms and make intentional pivots to achieve lasting results.
Show the Commitment from the Top
Although most CEOs say they believe the business case for diversity, only 32% of CEOs in a recent study reported DEI being a top five strategic priority in their company (The Moxie Exchange, 2018). If organizations want to have impact in the DEI space, making DEI a priority to the Board of Directors, CEO, and the entire executive team, and taking concrete actions are necessary to drive change (Cox and Lancefield, 2021).
Having a proactive, long-term mindset as it relates to DEI rather than reacting to external events (e.g., George Floyd’s murder) is vital to achieve ongoing and lasting change. When organizations step up their DEI efforts in response to external pressure or litigation issues, it leads to a short-term mindset that DEI is only helpful if an organization is dealing with acute challenges.
Truly making DEI a top priority will require companies to move away from a “legal compliance”, “nice to have”, or “as needed” DEI mindset. Instead, a strategic shift to link DEI to an organization’s business strategy, performance goals, culture, and values is essential, so it can be leveraged as an enabler to help achieve its mission and vision (Cox and Lancefield, 2021).
Given that CEOs are responsible for the overall operations of a company, ownership for DEI progress and outcomes also should ultimately reside with the CEO. Furthermore, it is important for the CEO and executive team to be visible in their support of DEI, actively engaged in the organization’s DEI initiatives, and communicating about DEI to their teams on a regular basis. The CDO cannot be the only one out front advocating for DEI.
Recommended Actions:
- Make a long-term commitment to DEI and make sure the commitment is sustained over time regardless of business results and external events.
- Join CEO Action for Diversity & Inclusion (https://www.ceoaction.com). This CEO-driven business commitment to advance diversity and inclusion in the workplace was launched in 2017 and now has pledges from nearly 2,000 CEOs.
- Include DEI as a regular topic at executive team and board of director meetings. Discuss company progress throughout the year, with a detailed deep dive at least semiannually.
Adopt a Holistic DEI Mindset
For decades, DEI efforts have been viewed as the right thing to do, a moral imperative so to speak. In most cases, DEI reports to human resources, and many business leaders view the work as solely an HR function. By placing DEI within HR, organizations unintentionally may be undermining their efforts because it provides leaders and employees with an easy excuse to absolve themselves of responsibility and puts the onus on HR for “fixing” DEI issues. In addition, organizations often focus their DEI initiatives solely on employee-related topics that fall within the realm of HR. That is a myopic view of true DEI work, which transcends HR.
Research supports that DEI is a driver of profitability and other positive results (Hunt et al., 2018). Several studies also confirmed that diversity leads to increased productivity, innovation, better decision making, increased employee satisfaction and lower turnover (Picincu, 2020). While DEI certainly is the right thing to do, an important shift is necessary to position DEI as a “yes…and” endeavor. By highlighting DEI as a growth driver and business imperative that creates competitive advantage, organizations will be able to get more cross-functional support, engagement, and partnership.
According to Cox and Lancefield (2021, para. 17) writing in the Harvard Business Review, “D&I is far more than an ‘HR issue’. It should be a core ingredient in the design and execution of business strategy and embedded in the activities of the organization day in, day out.” A holistic DEI strategy should be enterprise-wide and encompass both end-to-end people and business matters. DiversityInc (n.d.) utilizes a comprehensive framework to determine its Top 50 Companies for Diversity and it can be leveraged as a guide for all organizations on how to effectively position DEI initiatives.
For all the reasons outlined previously, it is a best practice for DEI to report directly to the CEO. If DEI does reside within HR, then, at a minimum, it should have a strong dotted line reporting to the CEO or someone else in the C-suite. When CEOs do not directly oversee the DEI function, it will be even more important to engage leaders throughout the organization and embed DEI into the company-wide goals and expectations for leaders and managers to drive action and accountability outside of the HR function.
Recommended Actions:
- Ensure the CDO reports to a C-Suite business leader (ideally the CEO or COO), instead of the CHRO. If there are valid reasons why the CDO reports to the CHRO, she/he/they should also have a strong dotted line to the CEO.
- Elevate the CDO to be a true C-Suite leader by providing her/him/them with a seat at the table and including her/him/them with the rest of the executive team in key business and people decisions.
- Develop a robust DEI strategy whose scope includes workforce (employees), workplace (culture), marketplace (business), and community.
- Talk about and position DEI as a business initiative that is championed by the CEO, executive team, and senior leaders, as well as HR.
Invest in DEI
Cutter & Weber (2020), writing in the Wall Street Journal, noted that the average tenure for CDOs is three years. They attributed the high turnover to lack of resources, unrealistic expectations, and inadequate support from senior executives. To minimize this costly turnover, companies need to do their homework before appointing a CDO. Organizations should first determine their goals and think through what success looks like when it comes to DEI. Then it is critical to assess their current efforts to ascertain what is working well and where they have opportunities to improve.
In addition, it is crucial for organizations to understand the competencies and professional experiences that are important for CDO success. Russell Reynolds Associates, the global leadership advisory and executive search firm, highlights many of these areas, including previous experience in HR and DEI, a business background, communication skills, strategic execution experience, ability to both influence and disrupt, savviness with data, and others (Shah Paikeday et al., 2019). By investing the time to go through an evaluation in advance of filling the CDO role, CEOs have a better chance of appointing the right person to get the job done.
Many organizations also do not provide their CDO with the resources to be successful. Putting a CDO in place is not a silver bullet and thinking that alone will advance your efforts is not realistic. DEI work is challenging and multi-faceted, and one person cannot do it on their own. New initiatives that businesses roll out always require resources. Just as companies invest in other business strategies that are tied to their success, CEOs being intentional about investing in DEI is a critical success factor.
CDOs have many responsibilities, yet nearly half said they are not resourced to fulfill them. 47% of CDOs in a recent survey stated limited staffing and budgetary constraints are the biggest challenges to achieving DEI goals (Weber Shandwick et al., 2019). Structure follows strategy, so once CDOs have developed the DEI strategy, CEOs should ensure all DEI efforts are adequately resourced by allotting headcount and budget based on the company-wide remit.
Recommended Actions:
- Appoint experienced CDOs to drive your efforts. DEI work requires competence and subject matter expertise, like other functional areas.
- Allocate headcount to build the DEI team and expand it over time as the strategy is rolled out.
- Set aside an appropriate enterprise-wide DEI budget that will enable the desired impact.
- Bring in external DEI consultants and partners as needed to help with additional expertise and capability.
Focus on Systemic Change
For years DEI efforts have centered on increasing diversity and fostering a culture of inclusion. Both goals are fundamental to DEI, but many organizations have failed to focus on the “E” in DEI: Equity. DEI is not about merely putting programs in place to prove you are “doing something”. It is not about having window dressing to look good or simply managing risk. DEI is about driving systemic change, which means organizations making a commitment to peel back the layers of the onion to examine what is happening within their walls, then actively working to address any inequities is paramount.
To accomplish this, organizations focusing on structural inclusion (processes, polices, practices, etc.), working to remove systemic barriers, ensuring bias-free decision-making, and intentionally building equity across the enterprise is key. According to Human Resource Executive, the purpose of structural inclusion initiatives is to “build equitable and transparent structures, processes and practices that work for all employees and customers” (Polonskaia & Royal, 2019).
Equity work is truly a cross-functional effort, which is another reason why having CDOs report within HR can be problematic. From an internal equity perspective, CDOs need to work closely with all HR functions, employee relations, legal and other key constituents to review and assess systems across the entire employee life cycle (i.e., talent acquisition, compensation and benefits, onboarding, learning and development, talent management, departures, retirement, etc.). The role of a CDO is to help identify and address inequities that have existed in those HR systems for years, and that can present a conflict of interest if she/he/they report up through the HR pipeline. In addition, CDOs need to take a similar equity-based approach with business leaders across the company that are driving marketplace initiatives, including products and services, operations, sales, marketing, customer service, communications, etc.
Recommended Actions:
- Have an external firm conduct a DEI audit to identify areas of inequity and opportunity, and then act based on the findings.
- Empower the CDO and the DEI team to do work across the enterprise to drive towards equitable outcomes.
- Form a cross-functional DEI Council with leaders from key areas to ensure DEI continues to be addressed and embedded throughout the organization.
Redefine the Meaning of Leadership
In many organizations, there is a disconnect between their words and actions regarding leadership. Companies say they are people-first, but then reward leaders who are business-first and give them a pass when they do not focus on people. Organizations say they value inclusion, but then fail to act when engagement survey data and qualitative information show leaders are not inclusive. For DEI efforts to bear fruit, it is vital for organizations to evaluate the gap between intentions and outcomes and to change the way they define leadership.
Inclusive leadership is a relatively new approach to leading and it has a unique application to DEI efforts. According to Chalk & Cheese Consulting (2019), inclusive leadership “is demonstrated when an individual’s belief in the social and economic importance of diversity motivates them to focus energy on adapting to and empowering diverse talent, as well as harnessing people’s differences to create value.” Inclusive leaders create an environment where authenticity thrives, where belonging is possible, and where business outcomes are amplified.
The Inclusive Leadership Compass (Chalk & Cheese Consulting Pty Ltd., 2019) is one of numerous frameworks that can be leveraged to infuse inclusive leadership skills into an organization. The four-prong framework highlights the actions required of leaders to drive inclusion for themselves, others, teams, and organizations. The goal is to embrace difference, empower diverse talent, enable diverse thinking, and embed DEI across the organization. As the focus on inclusion and belonging becomes more widespread, organizations need to shift their mentality and set new expectations about what represents leadership.
Recommended Actions:
- Carve out time and space for the CEO, executive team, and senior leaders to educate themselves about critical DEI issues and inclusive leadership so they can walk the talk.
- Embed inclusive leadership measures into your performance evaluation processes (e.g., mid-year and annual reviews, etc.) and feedback mechanisms (e.g., engagement surveys, 360° surveys, etc.).
- Hold leaders and employees accountable for inclusion and belonging and act when individuals fail to exhibit inclusive behaviors.
Align Internal and External Efforts
Driving workforce and workplace DEI strategies is paramount for organizations to achieve true change internally. However, many times organizations become so focused on their internal efforts that they neglect to extend their efforts externally. Companies need to include initiatives like supplier diversity and DEI-focused philanthropy in their DEI strategy. Supplier diversity efforts have shown to help address economic inequality in underrepresented populations and philanthropy and volunteerism are critical to help uplift underserved communities.
Younger generations care about Corporate Social Responsibility (CSR), and they want the chance to do good while they are working. For example, 75% of Millennials indicated they would take a pay cut to work for a socially responsible company (Taylor, 2019). There is a war for talent and candidates and employees have almost unlimited opportunities in today’s distributed world. They expect organizations to give back to and support the communities in which they operate.
Many companies tend to shy away from disclosing details about their DEI efforts because they recognize they are not where they want to be. However, it is important for organizations to be transparent and communicate externally about their DEI initiatives. The world is watching, and companies are coming under increased scrutiny from the media, customers, investors, and other stakeholders for organizational practices that used to be hidden from the public (Lee Yohn, 2018). For example, in the summer and fall of 2020, many organizations made external statements in support of the Black Lives Matter movement, only to be criticized for failing to address the inequities Black employees face internally.
In addition, environmental, social, and governance (ESG) criteria are an increasingly popular way for investors to evaluate companies in which they are considering investing (Chen, 2020). Even if organizations are not pleased with their progress, being upfront in sharing where they are, but more importantly, outlining their plans to close the gaps can help build trust and credibility. At the end of the day, organizations’ internal and external DEI efforts feed each other and therefore must be in alignment.
Recommended Actions:
- Visibly show your commitment externally through supplier diversity, community, and philanthropic efforts.
- Keep a pulse on current events and be ready to respond thoughtfully. Leverage employee resource groups to better understand what is happening externally.
- Balance your internal and external DEI efforts. Do not become too insular or conversely allow your marketing to be disconnected from the reality inside.
Drive Measurement, Accountability, and Transparency
All organizations have business goals, whether they be related to revenue, profit, market share, customer satisfaction, etc. In addition, all leaders have quantitative goals that they are measured on and held accountable for. Unfortunately, the same rules often do not apply to DEI. As it relates to DEI progress, Richard Kerby, general partner at Equal Ventures said, “You’re not seeing movement because it’s not being tracked or monitored – there’s no incentive alignment for someone to improve on the numbers” (Rooney & Khorram, 2020). The facts back up his assertion. According to a recent CEO survey, only 31% stated that increasing diversity and inclusion is a performance objective for someone on their executive team (The Moxie Exchange, 2018).
Progress in terms of representation has been slow in corporate America and even in organizations with metrics in place, only incremental gains have been made. In 2020, McKinsey & Company and Lean In (2020) reported that white men represented 35% of entry level positions, but 66% of C-Suite positions. According to Bari Williams, former executive at Facebook, “…companies are data-driven, but if people are not hitting their diversity metrics, where’s the downside? You have metrics, but no consequences.” (Rooney & Khorram, 2020, para. 11)
Like any critical business area, achieving DEI results requires data and analytical rigor. It is important for organizations to put metrics in place, build DEI dashboards, regularly share DEI data with HR and business leaders, and most importantly, drive accountability just as they do for other business initiatives. As the saying goes, “You get what you measure and what gets measured gets done.” In addition, organizations need to improve communication on their DEI progress both internally and externally via annual reports, websites, and other communication mechanisms.
Recommended Actions:
- Build a strong data-analytics function that partners with DEI to review, analyze, and report DEI data throughout the organization.
- Set DEI workforce, workplace, marketplace, and community goals and hold leaders accountable for key metrics as part of their performance review.
- Focus on and develop a plan for improving the diversity of the executive team and board of directors in terms of race, ethnicity, gender, and other dimensions of diversity.
- Provide regular internal updates on your DEI progress and report externally annually.
Summary and Implications
As this article demonstrated, Corporate America is at a crucial crossroads when it comes to DEI. Statistics reviewed in the article highlight that despite having the best intentions, many organizations have failed to make substantive progress with their DEI efforts as it relates to people and business outcomes. Creating and executing an effective DEI strategy is no small feat and requires strong, sustained, and inclusive leadership. The recommendations outlined here include positioning DEI leaders at the C-suite level, building a strong partnership with human resources, investing in DEI team headcount and budget, ensuring all initiatives incorporate an equity lens, and driving measurement and accountability. These strategies can be viewed as a roadmap for organizations and leaders with a commitment to DEI. Companies that alter their approach and follow the guidelines shared here have a real opportunity to achieve their desired outcomes and create competitive advantage.
In the wake of the murders of George Floyd, Breonna Taylor, Ahmaud Arbery, and others, maintaining the status quo is no longer an option. Unless and until organizations, CEOs, and CDOs make an intentional pivot in the way they approach and resource DEI efforts, change will continue to be slow and substantive progress will continue to be fleeting. The business case for DEI is clear. The time for change is now.
References
Catalyst. (2020, June 24).Quick take: Why diversity & inclusion matter. https://www.catalyst.org/research/why-diversity-and-inclusion-matter/
Chalk & Cheese Consulting Pty Ltd. (2019).Navigating inclusion as a leader: introducing the inclusive leadership compass. https://hrnet.forumbee.com/media/download/80m43s/Introducing%20the%20Inclusive%20Leadership%20Compass_May2019.pdf
Chen, J.(2020, November 3).Environmental, social, and governance (ESG) criteria. Investopedia. https://www.investopedia.com/terms/e/environmental-social-and-governance-esg-criteria.asp
Cox, G. and Lancefield, D. (2021, May 19).5 strategies to infuse D&I into your organization. Harvard Business Review. https://hbr.org/2021/05/5-strategies-to-infuse-di-into-your-organization
Cutter, C. and Weber, L. (2020, July 12).Demand for chief diversity officers is high. So isturnover.The Wall Street Journal. https://www.wsj.com/articles/demand-for-chief-diversity-officers-is-high-so-is-turnover-11594638000
DiversityInc. (n.d.).About the DiversityInc top 50 process. https://www.diversityinc.com/about-the-diversityinc-top-50-process/
Eavis, P. (2020, September 15).Diversity push barely budges corporate boards to 12.5%, survey finds. The New York Times. https://www.nytimes.com/2020/09/15/business/economy/corporate-boards-black-hispanic-directors.html
Hunt, V., Yee, L., Prince, S., & Dixon-Fyle, S. (2018, January 18).Delivering through diversity. McKinsey & Company. https://www.mckinsey.com/business-functions/organization/our-insights/delivering-through-diversity
Lee Yohn, D. (2018, September 26).Reminder: customers care how you treat your employees. Harvard Business Review. https://hbr.org/2018/09/reminder-customers-care-how-you-treat-your-employees
McKinsey & Company and Lean In. (2020).Women in the workplace. https://wiw-report.s3.amazonaws.com/Women_in_the_Workplace_2020.pdf
Picincu, A. (2020, July 6).What are the advantages of a diverse workforce? Chron. https://smallbusiness.chron.com/advantages-diverse-workforce-18780.html
Polonskaia, A. and Royal, M. (2019, December 10).How the world’s most admired companies drive D&I. Human Resource Executive. https://hrexecutive.com/how-the-worlds-most-admired-companies-drive-diversity-and-inclusion/
Rooney, K. and Khorram, Y. (2020, June 12).Tech companies say they value diversity, but reports show little change in last six years. CNBC. https://www.cnbc.com/2020/06/12/six-years-into-diversity-reports-big-tech-has-made-little-progress.html
Shah Paikeday, T., Sachar, H., & Stuart, A. (2019, March 1).A leader’s guide: finding and keeping your next chief diversity officer. Russell Reynolds Associates. https://www.russellreynolds.com/insights/thought-leadership/a-leaders-guide-finding-and-keeping-your-next-chief-diversity-officer
Taylor,C. (2091, April 30).What makes a CSR message resonate with millennials and generation-z? Forbes. https://www.forbes.com/sites/charlesrtaylor/2019/04/30/what-makes-a-csr-message-resonate-with-millennials-and-generation-z/?sh=57891ea27fc7
The Moxie Exchange. (2018).The state of diversity and inclusion according to CEOs. http://themoxieexchange.com/wp-content/uploads/2018/12/the-state-of-diversity-and-inclusion-according-to-CEOs-1.pdf
Weber Shandwick, in partnership with United Minds and KRC Research. (2019).Chief diversity officers today: paving the way for diversity & inclusion success. https://www.webershandwick.com/wp-content/uploads/2019/09/Chief-Diversity-Officers-Today-report.pdf
Zweigenhaft, R. (2020, October 28).Fortune 500 CEOs, 2000-2020: still male, still white. The Society Pages. https://thesocietypages.org/specials/fortune-500-ceos-2000-2020-still-male-still-white/
