This is the second article in a three-part series about diversity, equity, and inclusion (DEI). The first article presented a broad overview of what diversity in leadership is. This article will look at what drives companies to execute DEI initiatives and how they benefit from them.
“Zoomers” in the Workforce
According to Lauren Romansky, Managing Vice President of the Gartner Human Resource practice, the establishment of Generation Z (birth years from mid-1990s to early 2010s) in the workplace has had a catalyzing impact on the universal push for DEI. Typically, younger employees are the most zealous and vocal advocates for DEI initiatives, and the younger generation’s passionate influence provides the impetus to really push the movement forward and give it staying power (Gartner).
The Fortune 500 is a famous list of the 500 largest US companies ranked by total revenues for their respective fiscal years (Investopedia). Now, however, Fortune Magazine has also started tracking the top 20 most diverse firms as well, and the results show that large companies currently lead in DEI and that small and mid-sized companies are lagging significantly behind (Crain’s). Obviously, large companies employ more people, which helps drive diversity numbers up and sets an example that smaller businesses are trying to follow.
A diverse, equitable and inclusive work environment is a moral imperative.
- Diverse – multiple ages, races, ethnicities, genders, and religions are represented in all roles, including leadership
- Equitable – everybody on staff is treated and compensated fairly across the board
- Inclusive – an environment that promotes a feeling of belonging for all employees
The ethicality of a good DEI initiative should be the main reason that companies strive to incorporate it into the corporate culture. Rob Cahill, co-founder and CEO of Jhana, says, “You can’t sprinkle in a few diverse candidates, throw in some language about inclusion, give a rousing company speech or two and expect to magically have a diverse, inclusive place to work” (GreatManager). It’s not a matter of checking boxes, he says, it’s a mindset that must be woven into the fabric of your company’s culture, values and practices.
One of the main aspects driving the DEI movement is that diverse companies are more successful. Some measurable benefits that companies see from incorporating effective DEI strategies are.
- Companies in the top 25% of gender diversity on executive teams were also 25% percent more likely to experience above-average profitability (CNBC).
- Companies in the top 25% of ethnic diversity outperformed those in the bottom quarter by 36% in terms of profitability (CNBC).
- Companies with equal men and women earn 41% more revenue (Fundera).
- Diverse teams are 70% more likely to capture new markets (Fundera).
- Diverse teams are 87% better at making decisions (Fundera).
- Inclusive companies are almost two times more innovative (Fundera).
- Companies that have a highly inclusive culture have over two times more cash flow per employee (Fundera).
- Inclusive companies are 120% more likely to hit financial goals (Fundera).
A diverse leadership and workforce adds value on multiple levels. The next article will be focused on how you can implement and manage a solid DEI strategy.