We at the Josh Bersin Academy are just wrapping up a study of 84 DEI practices and their correlation to meaningful change and business results. Needless to say, the results are surprising.
One of the most startling findings has been that DEI training is one of the least impactful practices, despite the millions of dollars invested over the last years. We also found that only one company in five holds itself accountable for equity and inclusion in its business practices, and roughly 40% of companies still see DEI as an issue of risk mitigation and compliance, not a strategic imperative.
I don’t need to make the case for diversity and inclusion. Every study of employee engagement and retention in the last year found that “belonging” was the top driver of employee satisfaction. Studies from McKinsey, Deloitte and Catalyst clearly show that those companies with inclusive boards, diverse leadership teams and strong DEI brands are more profitable and considered leaders in their respective markets.
Today, as society focuses on income inequality, pandemic response and environmental sustainability, the issues around diversity and inclusion are even more important. For instance, laws are beginning to mandate women on boards, pay equity transparency and ever-more diligence in EEOC compliance. The Biden administration is using equity as a lens across every investment in the federal government—a good example of what we need to do in our companies.
I have just finished reading Isabel Wilkerson’s latest book, Caste, which describes the terrible roots of racial bias in the United States. Her argument is that bias is not just a mental state; rather, it is the result of a centuries-old human hierarchy that we must undo through discussion, debate and very hard work.
But, that said, the goal of our research is to help HR leaders find solutions. Let me cite the highlights.
First, the most diverse and inclusive companies do not think about diversity as a hiring problem or compliance issue. Rather, it is an integral component of the business strategy.
Making diversity a business issue manifests itself in many different ways. Target, for example, looks at DEI as a business issue that permeates every decision. Company leaders consider diversity and inclusion when making decisions about store locations, product offerings and pricing, as well as hiring, pay and promotion of employees. DEI is a business imperative at Chevron because the company does business in so many different countries and cultures. Unilever stresses inclusion because its business mission is to provide products to diverse communities and demographics around the world. These companies define their business in an inclusive way, so their people and HR practices are diverse as a result.
Second, we found that highly inclusive companies are really good listeners. It may sound obvious, but the most complex issues in DEI (harassment, the Black Lives Matter movement, pay equity or safe working conditions for all) are continually discussed by employees. Of the 84 practices we analyzed, the most important of all was to “listen, hear and act” on what employees are talking about. The challenge is then taking employee input and acting on it.
Third, we found that HR professionals, who are often given responsibility for improving diversity, are not nearly ready. In a separate research initiative assessing the capabilities of HR professionals, responses showed that, out of 20 capability areas assessed, DEI scored the poorest. A mere 3% of respondents claim deep expertise in this area, while 80% of HR professionals assess themselves as “beginners.”
Finally, while metrics and goals matter, they must be coupled with true accountability. Setting goals such as hiring more women or promoting more Black professionals into leadership roles is important but, without an accountable culture, these goals will often go unmet.
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Coca Cola’s story points this out. After settling one of the largest race discrimination class-action suits in U.S. history in 2000, the company set aggressive diversity goals. Ten years later, Black employees held 15% of executive roles in the U.S., up from 1.5% before the lawsuit. However, two decades later, progress had reversed, both in terms of leadership and overall workforce diversity. Reporting masked the backsliding. Without factoring diversity and inclusion into all aspects of the business, the company regressed and consequently now finds itself looking to make up lost ground.
Certainly, the DEI issue is not easy to fix. But as our research shows, we have to take a more expansive view of the problem and move way beyond unconscious bias training and anonymizing resumes. Elevating equity is a critical business imperative. I believe companies recognizing this will outperform, outlast and outgrow their competition.