In light of tight budgets, pervasive layoffs, and a Supreme Court decision to end affirmative action in college admissions, businesses throughout corporate America are reexamining their diversity, equity, inclusion, and belonging (DEIB) initiatives.  

Today’s business leaders are facing a “diversity backlash [that] puts companies in a difficult position,” according to the MIT Sloan Management Review. Feeling pressure from all sides, executives are increasingly fearful of turning off large groups of customers, getting caught up in politically charged lawsuits, and dealing with perceptions among employees that diversity targets take precedence over finding the right person for every job. 

Kristy Lilas, Vice President of Diversity, Inclusion and Belonging at web hosting company GoDaddy, understands the strategic importance of making all people a top priority. “From our own data and others’, we know that our current and prospective employees, customers and investors care about our DEIB commitments,” Kristy says. “They continually prove that through their engagement, investment and loyalty.”

A recent Forbes article tackles some of the internal complexities of DEIB efforts by highlighting the unintended consequences of well-intentioned programs: 

“Setting targets causes problems for the very people they are trying to help, because their colleagues will often assume that they were hired or promoted because of their identity traits rather than their skills … By the same token, the underappreciated individuals themselves will wonder whether they were hired simply because of their identity, leading to feelings of “impostor syndrome.” Aside from being a horrible experience, this also leads to greater mistrust, higher churn rates, and declining reputation, creating a vicious cycle.”

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Employers—and Employees—Are Still Reaping Rewards with DEIB

The delicate question is: How can businesses balance the needs of both underrepresented and privileged groups for the benefit of all? According to McKinsey, the solution must be broad-based and fair, without being heavy-handed: “Diversity winners are adopting systematic, business-led approaches to inclusion and diversity (I&D) … to create a long-lasting inclusive culture and to promote inclusive behavior.”

In practice, a truly inclusive approach to DEIB yields impressive financial rewards for companies and personal and professional rewards for employees. Ongoing research by McKinsey and other analysts clearly shows that healthy DEIB programs—those that foster environments of genuine respect and understanding—provide increased productivity and creativity, improved morale, and an ability to attract and retain better employees and customers. 

According to McKinsey, “Companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile … [while] top-quartile companies [in ethnic and cultural diversity] outperformed those in the fourth one by 36 percent.”

Another study by Bersin and Deloitte found that companies with diverse and inclusive talent systems are 1.7 times more likely to be innovation leaders, generate 2.3 times higher cash flow over a three-year period, and are 2.9 times more likely to identify and build leaders.

At GoDaddy, Kristy Lilas' team positions DEIB as a fundamental need. “Every member of our organization should feel valued, included and supported. We communicate DEIB goals as necessary components for a thriving workplace,” Kristy asserts. “It also helps develop resiliency and growth mindsets, which empowers our employees to navigate change and challenges during uncertain times and attracts talent with these skill sets.”

Effective DEIB Is an Ongoing Process 

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Lilas shares that DEIB is an ongoing process of removing barriers, creating networks, enhancing learning, and enabling opportunities for success. “We’re continually refining our processes and maturing the DEIB conversation to promote a culture of growth and development."

Today, through extensive employee feedback, research and applying best practices, the team is evaluating GoDaddy’s end-to-end recruitment cycle, learning and development strategies, vendor management protocols and other business areas to prevent bias from influencing outcomes.   

Dovetailing with Lilas’ experience, the Diversity, Equity and Inclusion Lighthouses 2023 Report from McKinsey [ES1] and the World Economic Forum identified five success factors that effective DEI initiatives have in common:

1. A nuanced understanding of root causes

Identifying DEIB opportunities helps prioritize investment, goal setting, and solution design. When Walmart offered free education and upskilling for frontline workers, for example, they achieved a 20% higher rate of retention among program participants and an 87.5% higher likelihood of promotion among black program participants.

2. A meaningful definition of success

Clear and measurable goals help guide DEIB efforts. To close pay gaps, Schneider Electric is aiming for a pay gap less than 1 percent for all employees and a 50/40/30 gender balance by 2025.

3. Accountable and invested business leaders

Commitment from executive management signals the importance of DEIB and ensures that initiatives have the right resources. At cosmetics company Shiseido, for example, senior business leaders are held accountable for improving the ratio of women in management roles.

4. Solutions designed for context

Effective DEIB solutions often require changes to key processes and ways of working. When Tata Steel launched an initiative to improve intersectional gender diversity for employees, they addressed key issues such as stereotypes, non-inclusive policies, and unsafe work practices. 

5. Rigorous tracking and course correction

Consistent monitoring is essential for keeping initiatives on track. To support economic empowerment for at-risk women in the U.S., HR consulting firm Randstad tracked key performance indicators and followed up with participants at key stages. 

Embracing DEIB at Every Level—Especially Generation Z

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Following these guidelines can help any business make meaningful progress on DEIB, especially when economic, political, and legal conditions put pressure on organizations to pull back.

Jennifer McFarren, Manager, Corporate Social Responsibility at Navy Federal Credit Union, hasn’t let up on her mission of “championing the community” to keep employees engaged and productive. 

“You must be incredibly strategic,” she says. “Working in social impact within the private sector requires practitioners to…create meaningful programs that align with business strategies.”

McFarren credits much of the credit union’s consistently high employee engagement—through the pandemic and beyond—to the celebration of diversity and the sense of community her team fosters. “We know that team members who participate in our programs are genuinely connected to one another, our mission, and our culture of service,” she says.  

One way organizations can accelerate their social impact and reap more DEIB rewards with less risk is to start embracing diversity and inclusion through the next generation of business leaders. Gen Z—the most diverse generation in history—offers employers an extensive talent pool of women, minorities, and individuals from traditionally excluded communities who are bright, ambitious, and eager to learn how to succeed in the business world.

Through structured programs like student internships and externships, companies can start mentoring and building productive relationships with the diverse students who will become the business leaders of the future. 

“DEI is usually one of the top three most important factors impacting the decision of diverse talent to accept a job offer,” says Kamela Forbes Matheson. As the Global Director of Diversity, Equity and Inclusion at Pride Global, a minority-owned integrated human capital solutions and advisory firm headquartered in New York, she knows that talented individuals have options, and that they “gravitate to organizations that have strong inclusive cultures.”

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To learn how Paragon One externships can transform your talent acquisition strategy and accelerate your DEIB efforts in a way that maximizes rewards and minimizes risk, contact us today.

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