Where DEI Strategies Fall Short

Question:

The diversity industry has been around since the 1960s. Yet, many organizations have little to show for their diversity efforts. So my question is, what actually keeps organizations from being more diverse, equitable, and inclusive? Surely it can’t be a lack of resources.

Answer:

The foundation of today’s diversity industry was built six decades ago on a combination of legal compliance and social justice. So you’re right: we’ve had a plethora of time and resources to try and “figure out” how to make our organizations more diverse, equitable, and inclusive. In this light, the fact that our world is 257 years away from achieving gender equity across all races/ethnicities seems puzzling.

So we need to ask ourselves whether the 60-year-old foundation of the diversity industry still serves us today. And what about the current stack of DEI resources at our disposal—do they still serve their function? 

Perhaps the foundation of the diversity industry (compliance and social justice) is crumbling and we need to rebuild it. Perhaps that means we will need to add new tools to our DEI toolbox to reconstruct our strategy.

By exploring these inquiries, we can begin to see where and why our journey to DEI has stalled.

Step 1: A new foundation—moving away from social & compliance-based DEI

We need to change the narrative around diversity, equity, and inclusion. It’s not a charity cause, it shouldn’t be compliance-driven, and it can’t be relegated to the realm of social justice. Years before the pandemic began, economists and researchers had well established the link between DEI and improved business performance.

My company, Pipeline, confirmed this link in our original research across 4,161 companies in 29 countries, which found that for every 10% increase in gender equity, businesses see a 1-2% increase in revenue.

The pandemic further exposed the business imperative of DEI, specifically how diverse, equitable, and inclusive companies outperform lesser diverse, equitable, and inclusive companies in times of economic downturn. (See here, here, and here.)

In fact, between 2007 and 2009, the S&P 500 declined 35%. However, the stocks of businesses where key employee groups such as women and POC had “very positive” experiences at work rose 14.4%.

The take-away: DEI is a business imperative, therefore it needs to be treated as one. 

• Business imperatives aren’t performative, like a one-time social media campaign.
• They aren’t siloed inside a single department, such as HR.
• They aren’t condensed into a singular initiative, such as implicit bias training.
• Business imperatives are integrated into every part of an organization.
• They are meticulously measured and tracked against quantifiable goals. (HR leaders ranked “lack of metrics” as the #1 barrier to increasing the effectiveness of their DEI initiatives.)
• Such data is visible and regularly reviewed in executive-level meetings. (A 2019 survey of 234 diversity professionals at S&P 500 companies revealed that only 35% had access to company metrics.)

If we want to make progress toward DEI, we need to stop treating it as a compliance mechanism or extra-curricular activity and start treating it like the business imperative it is.

Step 2: A new set of resources—using advanced tech to achieve DEI goals

Once we re-position DEI as a driver of organizational performance, it’s time to evaluate the tools that will enable it to thrive.

For example: Almost all Fortune 500 companies and approximately 50% of midsize companies use diversity training to enable DEI. In fact, US corporations spend $8 billion each year on diversity training alone. Yet, this training has proven remarkably unsuccessful in creating more diverse, equitable, and inclusive workplaces for five main reasons.

Furthermore, a study of over 800 companies over three decades found that companies who conducted diversity training did not hire significantly more diverse managers. Worse, researchers found that the prevalence of diversity training correlated with a decrease in Black women as managers.

If diversity training won’t unlock the power of DEI, what tools and resources will?

Data and advanced technology such as machine learning. <<<

Consider this: Companies make three key decisions about their talent every year:

1. How will we pay our employees?
2. How will we review their performance?
3. How will we evaluate their potential?

For the average Fortune 500 company which has approximately 60,000 employees, that’s 180,000 opportunities to move further from or closer to DEI each year.

The take-away: AI can not only remove bias from talent decisions across the entire employee lifecycle, but it can also augment decision-making to make it more equitable and ensure all decisions are in the company’s best interest. 

Instead of relying on informal relationships or one-off diversity campaigns, advanced technologies allow companies to hardwire DEI into their organizations. And by hardwiring DEI into our organizations, we can ensure that we treat DEI as the business imperative it is, all while using metrics to ascertain progress toward our stated goals.

That’s how we’ll close the intersectional gender equity gap once and for all.