It’s Time for DEI to Evolve, Not Dissolve

Photo by LeonidKos on iStock

March 13, 2024
  • MaryAnne Howland

    Former Director, Equity, Inclusion, and Justice, BSR

The backlash against DEI has resulted in many U.S. companies reducing their commitment to diversity. However, the debate about DEI in boardrooms, civil society, and media is not grounded in the right place. Diversity in and of itself is not a strategy, it’s an outcome that sustains livelihoods and saves lives.

Part of the challenge is the careless and imprecise way that language around DEI and diversity has been deployed. 

These terms first emerged as companies began reacting to the new challenges and opportunities created by the shift in workforce demographics, prompted by the rise of affirmative action policies in the 1960s. “Diversity” became a business euphemism to make up for the lack of it, using the term primarily as a branding exercise to imply “now we have it” rather than a bottom-line driven business development strategy. That resulting misuse and abuse of the term, has resulted in the misleading characterization of the “diverse” candidate as a reference to any candidate representing someone who is not a white male.

Too often with DEI, the focus has been on words and not on actions, connections, social justice, and impact. But, vastly more important is where and how businesses create cultural connections internally and externally, including how they build relationships in the community, and who is invited to participate in investment portfolios.

Inclusion is an action that builds trust. Building trust requires being treated fairly and with dignity and respect. It requires dismantling all forms of discrimination and subordination that are barriers to equal opportunities. It also involves reparative justice for those who have been victims of systemic inequities. 

Full inclusion in a competitive global marketplace is inclusive of a multi-generational, multi-racial, multi-ethnic, multi-abled population that empowers multicultural consumer engagement and product innovation. Effectively harnessing the skills, insights and power of a broad range of perspectives requires creating internal and external systems and operations strategies. These should align with the demographics and communities served, encompassing the workforce, products, service delivery, and community involvement. 

However, a renewed focus on diversity and inclusion is not enough. There must be a clear recognition from businesses that not all candidates have equal opportunities, and companies can ensure fairness and justice to rectify imbalances. This means there must be equity in wages as well as access to opportunities for growth, leadership, and investment. Equity helps build the foundation for resilience that can lead to a future-fit workforce and a sustainable supply chain for a global economy. 

It's also important to address another mischaracterization of DEI, which is that it is somehow antithetical to outstanding performance. Let’s be very clear about this: DEI and excellence are not mutually exclusive. Just ask Millennials, the most sought-after talent pool in a highly competitive global workforce market. Most will tell you that they value diversity and prefer to work for companies with a strong and credible commitment to DEI. According to data from Deloitte, 69% of millennial and Gen Z employees are more likely to stay for five or more years at a company with a diverse workforce—with Glassdoor research adding that 76% of employees cite DEI in strategy as “non-negotiable.” 

DEI is not merely a workforce strategy; it has evolved into a set of broader business policies centered around the principles of JEDI (justice, equity, diversity and inclusion). Companies committed to impact center the four focus areas of JEDI in their business strategies.

First, they address board diversity. Board members are uniquely qualified to help companies to act on their DEI commitments and to achieve or surpass their diversity goals to create more just and sustainable companies. They ensure a level of accountability that can undergird the kind of transformation that shifts systemic racism toward systemic equity.

Boards that can tap into the unique perspectives of diverse directors with lived experiences of discrimination, especially in industries that confront the worst disparities (i.e., healthcare, financial services, food, agriculture, etc..),are better equipped to develop solutions that help a company achieve impact across the four areas of JEDI, and create long-term business value. 

Second, being a future-fit organization requires a business strategy that includes historically marginalized groups such as indigenous peoples, immigrants, LGBTIQ+, and people with disabilities. Companies can start by recognizing who is not at the table. Concurrently, companies can create and leverage Employee Resource Groups (ERGs). Often organized based on common identities, interests, or backgrounds, ERG’s typically seek to support employees by providing opportunities to identify emerging leaders, to network, and create a more inclusive workplace. It’s estimated that about 90 percent of all Fortune 500 companies currently utilize ERGs in some form. Employees have a multicultural network that can be used to engage valued voices within the organization.  Externally, these same employee networks can support outreach to professional organizations, helping to develop relationships, and strategic partnerships that can enhance the talent pipeline and strengthen supply chains. 

Finally, companies can apply the same rigor to their global supply chains that they do for human resources. Corporate investment in a diverse supply chain helps to revitalize struggling communities by improving the local taxpayer base which in turn can help solve critical systems and infrastructure problems in areas including education, housing, and and healthcare, which in turn creates and incentivizes investment opportunities for new businesses. For example, companies can put their working capital or 401K funds in a black-owned bank, woman-owned pension fund, or LGBTIQ+-owned investment firm. 

Today’s business leadership requires courage to create powerful connections and deliver the necessary, meaningful impact to build trust. Focusing on the human value chain can make organizations more resilient to meet the challenges of changing demographics, societal divisions, and ever-shifting political and economic headwinds.

When it comes to DEI, some businesses play the game, some change it. Your company can be a player or a transformational change maker—which would you prefer to be? 

Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.

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