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April 19, 2022

Diversity, equity and inclusion: It isn’t just good to do. It’s good business.

Kira Kimball

Companies that focus on DE&I are out-performing ones that don’t

We know you’ve heard this before, but making a deep, ongoing commitment to diversity, equity and inclusion is critical to attracting and retaining great talent, creating a vibrant culture, and driving success.

Today’s employees —particularly younger workers who account for the majority of the workforce — expect the company they work for to be socially aware, diverse and willing to embrace all opinions, thoughts, ideas and styles.

The world is changing, not just business

The changes in U.S. demographics are profound. A variety of sources, including the Pew Research Center, U.S. Census Bureau, Center for American Progress, and Deloitte, report the following statistics:

  • 50% of children under five years old are minorities
  • From 2010 - 2030, the workforce will lose 15 million whites and gain 26 million minorities
  • Millennials make up 50% of today’s workforce and by 2025 will be 75%
  • Millennials are 56% white (Boomers are 75% white)
  • Women make up 47% of the workforce

The buying power in the U.S. increased for minorities in the past decade. Blacks increased by 48.1%; Asians by 89.5%; the Latin population by 69.1%; American Indian by 51.8%; and Multiracial by 73.6%.

According to a report, Elevating Equity: The Real Story of Diversity and Inclusion, approximately 80% of companies are only going through the motions when it comes to DE&I. The survey of more than 800 HR professionals discovered that:

  • 76% of the companies had no specific goals for DE&I
  • 75% do not include it in their leadership development or overall learning and development
  • 40% view diversity work only as a way to get around legal, compliance or reputational risks
  • Only 32% require DE&I training for employees and 34% offer training to managers

So why aren’t more companies taking DE&I seriously?

After all, bias in the workplace has a negative impact, even for anyone not directly affected.

According to a Deloitte report*, 68% of those who felt they had experienced or at least witnessed bias reported that it had a negative effect on their productivity. 84% said that bias negatively affected their happiness, confidence and well-being. And 70% believed that bias had a negative impact on how engaged they were with their company.

But the reasons for embracing DE&I aren’t all based on the negative. Companies with strong, deeply embedded DE&I efforts are, quite simply, better places to work.

According to Forbes magazine, DE&I helps employees feel safe, respected and connected. They feel a sense of belonging and that they are welcome at the company and encouraged to thrive in their jobs. An inclusive culture can help fight remote work burnout. And it can result in stronger team-building.

Focusing on DE&I is a smart business decision

The Wall Street Journal reports that DE&I can improve financial performance and spark innovation. A 2019 McKinsey survey found that companies rated highly for gender diversity on executive teams were 25% more likely to achieve above-average profitability that low-rated companies. And those highly rated for ethnic diversity out-performed lower-rated companies by 36%.

It doesn’t stop there.

Companies with high diversity ratings are 70% more likely to be successful in new markets and 45% more likely to improve current market share.

Diverse management teams increased revenue 19%.

Diverse teams were found to be 87% better at making decisions.

And organizations with above-average diversity showed 19% higher innovation revenues and 9% higher margins.

What does a company need to do to succeed at DE&I?

  1. You need to commit to and focus on six major areas:
  2. Executive, regional and office leadership support
  3. Create an easy-to-accomplish framework to do the work
  4. Equip and empower all DE&I champions in the organization
  5. Invest in building an inclusive culture
  6. Integrate DE&I into all aspects of the business
  7. Develop a “scorecard” that delineates your goals and measure often

It’s not a small task — creating a new culture isn’t easy nor is making sure DE&I is fully integrated into every aspect of your day-to-day business. But as you can from the numbers — both the financial results and who is making up your workforce — it’s absolutely worth it.

“While the business case for DE&I is clear, MMA believes this work aligns with our values as an organization. Creating a culture where colleagues can bring their whole selves to work and experience dignity and belonging, is central to who MMA wants to be and what we are committed to as a business and as an employer,” Kira Kimball, MMA Chief Diversity, Equity and Inclusion Officer.

Next steps?

If you need any help creating your own roadmap to achieve your DE&I goals, Marsh & McLennan has tools we can share. Call your local MMA representative for more information.

 

* The report is based on survey responses from 804 HR professionals working in a range of industries as well as interviews and one-on-one conversations about the findings with leaders around the world. JoshBersin.com, an Oakland, Calif.-based HR consultancy specializing in workplace analysis, conducted the research in partnership with Perceptyx, a global survey and people analytics company based in Temecula, Calif.