When considering where to focus environmental, social & governance (ESG) efforts, diversity, equity & inclusion (DEI) is a cross-cutting topic that cannot be overlooked. Similar to ESG, DEI is not politically motivated or a PR effort. DEI, when approached strategically and in earnest, drives value and strengthens a business by creating a more resilient workforce through innovation and enhancing brand and reputation.
In 2022’s highly competitive talent landscape, the global business case for DEI is powerful as recruitment, retention and talent development remain in the spotlight. 76% of job seekers note that a diverse and inclusive workforce is essential when evaluating offers.[mfn]https://www.glassdoor.com/employers/blog/diversity-inclusion-workplace-survey/[/mfn]In addition, while many businesses believe teams that think and look alike make the best decisions, research also shows that inclusive teams perform better in diverse environments.[mfn]https://www.cio.com/article/189194/5-ways-diversity-and-inclusion-help-teams-perform-better.html#tk.rss_all[/mfn] A few other benefits to focusing on DEI include:
- Diversity unlocks innovation and drives market growth.[mfn]https://hbr.org/2013/12/how-diversity-can-drive-innovation[/mfn]
- Companies with diverse management have exhibited higher profits.[mfn]https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters[/mfn]
- Companies with racial and ethnic diversity are 36% more likely to outperform peers.[mfn]https://www.mckinsey.com/~/media/mckinsey/featured%20insights/diversity%20and%20inclusion/diversity%20wins%20how%20inclusion%20matters/diversity-wins-how-inclusion-matters-vf.pdf[/mfn]
- People Management magazine reports that diverse teams are 87% better decision-makers than individuals.
- 73% of companies that employ gender equality practices are more profitable and productive.[mfn]https://www.entrepreneur.com/leadership/73-percent-of-companies-with-gender-equality-practices/372660[/mfn]
- Through 2022, 75% of organizations with diverse decision-making teams have exceeded financial targets. Additionally, gender-diverse and inclusive teams outperformed gender-homogeneous and less inclusive teams by 50% on average.[mfn]https://www.gartner.com/smarterwithgartner/diversity-and-inclusion-build-high-performance-teams#:~:text=Diversity%20and%20inclusion%20drive%20financial,by%2050%25%2C%20on%20average[/mfn]
What is the importance of DEI today?
The change COVID-19 has had on the workforce over the past two years has highlighted the high level of societal inequality that still exists today. Many people have forgotten what it’s like to be around others; something as simple as having a conversation with your coworker can feel completely different now than it did before 2020. This shift has driven and opened the conversation on DEI, giving us a powerful opportunity to advance the DEI narrative by combining conversation with action. The key to this is effective communication. We need to help people understand the importance of mindfully listening and using inclusive language in conversations with their coworkers. It’s important to be intentional, curious and willing to explore biases, hidden and unhidden, to not letting those drive business decisions, interactions and communication with the people we see every day.
Why is DEI an important focus for all businesses?
Because our world is rapidly changing, today’s workforce, work systems and employee demands are drastically different than they were 40 years ago. Despite The Great Resignation, there is tremendous opportunity for businesses and institutions to build a value driving team, full of employees who want to stay, grow and develop in their current roles.
Cultivating a sustainable culture where everyone feels valued, regardless of race, sexual orientation, identity or family structure is critical for the success and growth of any organization. It’s important to prioritize inclusion and provide support for your people because it creates happy and productive employees who ultimately become advocates for future hiring.
What are some of the risks of failing to address DEI within a company?
Like ESG, stakeholders expect all companies to have a DEI approach. It can be challenging for companies to intentionally carry out their efforts since no one knows what the workforce will look in 5 to 10 years. If your business isn’t willing to shift and adapt to this new working world, it’s at risk of losing its license and ability to perform; employees, both potential and current, will pass you by in search of professional places where they can see themselves in the faces of leaders looking back at them.
What is FD’s approach to DEI?
The core of our approach is to lead by example. Our goal at Frazier & Deeter is to hold ourselves accountable for the change we want to see. Society and business are changing rapidly. While we don’t have it all figured out just yet, we are prepared to start and eager to continue investing in evolving over the long term.
About the Authors
Missy Munoz serves as Director of Environmental, Social & Governance (ESG) at Frazier & Deeter and contributes over two decades of experience to the firm’s Process, Risk & Governance (PRG) Practice. She specializes in assisting clients with the development and execution of ESG strategy, engagement and disclosure. Missy’s experience includes working as a practicing architect, senior corporate ESG consultant and corporate ESG manager. Before joining FD, past roles also focused on helping organizations understand how risks and opportunities lead to innovative sustainable solutions.
As Diversity, Equity & Inclusion (DEI) Program Manager at Frazier & Deeter, Kandace Freeman is responsible for building DEI programs and initiatives at the firm. Kandace works in partnership with FD’s leadership to support, plan, develop, coordinate and execute strategies and initiatives with the goal of advancing the firm’s diversity causes and results. With over 10 years of experience, she offers expertise in DEI programming, curriculum implementation, human resources, development, leadership and education.