As economists fret about a looming recession, business leaders who vowed to make diversity, equity and inclusion (DEI) a priority this year may be tempted to put those efforts on hold while they focus on business fundamentals.
But that would be a mistake, because DEI isn’t just a feel-good initiative; it’s a significant contributor to business success, says Dr. Nika White, president and CEO of Nika White Consulting and the author of Inclusion Uncomplicated: A Transformative Guide to Simplify DEI.
“A solid body of research spanning many years and industries shows that everything from bottom-line growth to talent retention has been a direct result of diversity and inclusion initiatives,” White says.
As one example, a 2020 study by McKinsey & Company concluded that diverse companies were more likely to outperform non-diverse companies on profitability. McKinsey found that to be true for both gender diversity and ethnic and cultural diversity.
Tough times don’t change that competitive edge for diverse businesses, White says. In fact, in a recession, companies that have embraced diversity might even widen their lead over competitors. The McKinsey study, which came out early in the COVID-19 pandemic, suggested that diverse and inclusive businesses are better poised for success during a crisis because they are “likely to make better, bolder decisions.”
“For example,” McKinsey’s report continued, “diverse teams have been shown to be more likely to radically innovate and anticipate shifts in consumer needs and consumption patterns – helping their companies to gain a competitive edge.”
Companies that embrace diversity also are better able to snag the best employees, White says.
“We’ve been hearing about the great resignation, but it’s really the great reevaluation,” she says. “The upper hand goes to the job seeker right now. They can pretty much pick their ticket and be even more demanding about their requirements.”
So how does that relate to businesses and their records on the diversity, equity and inclusion front?
“Young people are showing up to job interviews with a list of questions and high ranking on that list is, ‘What are you doing to help manifest a strong culture of inclusion, equity and belonging?’ ” White says. “For organizations that don’t have a satisfactory answer, talent is moving in a different direction.”
What’s more, customers, clients and other constituent groups expect organizations to deal equitably with diverse groups, she says.
“The younger generations that are growing up and making decisions about which organizations they want to support are increasingly prioritizing diversity,” White says. “Generation Z, for instance, is not only the most diverse age group in America, but also the most inclusive. They are less likely to label others and are more accepting of fluid identities, and they expect the same from others.”
Whether the economy is thriving or struggling, organizations need to be thinking of ways to position themselves to attract and retain underrepresented talent when compensation can’t be the only solution, White says.
“If they are not intentionally engaged in DEI, they’re going to be challenged more than ever,” she says. “That lack of intentionality will fail to create a culture and environment where there’s a strong sense of belonging, psychological safety, and belief that full success is in reach for all. That not only makes for an unattractive workplace, it’s also bad for business.”