Five Reasons Your Diversity Efforts Aren’t Working

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By Sarah E Fortt

I wrote the first part of this series almost two years ago, in the months after the murder of George Floyd, when many public companies were making statements and commitments regarding racial justice. At the time, global protests and demands for police accountability drew a clear line for many companies: commit to the pursuit of racial justice and the protection of the Black community or take the significant, if perhaps temporary, reputational risk of staying put. behind.

Despite the good intentions of many, the reality remains that actually moving the needle is difficult, requiring long-term commitments, broad consensus, and effectively designed and assigned accountability. Even companies that have identified what success means for their diversity, equity, and inclusion (DEI) efforts don’t always have a clearly articulated path to achieving their lofty goals. And the challenge of turning DEI intentions into DEI results is made particularly complex by a messy web of historical and cultural considerations, labor and employment laws, political sensitivities, reputation and brand concerns, and geographic and industry nuances. Part of DEI is doing the right thing, but the other part is doing something difficult the right way.

In my job, I often help corporate leaders think about how they can more effectively implement and monitor strategies, including ESG and DEI strategies. Below, I identify five common reasons companies’ DEI efforts can fail and what companies can do to overcome these challenges.

  1. You focus on activities rather than behavior.. Companies’ DEI efforts often include activities that are ancillary to the day-to-day operations of the organization. However, these activities, which include affinity group meetings, anti-racism/anti-bias training, diversity-related conferences, mentoring programs, and diversity-specific recruitment drives, are useful aspects of a company’s overall DEI strategy. , without the addition of more closely linked initiatives. to the daily operations of the business, these activities alone are unlikely to result in significant and sustainable change. This is because activities often treat diversity as a single task to be completed (a training to be provided, a meeting to be held, a box to be checked) rather than a strategy for creating long-term value. To align an organization’s DEI strategy with the organization’s overall strategy, DEI efforts must be integrated into how the organization measures, rewards, and corrects behavior, which means that careful integration of DEI metrics into performance, promotion and incentive structures should be carefully considered. What the right DEI metrics are and how they are best integrated into the organization will always have to be company- and often business-unit-specific questions, but companies need not go it alone. Companies can use DEI specialists and consultants to help them create the right mix of metrics and an implementation plan, though they should do their due diligence as the DEI space is expanding rapidly. Answering the difficult questions about how DEI should be integrated into the company’s overall strategy may be a suitable task for newly appointed chief diversity officers or members of management with similar responsibilities (each a CDO), provided the CDO has the opportunity to engage appropriately with members of the c-suite and the board.[1] In addition, I am finding more and more that other business advisors, including compensation consultants, accountants, and attorneys, are aware of trends in this space and prepared to ask their clients the right questions.

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  1. You are prioritizing recruitment over retention. We’re all familiar with the saying that a bird in the hand is worth a hundred in the bush, but when it comes to DEI’s efforts, it’s often the bushes that get the most attention. Retention may be less psychologically satisfying than the thrill of acquiring new talent, but I think there’s another factor at play as well: investigating any issues with retaining underrepresented talent, and specifically, if and why the underrepresented talent It has more external impact. churn rates, it’s just a rock that some companies may not want to look at. The Great Renunciation, which may have significant implications for companies’ DEI efforts, may have brought these issues even more to the fore. Some companies may be in the position of watching in frustration as a significant number of underrepresented talent leave in search of other opportunities. This is one of the ways that doing DEI effectively is doing the hard thing the right way: It’s true that companies need to be careful about how they identify and address the problems they have in retaining underrepresented talent; however, remaining ignorant of any issues can be even more risky. Instead, companies should consider engaging an attorney to help establish a strategy for identifying problems as well as a path to address them. Ultimately, successfully retaining underrepresented talent will not only provide the immediate benefit of helping to build more diverse teams, it will also create the added benefit of bolstering the organization’s diversity-related recruiting efforts.

  1. You have yet to clearly identify what can be achieved and how. It goes without saying that not all diversity is created equal, however, investors and other stakeholders increasingly have expectations of DEI that include diversity-related goals. [While companies may view diversity-related targets as proxies for progress, they will always be imperfect proxies when we are looking at a specific organization, and may create their own significant legal risks if they are not very carefully administered.] Organizations looking to address stakeholder expectations need to dig deeper into the “why” behind their specific image of diversity. What industrial and geographic considerations have an impact on this image? A company that successfully links its diversity story to its overall strategy narrative is more likely to have a story that is unique to the company and sustainable in the long term. And diversity goals rooted in a company-specific narrative are also more likely to be met.

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It has been said that diversity is not rocket science; it’s harder For any individual organization, your list of diversity dreams may not be achievable in the short term, and being honest about it internally is an important step in building internal consensus and buy-in. Unrealistic goals are likely to go unmet while at the same time burning out employees, often underrepresented employees who may shoulder a disproportionate amount of the DEI burden (more on that below). And while no single organization can address all of the systemic issues underlying its DEI challenges, companies that integrate DEI considerations into their broader stakeholder engagement efforts, including their community engagements, are more likely to and policies, have a consistent and effective IED narrative and a deliverable IED. goals.

  1. Your DEI efforts are mostly D with little E and no significant I. In many organizations, the “D” in DEI does the heavy lifting. Diversity has been a major focus of investors and other stakeholders in recent years, and public companies in particular have responded with new chief diversity officer roles, new director appointments, board oversight of diversity-related matters and new disclosures related to diversity. But even without this focus on stakeholders, leaning on diversity often appears to be the most direct means for organizations to achieve their DEI goals. However, without meaningful equity and inclusion efforts, including equity and inclusion-related metrics aligned with company performance, promotion, and incentive structures, organizations are likely to see their diversity efforts fail to gain traction. This is because equity and inclusion are necessary for diversity to flourish in the long term; they are necessary to generate the corporate cultural changes that lead to belonging. In addition, diversity initiatives often rely heavily on the investment of time and energy from underrepresented talent, and an unbalanced DEI strategy that focuses on diversity without investing in equity and inclusion is more likely to result in employee burnout. underrepresented talent, exacerbating any underrepresented talent retention issues. It’s also worth noting that investors and other stakeholders are increasingly interested in companies’ equity and inclusion efforts, and this interest is likely to grow as companies with more balanced DEI strategies distinguish themselves.

  1. The people who define your corporate culture are the people you work for. A company’s DEI efforts are integrally tied to its corporate culture, and while many companies define and discuss their corporate culture, a smaller percentage actually do the hard work of evaluating and measuring it. Companies often rely on key members of leadership to define corporate culture, with little or no evaluation or audit of key cultural indicators. While leadership insights into company culture can provide significant insights, these individuals have often been rewarded for the very corporate culture they are evaluating. Having been rewarded for the status quo, leadership is more likely to view corporate culture in positive terms than people who have, for example, left the organization. Gaining a more balanced view of the organization’s culture is integral to effectively evaluating the effectiveness of your DEI efforts. Increasingly, consulting firms are refining the art of measuring corporate cultures. Companies that are serious about their DEI efforts should consider conducting meaningful assessments of their corporate cultures to inform those efforts.

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An effective DEI requires an ongoing engagement with both the science and the art of navigating human engagement. This engagement requires proactive internal consensus building, which can be a delicate and uncomfortable process, part of doing something difficult the right way. Recognizing that DEI is not an easy or natural process is often the first important step in making meaningful progress.

[1] As I have discussed above, it is critical to the success of the CDO role that the highest levels of the organization (1) understand the scope of the CDO role (and ensure that the scope is reasonable); (2) support the CDO’s efforts in a real and measurable way; and (3) provide the CDO with the opportunity to report directly to senior management and the board of directors on the company’s DEI efforts.