5 Ways to Recalibrate Your DEI Strategy

With market instability looming, companies can’t afford to fall short on productivity, which requires hiring and retaining top talent for critical roles. To stay competitive and relevant in today’s fast-paced business landscape, leveraging the benefits of diversity and inclusion is a must, but many companies seem to put diversity, equity, and inclusion (DEI) efforts on the back burner.

According to DDI’s Diversity, Equity, and Inclusion Report 2023, only a quarter of leaders globally believe inclusion is a strong component of their company values. Worse, the average percentage of leaders who endorse their company’s overall DEI efforts has decreased by 18% since 2020. Companies need to recalibrate their DEI practices before they fall short of meeting their productivity goals.

Overlooked Advantages to Having Strong DEI Practices

Companies leading in DEI practices are reaping immense benefits. Among these are the increased diverse representation for companies with stronger programs and having different perspectives to solve problems. In fact, organizations with greater leadership diversity are over twice as likely to outperform their competitors. Those that rank in the top 10% among their peers in financial performance were found to have at least 5% more leaders who are women or are from minority racial/ethnic backgrounds.

But perhaps a lesser-documented advantage to having strong DEI practices has to do with work engagement. Companies that are proactively focusing on developing more high-potential leaders from diverse backgrounds are more than three times more likely to have an engaged workforce than those that aren’t. This alone has strong business implications, with Gallup estimating low engagement to cost the global economy roughly $7.8 trillion.

Another overlooked advantage of having a strong DEI program involves agility. Specifically, companies with high-quality DEI practices are four times more likely to have leaders who understand and can act on ever-changing customer needs. This can put companies in better positions to maintain long-standing relationships with their customers.

Lastly, companies with strong DEI practices may experience fewer struggles filling key roles, as jobseekers find company cultures with strong inclusivity practices to be welcoming. With attracting and retaining top talent being a top concern for CEOs, having a strong focus on creating an environment conducive to an inclusive and diverse work environment is a no-brainer.

Changing the Narrative

To course-correct and advance DEI in their companies, there are several key actions organizations can take:

1. Ensure commitment to DEI at all levels of the organization. DEI should be a top priority for senior leaders and should be integrated into the company’s overall business strategy. By embracing DEI at all levels, organizations can foster a culture of innovation and creativity, leading to more effective decision-making and problem-solving.
2. Regularly provide training and development opportunities. Leaders should be equipped with the knowledge and skills to effectively lead diverse teams, and employees at all levels should have access to training on DEI topics. It provides the tools needed to communicate across differences, resolve conflicts, and collaborate with colleagues from diverse backgrounds.
3. Proactively plan for diverse talent. Succession and talent planning practices should be audited for adverse impacts on any marginalized group. Identifying high-potential diverse talent and making sure this talent receives equitable opportunities for development will help ensure they’re set up well for future opportunities.
4. Foster trust with senior leadership. Only 46% of leaders report they fully trust their direct manager to do what’s right. Even more troubling, fewer than one in three trust senior leaders within their organization. Senior leadership must follow through on promises, practice transparency, and foster trust every day, not just in relation to DEI matters.
5. Coach for growth. Developing coaching capabilities across different leadership levels will help provide feedback and guidance in the moments that matter.

In addition to these five actions, companies should consider offering flexible working arrangements. Doing so helps improve perceptions of inclusion. In fact, when women and minority leaders work remotely, they’re more likely to believe inclusion is a strong part of their culture. This is especially true when they trust their direct leaders, are recognized for their achievements, and are encouraged to raise concerns and challenge the status quo.

By taking these actions, companies can advance their DEI programs and reap the associated benefits. However, it’s important to note that DEI is not a onetime initiative. Instead, it should be treated as an ongoing commitment that requires continuous attention and investment. It should be deeply ingrained into the DNA, not just a stand-alone metric to measure.

Rosey Rhyne is a senior research manager in DDI’s Center for Analytics and Behavioral Research (CABER) team. With a background in I/O psychology and career experiences in HR, she’s passionate about uncovering opportunities to better understand and improve the leadership experience.