DEI, short for diversity, equity and inclusion has made a big splash in the last few years.
Beyond mere trendiness, inclusivity has emerged as a critical value that holds immense potential for enhancing a company's bottom line and fostering a more values-driven approach.
Businesses and NFPs (non-for-profits) might be tempted to implement DEI practices just for the significant ROI (return on investment) it can bring. But backing this up with values-driven conviction is crucial and shows an organisation’s commitment to fairness and ethics.
This all sounds pretty great, right?
But before we dive any deeper, let’s review exactly what DEI practices are, and what role, specifically, does inclusivity play in this context.
Then, we’ll look at data-driven research that confirms just how good inclusivity is for your ROI. We’ll also explore an example of DEI that puts theory into practice before finally commenting on the importance of backing your practices up with clear values instead of just following trends.
What is DEI and What Role Does Inclusivity Play?
Diversity, Equity and Inclusivity refers to a set of principles and practices aimed at creating a more diverse, equitable, and inclusive environment within organisations and communities.
Within work environments, diversity involves recognising, valuing, and promoting differences in race, ethnicity, gender, sexual orientation, age, socioeconomic status, physical abilities and religious beliefs.
Equity focuses on just conditions and aims to eliminate systemic barriers such as societal attitudes, but also physical barriers such as transport, health, digital inequity and housing.
Inclusion refers to creating an environment where everyone feels valued, respected, and empowered to contribute their perspectives and talents.
Inclusivity Is Hard to Measure
According to the Harvard Business Review (HBR), inclusivity is notoriously the hardest to measure out of the three principles and serves as a barrier for businesses to develop a coherent metric that tracks overall DEI progress over time.
Thankfully, Gartner developed an inclusion index to successfully measure inclusivity, which consists mainly of asking employees if they agree on certain statements related to fair treatment, psychological safety, belonging and more.
Overall, collecting data, setting metrics and reporting the results of your DEI practices will help leadership gauge how DEI efforts directly correlate to your organisation’s ROI.
Inclusion is Good for ROI
Research has proven time and again that DEI practices offer many long-term benefits for organisations and improve their bottom line.
Job Performance
According to HBR, employees that have positive experiences at work are proven to perform better. A high level of belonging is linked to a 56% increase in job performance and a 75% reduction in sick days.
In another study by Gartner, research found that highly diverse and inclusive work environments lead to 26% more team collaboration.
Yet another study found that companies with DEI programmes created 2 more products a year compared to those without DEI initiatives.
Employee Retention
Employee turnover can be expensive in terms of recruitment, training, and lost productivity. Research proves that workplace inclusivity produces more employee satisfaction and loyalty.
According to Deloitte, inclusive companies are 3x more likely to retain millennials for 5 or more years.
Further, employees display 18% more team commitment in an inclusive environment, and demonstrate 1.19x greater intent to stay.
DEI helps improve communication amongst employees and makes them feel valued, thereby increasing their likelihood to commit to their jobs.
Rise in Profits
DEI practices offer huge ROI and increase companies’ bottom line.
The MicKinsey Global institute conducted a large study on this very subject and found that gender-diverse organisations’ financial performance is 15% better.
They also found that ethnically-diverse organisations’ financial performance is 35% better, and that for every 10% increase in diversity on executive teams, organisations saw an 8% increase in profitability.
A separate study by HBR found that for every 10% increase in gender equity, organisations saw a 1 to 2% increase in revenue.
Inclusivity also holds the potential to tap into previously untapped markets. By understanding and catering to the needs of a diverse range of customers, customers see themselves represented and acknowledged.
They’ll develop a stronger bond with the brand, resulting in higher customer loyalty and increased customer lifetime value.
The Gender Passport: A Practical Example
In 2015, Make It Happen designed the Genders, Bodies and Relationship Passport. The document was subsequently updated in 2021.
The project was the first of its kind in Australia, and aimed to help people get quality care. Further, it served as a valuable tool for organisations to achieve their DEI practices.
The Passport includes information about the rights of intersex, trans and gender diverse people. It has space for people to include information about themselves that may affect their care, including language preferences, preferences for gendered facilities, health requirements, intimate care and privacy concerns and end of life care.
This document demonstrates that inclusivity is not just about words; it's about tangible actions that prioritise human dignity and sensitivity.
Moving Beyond Trends
Inclusivity runs the risk of becoming a buzzword, both in the world of investment and in organisations.
For example, forward-thinking investors are increasingly recognising the power of inclusivity as a determinant of long-term success. This drives businesses to implement inclusive practices, but are they doing it for the right reasons?
When implementing DEI practices, be sure you are motivated by the values your organisation stands for, not by the reputation or money it might gain you.
Inclusivity must be deeply ingrained and woven into a company's DNA. Make sure you prioritise authenticity over superficiality.
Final Thoughts
Inclusivity is not a fleeting trend, but a pathway to a more equitable future.
DEI practices are good for ROI and we have the research to prove it. But when embarking down the path of inclusivity, make sure you are upholding your core values and doing things for the right reasons.
As the business landscape continues to evolve, those that prioritise and champion inclusivity will emerge as true leaders, driving not only profitability but also positive societal change.