During a discussion with a colleague on Diversity, Equity, and Inclusion imperatives at organizations, he brought up an interesting point. He asked me to make a business case for adopting DEI initiatives. Obviously, I mentioned that it helps bottom lines and improves overall team productivity. 

However, as the discussion progressed and we couldn’t find enough ways to substantiate that. As watercooler talks go, that was the end of that discussion. 

Problems with DEI Hiring

Reflecting on the conversation, I came up with a few pertinent questions on the matter.

• If I have a non-DEI candidate with a 98% test score and a DEI candidate with an 89% on the same test, wouldn’t hiring the DEI candidate compromise my organizational potential?
• Building on that previous question how would you ever convince an organization to do that if the 98% candidate is willing to join the organization?
• If you did hire the 89% candidate, how would you explain it to the other colleagues who would feel their achievements are undermined; lost to someone who, solely by chance, was born differently?
• How would you create a conducive work environment in a situation where a candidate will always have the tag “hired by DEI” hanging over their heads?

Harnessing DEI Hiring Potential

An interesting HBR article on something the authors called the “learning-and-effectiveness paradigm” dispelled my myths about simplistic financial performance improvements. Basically, just because you hired for diversity, you can’t expect sudden growth in your top or bottom lines. You need to be able to harness that diversity hiring potential. 

Saying we need to harness diversity potential sounds like a conversation-ending corporate jargon that would get nods from everyone in the room. However, when you follow it up with what that harnessing looks like, you get a lot of stumped executives trying to justify their DEI programs. 

More often than not, most companies have diversity programs with the goal of satisfying investors or social stakeholders. After all, in a world that’s striving to be more inclusive, those organizations that seem to ally with the current will always be looked upon favorably. 

So, how do you make a business case for an organization that needs to justify its costs in relation to its revenues?

Employee Engagement and the Bottom Line

I have always stated that no matter how much organizations might proclaim to be employee champions, the end goal is always to maximize both top and bottom lines. Every other activity made to engage the employees, enrich the work environment, or contribute to society falls distantly secondary to this idea. 

Just look at Google – the pop culture epitome of employee engagement and perks. Even before times had become tough, Google slashed perks and engagement activities because it needed to redirect those resources to improve the top and bottom lines. 

In the long run, companies that are not trying enough will end up looking hypocritical when they publicize their DEI programs. 

Now, this begs the question, for companies that are not being hypocritical, what would the business case be to justify DEI hiring, given the constraints we’ve discussed 

Building a Business Case for DEI Hiring

Building Trust

The first pillar in identifying the business case, somewhat paradoxically, is trust. Trust has three components: Authenticity, logic, and empathy. Each of these components helps in accentuating organizational trust that the employees have reposed. 

Employees will be aligned with the mission statement better if they believe that the organization encourages everyone to bring their authentic self to work. This is further enhanced by employee perception of how aligned the organization’s internal mechanisms and external portrayal are. 

Employees will also be more accepting of organizational programs if they believe that it is capable of sound judgment and has considered all facets before arriving at a decision. 

Lastly, organizations committed to diversity hiring build trust in their employees that they are willing to stand for wrongs, whether historical or contemporary. Psychologically, this creates a perception that the commitment would extend to workplace grievances and the environment as well. 

Financial Benefits of DEI Hiring

The second pilar, speaking fiscally, is understanding how to tailor products and services to align better with the target groups. Realistically, no organization would want to settle with a single target group if they could expand or build new ones. Just look at De Beers, an exceptional case study in marketing. 

Hiring the underprivileged, marginalized, or the frequently-overlooked provides a window into the thoughts, experiences, preferences, and choices taken right from the horse’s mouth. This helps in tailoring services to an entire group of people with broadly similar identification. 

Streamlining Market Offerings Through D&I Hiring

Nowhere else and at no other time in history have groups of people been as homogenous as the overlooked and marginalized groups. Consider women: They make up roughly 45% of the world’s population, yet constitute less than 20% at the middle management level. This comes in the aftermath of statistics that more women complete college degrees than men. 

Catering to the female and female-identifying population requires demographic and ethnographic adjustments to broad offerings, which is more efficient than creating niches for each small target segment. When groups have shared pain and peeves, the baseline for alleviating those problems remains more or less at sea level. 

Executives might run around tooting that their DEI programs have the right intentions and put in the work to meet quotas, but this is where harnessing the D&I and DEI potential plays out. It is about corporations playing an active role in understanding what shapes, affects, triggers, satisfies, anger, and pleases each of those marginalized communities using insights derived from people within those communities

Innovation and Building Employer Confidence

We’ve established earlier that employee engagement activities come secondary to the bottom line. This means, broadening the market by investing in resources drawn from those very markets is fiscally prudent. David Thomas’ and Robin Ely’s research had conclusively proven that teams that leverage these differences outperform homogenous groups significantly.

The third pillar in establishing a business case for hiring for diversity and inclusion is leveraging employee innovation and building employee loyalty in their role. While there are many ways to stimulate employee innovation, nothing works as well as proof by actions. As it is, social trust in corporates is at a historical low. Since society largely translates to the workforce, companies are hard-pressed to retain internal and external goodwill.

If employees see that companies are willing to let all voices heard, sometimes at the cost of group cohesion, they would be willing to react to workplace stimuli better to spur innovation and productivity at the workplace. 

Effectively, productive and good diversity and inclusion programs have rippling effects that stretch beyond making workplaces comfortable for those individuals hired for diversity. 

Pushing Diversity Hiring as a Narrative

If the business case for diversity has such strong legs, the question lingers on why we need to look for a business case in the first instance.

Research published back in 1995 has shown that diversity and inclusion hiring works only when organizations foster a learning environment where individual groups can leverage their experiences to reimagine and reconceive tasks, processes, and business tools. 

The problem is, today, in a rush to appear inclusive, quite a few organizations are pushing unrealistically simplified versions of this complex honeycomb to show that they are doing something. Unfortunately, just hiring people and expecting changes in the workplace is not only unsubstantiated by academic literature, but can quite often have unintended consequences. 

Employees hired for DEI may lose morale due to being socially ostracised or their experience not being leveraged. Meanwhile, the non-DEI employees would grow resentful or show animosity towards those hired for DEI because they perceive the company is compromising talent for quotas.

Why Diversity Hiring isn’t So Widely Accepted

A study of Investment Banks’ performance on DEI metrics showed that while their hiring was on point, it didn’t translate to any benefits. In fact, employee attrition in the one-year period immediately succeeding the hiring spiked. Further analysis showed that this was because choice assignments still went to non-DEI candidates while the others were left to salvage from the scrap left behind.

Despite the voluminous evidence, the fact people of different castes, races, colours, and creeds are still critically underrepresented across industries throughout countries is a testament that the executive leadership doesn’t find the business case compelling. 

Ironically, we can’t blame them either. When you peddle a simplistic form of an otherwise-complicated endeavour, the lack of results makes the whole affair seem like a platitude. 

What happens when you have one platitude heard way too many times to be healthy? You have companies that lose track of the original intentions behind the programs. Now, resources would be directed to convincing the lower levels of DEI in a vain attempt to convince themselves. 

Alternatively, these very companies would continue the activities, but it would end up being perfunctory because they want to appear like they care. 

True diversity and inclusion harnessing goes beyond reporting in annual disclosures or in flashy impact segments on websites. It focuses on ensuring inclusion that looks past the initial diversity barriers. Now that statement looks as close to the tautology as the article has been criticizing initially.

However, when you move past metrics that track headcount and start measuring those that track the results such as innovation, change in processes, stimulations, productivity, and acceptance at the workplace, you have achieved the purpose behind creating the DEI program in the first place.

Conclusion

While companies would set clear benchmarks on what’s acceptable even under DEI hiring, they should realize that rewards are not instantaneous. However, if you have middle and lower management levels who aren’t made aware of the purpose of such hiring, the downward communication will further accentuate that ignorance. 

Eventually, just as the grapevine works, the invisible truth distorts until half-truths and rumors fan job insecurities born out of ignorance. Communication and fostering learning environments are critical to reap the promised rewards.