How to make DEI work for your bottom line, not just your employees

Having strong diversity, equity, and inclusion (DEI) training is a business asset. Not having it is a business risk. So, what should you keep in mind when striving for a more inclusive and more profitable workplace?

DEI initiatives are growing in popularity, albeit slowly. As noted by McKinsey, however, this sense of stalled progression is misleading as there is considerable polarity in the uptake of DEI initiatives.

Most companies have made little to no progress, while others are trending in the wrong direction, said McKinsey. On the other hand, those making gains in diversity are realising strong business and cultural benefits.

In a recent episode of The HR Leader, we sat down with Peter Mousaferiadis, chief executive and founder of Cultural Infusion, to discuss the benefits of DEI initiatives, how to implement meaningful change, and what the future of DEI might look like.

1. The benefits of DEI

Positive DEI is a business asset. According to Mr Mousaferiadis, companies with greater diversity are “six times more innovative, [and] six times more adaptive and responsive to change”. The return on investment for DEI initiatives, said Mr Mousaferiadis, makes the investments well worth it.

Indeed, McKinsey reported on the “robust” business case for DEI, citing a 25 per cent greater likelihood of profitability among companies in the top quartile for gender diversity on executive teams. The results are equally compelling for ethnic and cultural diversity, and the return on investment for initiatives targeting DEI is growing.

DEI is about knowing how we can engage more deeply with our workforce, and ultimately, said Mr Mousaferiadis, it’s about focusing on our shared humanity.

“We have so much more in common than we have different, and when we understand each other more, we can start to foster intercultural understanding,” said Mr Mousaferiadis.

“When we can understand why people behave the way they do, why they do what they do, why they think the way they think, then we can start to create bridges of understanding.”

2. Measuring DEI

DEI in business is a relatively new phenomenon, said Mr Mousaferiadis. The best performers on DEI are those that recognise it as a learning journey: “They are starting from a basis of: ‘what more can we do?’”

A major part of the learning journey, said Mr Mousaferiadis, is finding a way to quantify diversity so that performance can be benchmarked.

“Diversity means one thing,” he outlined. “It means difference. And if it means difference, we can measure that difference.”

Statistically, there are three key components to a metric analysis of diversity in a business: variety (meaning the absence of homogeneity), balance (meaning the distribution of diversity across a business), and disparity (meaning the degree of difference). Once the metrics are understood, algorithms can be developed to craft a strategy for inclusion.

Central to understanding diversity, and therefore approaching it with suitable business policy, is avoiding the temptation to “otherise”. According to Mr Mousaferiadis, “we otherise because we think people fit into four or five groups, when, in actual fact, identity is so much more complicated than that.”

3. Involving your workforce

As businesses embark on their diversity journeys, Mr Mousaferiadis said, it’s crucial that they are guided by open lines of communication with their employees.

“Those organisations that are doing best, I think, are those who are in regular communication with their workforce, but they’re also trying to create an environment of psychological safety and cultural safety,” he said.

“I think that’s really important because when you do that, then we can start to foster environments where individuals can start to bring their full selves to [work].”

Perhaps more persuasive than the case for DEI is understanding the case against inaction. As noted by Mr Mousaferiadis: “I would say to all those businesses out there that aren’t doing this work of DEI training, there’s a huge risk when you’re not doing the work.”

“You need to embark on this journey because it’s not about just creating a safe environment; it’s also about looking at how this can lead to improvements in the bottom line.”