- Falling short on DEI commitments has consequences. Research from DDI finds that 49% of senior-level leaders who are minority women, 46% of minority men and 40% of non-minority women plan to leave their company to advance their careers.
- A misunderstanding of DEI success. Research indicates many senior leaders and executives overestimate how well they are doing with DEI at their organization.
- How DEI efforts are falling short. A few reasons include organizations not addressing root causes of inequities, mismanaging the chief diversity officer role, neglecting people managers and focusing too much on the numbers.
- Good for business. DDI research found a strong correlation between diversity and financial performance, with organizations that have above-average diversity 2.4 times more likely to financially outperform their peers.
Nearly every Fortune 100 company is on record as pledging a commitment to diversity, equity and inclusion (DEI) initiatives. Plus, an estimated 83% of companies are working to implement DEI programs, according to WorldatWork’s “Trends in DEI Practices and Policies” survey from 2021.
Despite those well-meaning efforts, however, recent data from a report by DDI, a global leadership consulting firm, found that DEI programs — especially when it comes to leadership roles — are not hitting the mark. Among other results, the survey found:
- 46% of senior-level leaders who are minority men and 40% of non-minority women plan to leave their company to advance their careers.
- 49% of senior-level leaders who are minority women plan to leave their company to advance in their careers.
- Women leaders are 1.5 times more likely than men to leave their companies to advance.
- There has been an 18% decrease in the number of leaders who endorse their company’s overall DEI efforts, compared to DDI’s 2020 survey.
A report from WTW uncovered that for employees who say DEI is important and rank their employer’s effort as poor, 69% are likely leave for only a 5% pay raise — as opposed to just 36% who rank employer efforts as “very good.”
Hitting a Glass Ceiling
Stephanie Neal, director of DDI's Center for Analytics and Behavioral Research, said that across the board, women and minority leaders are significantly more likely to feel they need to change companies to advance their careers.
“When we looked at the factors underlying this intention to leave, we found that concerns are less related to differences in leadership experiences and more related to the environment created by company [executives],” she said.
DDI data shows 64% of mid- and senior-level women and minority leaders who did not trust their senior leaders said they felt they had to leave to advance.
The most critical thing is for company executives to truly understand that DEI efforts will enable them to build a stronger organization, Neal explained. However, DDI found that many C-suite leaders overestimate how well they are doing with DEI.
“With [C-suite] support, leadership needs to move beyond viewing DEI as an isolated initiative and focus on building a stronger leadership culture with inclusion embedded in it,” she said, adding that such a move requires leaders to strengthen their interpersonal skills through training, assessment and practicing effective leadership behaviors including using empathy regularly.
Furthermore, Neal said, coaching for growth is critical “to ensure people across the organization have the support they need to take on new leadership roles.”
How to Fix the DEI Shortcomings
A survey by APQC, which polled more than 300 DEI leaders about their motivations, practices and outcomes related to workforce DEI, shed some light on where organizations could be going wrong.
The survey found that fewer than half of the DEI leaders agreed that statements reflective of a diverse, equitable and inclusive work experience describe their organization.
“Treating DEI as an initiative is critical,” said Elissa Tucker, research lead for human capital management at APQC. “Not understanding that DEI is a journey and that undoing long-standing ways of thinking and behaving takes time.”
A couple of reasons why DEI efforts are falling short, Tucker noted, were because organizations were:
- not addressing root causes of inequities,
- mismanaging the chief diversity officer role,
- neglecting people managers and
- focusing too much on the numbers.
“We found 57 organizations in our survey whose DEI leaders reported significantly better outcomes related to workforce DEI,” Tucker said. “When we compared this group of organizations to the other organizations that participated in our survey, we found significant differences in DEI approaches.”
One such “difference maker” is ensuring that DEI is the responsibility of everyone in the organization. Chief diversity officers have authority and provide direction and resources, Tucker said, but for noticeable change to be made, it is key that everyone in an organization is prepared, participating, accountable and incentivized to do their part when it comes to DEI.
Rachael McCann Jones, global DEI solutions leader at WTW, said the success of DEI initiatives hinges on a governance structure, leadership accountability, related investment and agility to adjust as necessary.
She added that when this is done well, which WTW has seen in particular with women, there is an “intentionality” of programs required. This comes in the form not only of the strategic review of career frameworks and enablement, but the tactical levers of leadership training, skilling and developmental opportunities that are paired with mentorship and sponsorship.
“Effectively, a business plan and roadmap are required, with accountability at each step,” McCann Jones said. “This provides employees greater transparency that the words of commitment to greater representation at leadership are backed by action. And that improves trust and willingness to engage.”
The Financial Incentive of DEI
Amid an uncertain economic environment where many organizations are looking to cut costs, many are decreasing their investment in DEI programs, Neal said. This approach, however, is somewhat counterintuitive, as studies have indicated that organizations that rate well in DEI metrics tend to have better performance and higher profits.
DDI’s data echoes other studies, as its research found a strong correlation between diversity and financial performance, with organizations that have above-average diversity 2.4 times more likely to financially outperform their peers.
Organizations with high-quality DEI practices also have stronger employee engagement and agility, with leaders four times more likely to understand and act on changing customer needs and perspectives.
“DEI is good for the bottom-line, for people and for society,” Neal said. “CEOs have publicly pledged to make unprecedented levels of investment in DEI. Employees, recruits, customers, community leaders — as well as investors — are watching.”
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