The Business Case for Diversity and Inclusion
For truly modern companies, long-term success means looking beyond news cycles.
During a summer of protest and social-justice awakening, plenty of brands have made fleeting headlines and won short-term gains by declaring allyship and loyalty to movements that work to reduce racial inequality. But what happens to companies that actually commit to change?
The answer, overwhelmingly, is that they succeed. While supporting social justice movements is and should be a moral imperative, it’s also proven to be good business to back up press releases with action, especially as it relates to creating a representative workforce. The data speaks for itself.
Dividends in Representation
“Companies in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation,” noted a McKinsey report on diversity. But the good news didn’t stop with gender diversity in leadership. “Companies in the top-quartile for ethnic/cultural diversity on executive teams were 33% more likely to have industry-leading profitability.”
The capacity to see a product and its place in the market is enhanced by the value of different perspectives, different backgrounds, and different experiences. This has always been true. However, as more consumers become aware of structural inequity (and they are), the difference between a company that can win a moment and the company that can gain a permanent foothold will matter more. “Diverse organizations outperform non-diverse companies in virtually every metric used, and the changing face of society and our population will continue to be — as it's always been — a source of strength and dynamism,” says Mike Bodson, the CEO of the consulting firm DTCC.
But it’s not just meaningful to the success of a company to be diverse. To have a homogeneous workforce and braintrust has now proven to be a liability. “Companies in the bottom quartile for both gender and ethnic/cultural diversity were 29% less likely to achieve above-average profitability than were all other companies in our data set,” McKinsey adds. “In short, not only were they not leading, they were lagging.”
More Than Talk
In spite of its mission, the digital-first ecosystem has had trouble living up to its democratic promises. Exposés, employee walk-outs, and even racial discrimination lawsuits (like the one Facebook is contending with) continue to prove that while tech is meant to be forward-thinking, it’s not always been forward-looking.
Part of the problem is an inherent lack of commitment, the papering over of issues with weak initiatives and public statements that don’t translate into long-term change. And one solution is to actually make a roadmap to adjust a company’s values. “We need to commit to a cause and then after that, we need to map out our strategy,” the DTC and eCommerce consultant Kunle Campbell said in a meaningful conversation with Kristen LaFrance about diversity in the DTC community. Campbell cited outreach, mentorship, and investment as a few possible avenues in.
Tangibility makes all the difference. Indeed, when TikTok released a statement in the wake of this summer’s protests, it also included four actionable, long-term steps that the company would take to create a more equitable platform. They included investment in tech to prohibit problematic content, the creation of diversity task forces and councils, community outreach programs, all of which were proposed to not just to make the platform safer and more welcoming, but also more attractive to audiences of color. Increasingly, this is what consumers and industry observers are focused on.
Tailored for Tech
While it’s certainly true that all industries have problems with diversity, equity, and inclusion, what makes it exceptionally jarring in the digital-first landscape is that these spaces are by definition meant to to be more democratic and inclusive. Anyone with internet can join in, can participate, and can theoretically avoid the inherent biases that come with physical communities.
Since the work and the culture come with built-in features—the joys of being nimble and having less hierarchy can sometimes cause problems too—there are specific solutions out there for the world of tech, start-ups, and DTCs. From unconscious bias training for interviewers to internal audits to payroll transparency, there are several strategies and guides that can help turn a verbal pledge into a lasting change.
The reasons to engage in this work are both timeless and extremely contemporary. In a recent national study (of many recent national studies), the firm Opinium found that almost three-quarters (71%) of U.S. adults said brands have a role in responding to the issues of racial injustice. That figure was significantly higher for Gen Z and Millennial consumers.
As we’re seeing this summer, there are plenty of ways to show commitment to social justice both symbolically and rhetorically. But to truly future-proof a business means building smarter and more proactively. It’s increasingly becoming easier to tell when a company really means it.