4 Arguments for J.E.D.I. Action (justice, equity, diversity, inclusion)

One of the biggest issues behind the lack of progress against accelerated corporate commitments to #diversity #equity and #inclusion initiatives made in the past 2 years has been the sustained will to truly do the necessary work to truly deliver needed change. The simple fact is that most companies are only invested in DEI as some sort of offshoot of their corporate social responsibility efforts versus a needed change initiative that will deliver the capabilities to drive performance. As the previous burning platforms from 2020 transform into ash and decay and day to day business pressures pull focus away from less acute issues - executives have excused themselves for taking their eye off the ball.

Unfortunately, if external issues are the change drivers, then there will never be enough inertia to commit to long-term long-lasting transformation. Executives need more reasons to keep their skin in this game. Initially, they wanted a business rationale for DEI - McKinsey, Deloitte, BlackRock, Harvard Business Review, and more commissioned the requisite analyses and proved the business case. Why didn't data points like the fact that companies in the top quartile for gender diversity are delivering significantly higher returns than laggards move the needle?

Source: McKinsey & Co Diversity Wins White Paper May 2020

Why are smart business people ignoring such relevant facts? Is it ignorance? The beliefs and biases of the leaders in question? Or even pure negligence? Or it could be a lack of compelling arguments for change that go beyond a business case and paint the complete picture of the necessity for J.E.D.I. action - eradicating injustices, eliminating inequities, expanding diversity, and enhancing inclusion.

After mining the best research on the topic, it is clear there are 4 primary arguments that need to be made in order for executives to truly invest in DEI to the degree that is required: moral, peer-pressure, innovation, and risk mitigation.

The Moral Argument (aka - changing because it's the right thing to do): This is what many people counted on during and after the summer of social justice protests in 2020. Companies began backing social movements and making major external financial commitments but found it easier to write checks, hire DEI leads, and conduct unconscious bias training than do the actual work of cleaning up their principles, processes, priorities, and practices. Still, the moral argument presents several compelling reasons for change:

  • Workforce composition and participation is at its most diverse in history.

  • Yet senior management positions are overwhelmingly held by white cisgender males.

  • Employees deserve to see representation at all levels of the organization.

  • This creates the environment of psychological safety and support needed to fully engage these different types of employees.

Source: McKinsey & Co Women in the Workplace Report 2021

The Peer Pressure Argument (aka - changing because everyone else is doing it): The companies that have proven the business case for diversity, equity, and inclusion are leapfrogging those who have sat on the fence. Investor pressure has therefore come into play - forcing the hand of those companies for whom morality is not a business imperative. Organizations like Just Capital and PolicyLink are now holding companies accountable for progress against these initiatives and capital providers, institutional investors, and regulators are starting to pay attention. Because competition drives business decisions, the peer-pressure argument is a powerful card to play when convincing executives to shift priorities due to the potential consequences of inaction:

  • Competitors are more attractive to a more diverse group of talents.

  • Companies that don’t follow the trend will fall behind in terms of public perception and reputation.

  • But companies found guilty of merely “performative” DEI are the most negatively affected.

  • Starting slow and building momentum (without big public statements) is the way to enter this space a la Good to Great versus merely following.

Source: McKinsey & Co Diversity Wins White Paper May 2020

The Innovation Argument (aka - changing because it will enhance our competitiveness): This is the competitive advantage front running companies have already embraced and what everyone else now needs to address. And don't mistake innovation for technology (although many tech companies are making progress in this space such as Intel, SalesForce, and Alphabet). Now is the time to embrace virtual and hybrid working as the opportunities they truly are to impact employee make-up, well-being, engagement, and productivity. Every day that a company stubbornly holds on to past management paradigms is a day that company is losing the ability to manifest future performance because:

  • Diverse organizations have been proven to be more successful than non-diverse ones.

  • Capitalizing on diversity requires efforts to enhance gender and ethnic representation.

  • Teams able to maximize diversity of collective strengths are far more profitable and sustainable.

  • Diverse teams increase understanding of a variety of markets and psychographics leading to potential competitive advantages

Source: McKinsey & Co Diversity Wins White Paper May 2020

The Risk-Mitigation Argument (aka changing because there is significant reputational and financial risk to not doing so)