Is your company focused on diversity, equity and inclusion? All businesses, including small businesses, need a strong DEI strategy to thrive in the current business environment. Here’s what business owners need to know.
Diverse Companies Perform Better
Although business owners might genuinely care about social and environmental issues, they also need to focus on their bottom line as a matter of survival. When it comes to diversity, these two goals are not in conflict. Improved diversity can boost your bottom line.
This was the conclusion of research conducted by McKinsey & Company. The 2019 analysis compared companies in the top quartile for executive team gender diversity to companies in the bottom quartile for gender diversity. The companies with more gender diverse executive teams were 25% more likely to have better than average profitability. A comparison based on ethnic diversity yielded similar but even more significant results – companies in the top quartile for ethnically diverse executive teams were 36% more likely to show above average profitability compared to the lower quartile.
Businesses Need to Attract Diverse Talent
Employers always have to compete for top talent. As businesses struggle to attract enough workers to reopen after the pandemic, the competition is even fiercer. As Fortune says, workers have the “upper hand” right now.
Focusing on diversity, equity and inclusion can help employers win the talent war in two ways. First, they’re not accidently excluding the talent they desperately need with inadvertently exclusive employment practices. Second, they’re making themselves more attractive to many workers. According to Glassdoor, 76% of employees and job seekers say that they consider a diverse workforce to be an important factor when evaluating companies and job offers, while 31% go so far as to say they would not apply to work at a company that did not have a diverse workforce.
Consumers Demand Social Responsibility
Diversity, equity and inclusion efforts also matter to consumers. One survey from Markstein found that 70% of consumers want to know what brands are doing to support social and environmental issues. It’s not enough to say that you care about social issues, either – you have to show consumers what you’re doing to make a difference. Creating a diversity, equity and inclusion strategy is a key part of this.
Legal Compliance Is a Must
Businesses should also consider the potential liability issues that could come from not having a strong diversity, equity and inclusion strategy.
In addition to compliance with EEOC laws, businesses must consider additional state-level requirements. For example, California has recently passed laws that create requirements for female directors and directors from underrepresented communities on boards in the state.
Employers need to create a work environment that is safe and healthy for all workers, regardless of their race, religion, ethnicity or gender. If they fail to do so, they could be accused of creating a hostile work environment that allows harassment. Likewise, employers that do not promote diversity in their hiring, mentorship and promotion practices could be accused of discrimination. The result could be a costly lawsuit, not to mention reputational damage.
Contact Tangram to learn more about our DEI strategy and how we are taking steps forward to set up a rich culture, diverse workforce, and sustainable business.