We may be witnessing the rise and fall of the CDO and DEI leader
Organisations continue to communicate their ambitions of improving diversity, equity, and inclusion (DEI), but how willing are they behind closed doors? Does the CDO enjoy the support necessary to make impactful changes to the workplace – or is the entire role primarily for show?
The Wall Street Journal published an article recently called The Rise and Fall of the Chief Diversity Officer, which delves into the challenges of senior DEI leaders as organisations cut back on their commitment to diversity, equity, and inclusion. According to the article, there was a significant rise in the number of CDOs around 2020, and the idea was that they would lead the company to more diverse and inclusive pastures.
However, this turned out to be easier said than done. Despite the company’s proclaimed commitment to DEI, CDOs struggled to garner support for their proposals and initiatives. By 2022, many had quit or transitioned into different roles – and those who remained still had to fight for budget and commitment.
So, are we witnessing the rise and fall of the CDO?
First, we need to question how many organisations actually hired a dedicated CDO or DEI leader. Most didn’t, according to a Gallup study on HR leaders in the Fortune 500. A mere 39% of the organisations reported having a dedicated DEI executive. In contrast, nearly half of them said that DEI was one of the Chief HR Officer’s (CHRO) many areas of responsibility.
This alters the narrative that CDOs are disappearing, as it suggests that many of them didn’t exist in the first place.
In addition to this, there’s also the public perception that DEI budgets are gone. Gallup’s study, on the other hand, suggests the opposite. In a March 2023 survey, 59% of CHROs planned to raise their DEI budgets within the following 12 months, which remains a considerable number despite falling from 84% of CHROs the year before.
It’s still more than half.
So, while the spending might be slowing down, companies are still intent on investing in DEI initiatives.
Making a business case for DEI
Another explanation for the decline and influence of CDOs and DEI officers could be that the sudden focus on DEI was a reaction to ethical and moral challenges in the workplace. Instead of being a business case, it became a social one – and that made it much harder to justify and show returns on investment.
But can that be reversed? Can you make a business case for DEI without losing the moral and ethical elements?
We asked senior DEI executives from some of the world’s largest companies how they made a business case for their initiatives, and the reactions were surprisingly strong. The mere question affronted several, and one even went so far as to say they’d resign if their organisation asked them to justify DEI investments. But not everyone did.
Most agreed on the importance of substantiating investments in a business, especially when it comes to talent acquisition, training, and reward programs.
The ethical and moral side is, of course, important. Yet businesses must also be about business, and justifying why DEI investments are worthwhile from a business standpoint won’t lessen the value of the moral and ethical aspects. If anything, it’ll add to it. For example, they can improve talent retention, collaboration, employee engagement, and productivity.
According to Gallup’s research, specific employee experiences impact engagement, retention, well-being, and how colleagues perceive each other and their employer. Those who felt included at work were far more engaging, and those who felt they were treated with respect were five times more engaged than those who didn’t.
And demonstrating these effects can help CDOs secure better budgets and more support from their peers – and, as a result, everyone wins.
CDOs and DEI leaders:
According to Gallup’s CHRO Roundtable research, DEI leaders are generally satisfied with their jobs and believe their work is important. However, there is room for improvement regarding organisational progress on DEI.
Only 46% of DEI leaders strongly agree that their organisation has made changes in the past year that have improved workplace DEI, compared to 97% of CHROs and 37% of the US employee population.
In other words, DEI leaders seem frustrated by their inability to focus on the strategic aspects of their role.
A survey of nine HR functions found that DEI leaders spend less time on strategic issues than any other HR function, with only 44% of their time devoted to this area. DEI leaders themselves believe that they should be spending 68% of their time on strategic issues.
Despite their strong commitment to their work, DEI leaders are the least engaged HR function, according to a recent Gallup CHRO Roundtable survey. DEI leaders scored in the 42nd percentile of Gallup’s engagement benchmark database, compared to the 68th percentile for Learning and Development and the 67th percentile for Talent Management.
Improving CDO and DEI leader engagement
CDOs and DEI leaders need to be engaged at work. It’s essential for driving effective DEI initiatives and achieving desired organisational change. Our research with CHRO Roundtable members identified three key factors contributing to the current lack of engagement:
1. A lack of resources, materials, and equipment
2. Feeling unheard and undervalued
3. A lack of recognition for their work
The first factor shows that CDOs and DEI leaders need adequate resources, both tangible (e.g., budgets and materials) and intangible (e.g., access to information and expertise), to do their jobs effectively. To achieve this, they need the support of their peers.
The second factor speaks to a need to feel heard, valued, and empowered by HR and company leadership. This means that their ideas and recommendations should be given serious consideration and support, and one way to do that is to share DEI progress and successes with the organisation.
The third and final factor is that DEI leaders need to be recognised for their efforts, even when progress toward DEI goals is incremental. Organisations can do this by celebrating small wins and milestones, such as the implementation of new DEI initiatives or the hiring of more diverse candidates.
In the end, engaged leaders are effective leaders – and many CDOs and DEI leaders aren’t engaged at work. The real fall of DEI leaders has been their falling engagement and not an inflated notion that everyone had a DEI leader and then got rid of them.
Further, the perception that most companies are reducing their spending on DEI initiatives appears untrue. DEI leaders believe that their work remains vitally important. Still, organisations need to engage and help them demonstrate both the moral and business case if they’re serious about improving the diversity, equity, and inclusion of their workplace.