article by Ali Hanan, founder and CEO, Creative Equals
There’s ample research to prove diversity, equality and inclusiveness (DE&I) leads organisations to become more profitable, and therefore better placed to weather a financial storm. Analysis by McKinsey has shown the most diverse companies are now more likely to outperform less diverse peers on profitability.
McKinsey found companies with more than 30% women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women executives, or none at all. With regards to ethnic and cultural diversity, McKinsey’s business-case findings are equally compelling.
And yet, when budgets need to be cut, which they are now being at pace – new research by Personia found more than half (55%) of HR managers have either had their budgets slashed already, or expect them to be cut in the coming months – DE&I is usually the first on the chopping block.
Why are DE&I budgets often the first to be slashed?
In reality, there has long been a gap in intention, commitment and action on DE&I initiatives. There are many leaders that fail to take DE&I seriously and are, despite the evidence to prove otherwise, still cynical about the benefits. A study revealed that 95% of CEOs believe diversity, equity and inclusion should be top priorities, for business and moral reasons, but only 44% of the companies surveyed had actually developed a formal, actionable strategy. It is the ongoing disconnect within the organisation that makes DE&I vulnerable to budget cuts.
Plus, it is often the case that, in times of crisis, organisations believe there are more pressing issues to address. Whilst there is no dispute there are other issues of importance, cutting DE&I budgets would be incessant and doing so will have lasting consequences.
If DE&I falls by the wayside, what’s the impact?
The ramifications could be significant for business leaders who do not prioritise DE&I during an economic crisis.
For example; closed cultures may develop within workplaces and, as a result, employees may feel their voice has been silenced; without continued coaching and commitment on concepts such as unconscious bias, meaningful progress on matters of diversity and inclusion is unlikely; policies that genuinely consider the needs of the people those policies are designed to help, are likely to flounder; multiple perspectives will fail to make it to the table and innovation and creativity will tank.
One of the consequences likely to cut the deepest is that organisations will find it harder to attract and retain talent, and inclusive recruitment and talent management may stop altogether. To cut from a DE&I budget that has helped to attract and retain talent organisations have spent the last two years fighting to bring in, would be a false economy indeed.
Let’s not forget, crisis or no crisis, organisations are still under pressure to better their diversity and inclusion rates; to continue working on closing the gender pay gap that increased after Covid, to move forward on – and for many companies, simply kick-start – their campaign to close the ethnicity pay gap, and to ensure disabled employees and the age-diverse in the workforce are a key focus.
It would be short sighted to pull initiatives dedicated to creating a workplace where everyone feels safe, valued and heard, more so in a time of crisis. Initiatives that help achieve this need momentum, continued commitment and time to succeed. Plus, employees need to be reassured that this is still a priority, especially as many are now exposed and vulnerable to the emotional and financial impact of the cost of living crisis.
Purpose-led and people-centric organisations will more likely weather the storm
Inclusion-first thinking is incredibly powerful and there are few people who would disagree with the notion that organisations that prioritise DE&I will be more successful in navigating difficult times and the economic downturn. There’s no two ways about it, DE&I should be more of a priority now, not less.