The power of action: examining the costs of inaction in DE&I

The cost of inaction in the workplace is like a leaky tap in a busy restaurant. Each drop of water may seem insignificant, but over time, the constant dripping accumulates into a staggering waste of a precious resource.

You’re no doubt aware that sometimes in life, not doing something is effectively the same as doing something. Inaction is sometimes an action; passivity is not without consequence. The cost of inaction in the workplace is like a leaky tap in a busy restaurant. Each drop of water may seem insignificant, but over time, the constant dripping accumulates into a staggering waste of a precious resource.

Similarly, when issues at work are ignored or decisions are deferred, the small inefficiencies and unresolved problems compound, resulting in lost opportunities, diminished productivity, and a drain on the organisation’s potential success. Just as a chef would fix a leak to save water and costs, a manager must address inaction to preserve the strength and productivity of their team and projects.

Because although inaction (probably) won’t spell doom for your organisation there are still costs, both literal and metaphorical. The severity of those costs will vary depending on an organisation’s specific size and industry.

Consider then the impact of taking intentional action:

Increased productivity

Investing in DE&I has a proven benefit of increasing overall productivity. Part of this benefit comes as a result of engagement. Employees that feel like they belong, that they are cared about, and who believe that they have genuine opportunities to grow and develop are naturally inclined to be the most engaged.

According to research by Gallup, organisations with engaged employees benefit from 10% higher customer loyalty and 23% higher profitability. On the other side of that, according to the same research, “employees who are not engaged or who are actively disengaged cost the world $8.8 trillion in lost productivity every year”.

Lower turnover

Recruitment is an expensive and disruptive process. Few and far between are the organisations that benefit from high turnover. According to research by Oxford Economics and Unum, on average it takes 28 weeks – roughly seven months – for a new employee to produce the same level of work as the person they replaced. Putting a number on that, the Society for Human Resource Management estimates the cost of replacing someone to be roughly three to four times that person’s salary.

Research from McKinsey in 2022 found that a stunning 51% of employees who had recently left their job said a lack of belonging at work was “a critical reason for leaving.” This was even more true for individuals from under-represented groups.

Improved morale and wellbeing

Lack of belonging and/or psychological safety can not only lead to disengagement, it can also serve as a catalyst for mental health challenges.

Miserable or anxious employees are going to find it incredibly difficult to deliver their best work. Productivity may again be affected because of sick days. Meanwhile, a recent article in Forbes highlighted research by Deloitte and NYU Professor of Law Kenji Yoshino, which found that when employees experience belonging in the workplace, they are better able to deal with challenges and stress. Having a positive outlook on their work environment translates to better performance.

Increased innovation and creativity

Diverse teams bring different perspectives. This is a truth backed up by research; the organisation Great Place to Work found recently that, “regardless of industry, field, or domain, organisations that seek diverse viewpoints – across ethnicity, gender, age, educational background, etc. – experience higher rates of innovation.”

This benefit manifests in a number of ways, including enhanced problem solving, increased creativity and reduced ‘groupthink,’ where sameness in thought and action leads to poor decision-making. Diverse organisations with engaged employees who feel they genuinely belong are able to thrive thanks to a culture of diverse viewpoints, constructive criticism, and informed, thought-out decisions.

Protect organisational reputation

People often make their decisions about a service or product based partly on their perception of the organisation providing that service or product.

How you treat your employees ultimately affects how customers/stakeholders view your organisation as a whole. Research from Deloitte has found that 28% of those polled said they would stop doing business with a company if they felt the company was treating their employees poorly. Additionally, some 25% of those polled said they would stop doing business with a company if it failed to invest properly in DE&I.

This kind of thinking – understanding that an organisation is not just the thing it makes/does – is also at the heart of ESG investing. Organisations that fail to behave responsibly face a serious risk of damaging their financial foundations.

The right thing to do

It’s worth pointing out that there is also a moral element to all this. DE&I initiatives are not just about avoiding costs but doing the right thing. Beyond the costs and benefits that directly affect your organisation’s bottom line there is, as we say, that question of: Why wouldn’t you do this? Every organisation, regardless of industry or purpose, is made up of people – who ultimately provide goods or services to, or for the benefit of, people. There’s no reason for any of this to exist without people. So, if people are the endpoint, if they are ultimately why any of us show up for work each day, why wouldn’t we want to treat them well? Why wouldn’t you want to be treated well?

Admittedly, that’s an argument that may not fully warm the heart of your organisation’s CFO. That’s why we at Talking Talent keep track of our successes and can state confidently that our clients have seen a savings of roughly £100 million a year in retention costs. An impressive 88% of clients who measure ROI have seen a positive return. Investing in belonging makes sense.

To do so properly may require some hard work and patience but the benefits of DE&I are long-reaching. And choosing to not do something may be an action that your organisation will eventually regret.

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