Investing money into Diversity, Equity, and Inclusion (DEI) efforts cannot on its own transform the workplace. Corporate America spends more than ever before – $8 billion a year – on DEI training but fails to grasp why underrepresented employees increasingly resign in droves. As the world continues to grapple with the inequities exacerbated by the COVID-19 pandemic, companies are expected to critically approach DEI efforts with actions that go beyond transactional investments or toothless commitments.
Following the murder of George Floyd and nationwide protests in the summer of 2020, corporations promised to actively confront and end systemic racism. To date, America’s 50 biggest public companies and their foundations have collectively committed more than $49.5B to address racial inequity. The scale of these commitments means companies will have to innovate and go far beyond what they’ve done in the past in tracking and publishing their impact.
Most of these companies have focused on external initiatives while investing less internally; this is where the gap lies. Internal commitments require increasing the number of underrepresented employees, specifically Black and Latinx people, and women. Amazon, for example, committed to doubling its number of Black leaders in 2021, increasing the group’s representation to about eight percent of senior directors. Other companies, such as Goldman Sachs, have started reporting detailed demographic data of their workforce. Few companies have gone beyond this scope.
America’s businesses cannot stop at external engagement and minimal internal DEI effort, if they seek to transform into high-functioning, high-impact DEI practitioners. With the current employment landscape in the U.S., execution will be particularly challenging.
In 2021, a record 47.8 million Americans quit their jobs in what has been characterized as the “Great Resignation.” According to a Microsoft study in March 2021, 41 percent of the global workforce was likely to consider leaving their employer within the next year, with 46 percent planning to make a significant career pivot. This mass exodus has been attributed to the combination of return-to-office mandates, delayed travel plans, and a shift in how employees are valuing work-life balance.
The challenge business leaders face during the Great Resignation is resisting the urge to hire impulsively amid a talent shortage. Company leaders must not ditch diversity workforce goals in the haste to fill vacancies. According to a 2020 Glassdoor study, more than 76 percent of job seekers and employees report that a diverse workforce is a principal factor when evaluating employment opportunities. The potential stagnation of DEI progress during the Great Resignation could lead to future retention issues.
Moreover, many companies base their diversity goals only on increasing racial and gender representation – entirely sidestepping other underrepresented groups, such as people with disabilities or the LGBTQIA+ community. Achieving transformational change means considering all factors of inclusion and diversity, as well as providing support and professional advancement opportunities for underrepresented employees.
Unless DEI actions are intentionally published externally, outside stakeholders (e.g., community members, customers, and other consumers) have limited insight into their progress. To be successful, internal DEI commitments require the extra step of transparent tracking, metrics, and reporting.
Luckily, some companies have stepped up to the plate and are notable examples of positive change. This year, Sephora created the Sephora Diversity & Inclusion Heart Journey to address bias across all areas of the firm, including marketing, merchandising, hiring, training, operations, and the in-store experience. Eleven internal task forces and a DEI action plan, based on a large-scale racial bias study the firm commissioned, are driving the initiative. The company pledged to feature content from nonprofit partners, such as National CARES Mentoring Movement, Act to Change, and National Black Justice Coalition and will communicate its initiative’s progress on a bi-annual basis via a dedicated DEI section on its website. Additionally, the company is asserting itself as an industry leader by making learnings transparent to other U.S. retailers who want to enact systemic change in their own organizations. These collective actions signal Sephora’s transformational approach to DEI progress.
The American public has not let up in its vocal assessment of corporate DEI efforts – are they performative one-offs or transformational long-term actions?
Ichor is well-equipped to help a company take their DEI strategy from transactional to transformational, leading to better returns for your business and critical buy-in from your community and employees. Our newly created DEI Assessment looks at four key factors:
DEI Strategy – assesses the extent to which a company references formal DEI strategies and policies, publishes associated metrics, and designates individuals to be specifically responsible for executing DEI initiatives.
Leadership – considers how engaged and directly involved a firm’s leadership team is in promoting DEI internally, as well as how accountable they are for progress in meeting DEI strategy targets.
HR Processes – captures the extent to which HR policies, such as recruitment and career progression programs for underrepresented groups, are in place and the existence of DEI-related training for all staff.
Diversity Networks – looks at the level of disclosure and public activity related to networks for underrepresented groups. This includes Employee Resource Groups as well as partnerships and events/programming with community organizations.
To learn more about Ichor’s work to advance equity and accelerate enterprise, visit our Transformation offerings page.