The Impact of DEI on Company Culture

Diversity, equity and inclusion have become critical themes in modern workplaces, due to the significant impacts they can have on company culture, growth and innovation. Studies continue to show that more diverse workplaces perform better, whether it’s through better decision-making, more innovation or happier employees. This is why 73% of HR professionals now view DEI as both the right thing to do and critical to the organization’s survival.

This article looks at the impact DEI can have in the workplace, the benefits to implementing DEI policies and the challenges organizations may face while doing so.

Understanding DEI in the Workplace

What does DEI mean in the workplace? Diversity refers to the backgrounds and characteristics of the individuals within a group or organization. Common characteristics include ethnicity, age, gender, disability, religion and sexual orientation.

Equity ensures that all employees have access to the same opportunities and resources, regardless of their background or characteristics. Essentially, equity aims to level the playing field. Lastly, inclusion refers to creating a work environment where all employees feel respected, supported and valued. The goal of inclusion is to foster a sense of belonging within the organization by actively involving diverse perspectives.

Benefits of a Strong DEI Culture

Implementing DEI in a company goes beyond social responsibility. Numerous studies have shown that businesses with strong DEI cultures perform better than those without. Working on an organization’s DEI culture can lead to a range of benefits that create a strong foundation for years to come. Some of these benefits include:

• Higher Revenue: According to one study, diverse companies earn 2.5 times higher cash flow per employee compared to less diverse organizations, with inclusive teams being more productive by over 35%. Having more diverse voices within an organization promotes better decision-making, which in turn leads to increased productivity and revenue.
• Increased Employee Engagement and Retention: Keeping employees engaged and encouraging them to stay with the organization for the long term are top priorities for many companies. Studies have shown that creating a more inclusive and diverse culture leads to a 50% reduction in turnover and a 75% decrease in sick days. When employees feel heard within their organizations, they are more likely to stick with that company and show up for work.
• Enhanced Reputation and Brand Image: People were 22% more likely to view an organization with a DEI team as “an industry-leading company with high-caliber talent,” according to a LinkedIn study. Another LinkedIn study found that 76% of job seekers view diversity as an important factor when considering job offers and 60% of employees want to hear business leaders speak up on diversity issues. When an organization has strong DEI initiatives, it becomes more attractive to top job candidates, further enhancing its ability to bring in the best people.

With these benefits and many others, it’s clear why top organizations are investing significant amounts of time and resources into developing a strong DEI culture.

Challenges in Implementing DEI Initiatives

As organizations work to implement DEI initiatives, they may encounter some common obstacles. Knowing how to manage these challenges can help overcome them more quickly.

For instance, they may face a lack of buy-in from company leadership. It’s important to clearly highlight the long-term benefits of DEI initiatives. Leadership should understand why they should fully invest in DEI initiatives to remain competitive.

Other common challenges are resistance to change and unconscious biases. Many people within an organization may be reluctant to change the way they operate, even when the potential benefits are clear. This is especially true when unconscious biases are at play. Addressing them includes showing evidence of unconscious biases and creating a smooth transition to new policies, such as a standardized interview process.

Lastly, many DEI initiatives fail because of a lack of momentum or clear goals. Each DEI initiative should have clear, measurable objectives. For instance, a goal could be to increase the number of women in leadership positions by 20% by the end of the year. Creating specific goals with measurable attributes makes it easier to track progress. As the deadline approaches, companies can either set a new goal if they succeeded or adapt their current goal based on what they learned if they didn’t.

Measuring the Impact of DEI on Company Culture

As organizations implement new DEI policies, they should measure the impact on company culture using a few key performance indicators. Doing so will help them demonstrate to leadership the importance of the initiatives and let them know which ones are working and which need adjustment.

One metric is a diversity and inclusion index, a ratio that measures the diversity of the workforce. It involves taking the number of people in different groups within a workforce and dividing it by the total number of employees. For example, the D I index of the number of women working within a tech company at the start of DEI initiatives can compare to one from a year later to see if the ratio increased.

The turnover rate among underrepresented groups is another key metric. While a company may be hiring more people from diverse backgrounds, it won’t matter if they’re also leaving the organization at a high rate. Businesses should ensure that underrepresented groups have a similar turnover rate to everyone else.

Other KPIs that can measure the impact of DEI initiatives include:

• Equity ratio
• Inclusion score
• Pay equity
• Promotion rates
• Representation at leadership levels
• Supplier diversity
• Mentorship and sponsorship participation
• Employee resource group engagement

The Future of DEI in Shaping Company Culture

Key Takeaways

• DEI initiatives lead to a stronger company culture.
• Organizations can improve profits and employee retention rates through DEI.
• Education and buy-in are essential for DEI success.

As organizations continue to see the benefits of a diverse and inclusive workplace, DEI initiatives will grow even more important. Now is the perfect time for companies to start planning new DEI policies to shape their company culture. While there may be some challenges along the way, investing time and resources into DEI initiatives now will lead to long-term success for organizations.