The Business Case for Diversity and Inclusion

April 13, 2018 at 9:45 AM by Yasmin Zarabi

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This week, I had the opportunity to kick off the HCI Inclusive Diversity event in San Francisco with some opening remarks outlining the business case for Diversity & Inclusion. Why the business case? At an event like this, the general HR practitioners in attendance already know that D&I is the right thing to do. Many also know there is a legal case for it as well. But how do you convince a group of senior level executives that you need resources to produce a successful D&I program at your organization? That’s where the business case becomes necessary. What follows is a breakdown of the business case for D&I, complete with the relevant stats to help you make an airtight argument for a program like this at your own organization.

Organizations Reflecting Communities

There is a white male majority across corporate America. According to Fortune, white men accounted for 72% of leadership positions at 16 Fortune 500 companies. However, white men don’t make up the majority of our communities. In fact, America is only becoming more diverse. By the year 2065 America will not have any single ethnic or racial majority (Pew, 2015). When we isolate leadership roles, the demographic numbers are even less representative. Only five out of all Fortune 500 companies have African American CEOs (CDC, Diversity Inc. 2015) and only 10 percent of executive level roles in technology are held by women (Entelo Women in Tech Report, 2018). These numbers show that in corporate America, we may know that D&I initiatives are important, but we have a long way to go until our organizations and leadership teams are actually diverse. To turn priorities into action, you’ll need to tie D&I to direct business results.

Diversity and Inclusion Initiatives Drive Business Results

The proof is in the numbers, D&I isn’t just the right thing to do, it’s also the smart thing to do. Employees with diverse backgrounds are critical to driving innovation. Researchers at Portland State University studied 3,000 of the largest publicly traded companies in the U.S. and found that companies that had a diverse workforce and took action to retain and promote employees with underrepresented backgrounds had higher innovation results. The researchers were able to prove that this wasn’t just coincidence and that diverse backgrounds and experiences lead to increased innovation.

Hiring and engaging talent with diverse backgrounds also positively impacts a company’s bottom line. A Mckinsey 2015 study found that companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians. Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians. Diversity doesn’t just impact productivity, but it is directly tied to a company's earnings. For every 10 percent increase in racial and ethnic diversity on senior-executive team of a company, earnings rise 0.8 percent.

Your Action Items

When presenting the business case for D&I initiatives, you’ll want to start laying out the next steps so your senior level exec team can visualize these programs in your company’s future. It can be difficult to retain and promote employees from underrepresented communities if you don’t have any, that’s why many companies start at the source, with recruiting. Adopting a tool like Entelo Diversity allows companies to ensure their candidate pools are diverse from the get-go, many of whom may have been overlooked by unconscious bias. However, adopting technology is one piece of your overall strategy. Every company is unique so your initiatives should reflect that.

If you’re interested in learning more about Entelo Diversity, sign up for a demo today.  

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