The Business Case for Inclusivity
A graph showing profit increasing as inclusivity increases
Many organizations, governmental agencies, and communities are focused increasingly on equity, diversity, and inclusion (EDI) – realizing that multiple perspectives can be more profitable and lead to innovation. Their interest in EDI is often performative – for example, inviting Women and Black, Indigenous, and People of Color (BIPOC) to photoshoots but not to the boardroom – and not truly inclusive. Members of marginalized groups lack a voice even in the rare case when they have a seat at the table. An example of this situation occurred at Activision Blizzard. Recently promoted co-head Jen Oneal, a gay Asian American, resigned after a few months because she was, as reported in the Wall Street Journal, “tokenized, marginalized, and discriminated against.” Organizations are lowering morale and potentially losing valuable resources by disenfranchising marginalized individuals.
Even the best-intentioned organizations and communities are unsuccessful in improving EDI metrics because they fail to recognize the complexity of the structural and interrelated barriers to meaningful and sustainable inclusion. Companies implement one-and-done programs that raise the consciousness of EDI issues with non-marginalized groups or are focused on diversity metrics. This model usually focuses on individual behavior and does not address the systemic barriers within an organization like wage disparity, inflated job requirements, and lack of mentoring for employees from marginalized populations - to name just a few. By being reactionary and punitive, organizations fail to become truly inclusive and to realize the many benefits this brings.
And inclusivity does bring substantial benefits to organizations.
Financial
In a 2020 report, McKinsey & Company indicated that companies with more diversity were more likely to outperform less diverse peers on profitability. McKinsey & Company’s international research showed that companies with more than 30 percent female executives outperformed companies with 10-20 percent female executives. In looking at ethnic and racial diversity, the most diverse companies outperform the least by 36 percent.
The United States of America’s Office of Personnel Management (OPM) makes an additional case for inclusivity. In answer to a FAQ on their website, the Office highlighted the largest line item in any agency is an investment in human capital. By creating an inclusive environment, an organization can avoid costly turnover and retraining efforts by maintaining high levels of engagement and job satisfaction. Additionally, OPM points out that organizations can avoid high-cost litigation and settlements incurred by discriminatory practices.
Better Decisions
EDI increases are not limited to return on investment for organizations, either. Research from Cloverpop, a company whose product is a cloud app used to enable better business decisions, indicates that inclusive teams make better business decisions up to 87 percent of the time. Those teams also make those decisions two times faster and deliver 60 percent better results. Harvard Business Review provides additional data in a 2016 article by stating that a diverse team can view problems from multiple perspectives, bring knowledge and insight unavailable to a homogenous group, and more carefully process information.
Innovation
A 2020 article in Forbes states that “Diversity further enables nonlinear novel thinking and adaptability that innovation requires.” Innovation - or the successful implementation of new ideas - is critical to the success of an organization. Boston Consulting Group surveyed over 1700 companies and determined that companies with above-average diversity produced a greater proportion of revenue from innovation (45% of total) than companies with below-average diversity (26%).
The benefits of innovation are not constrained to for-profits either. In the civil service sector, consulting firm Deloitte lists three main benefits of innovation for governmental agencies:
Keeping pace with the rapidly changing civic challenges;
Building trust and meeting expectations of community members; and,
Attracting and retaining the best employees.
Want to Know More?
Please reach out to me and discover how I can help your organization take steps toward true inclusivity and greater profitability.