The ROI of DE&I
The term “return on investment,” has its roots, unsurprisingly, in finance. Coined in the early 20th century, it was metric used as a measure of performance. Today, organizations use ROI to quantify just about everything — earnings, capital, and resource expenditures.
In the last year, as a result of the racial awakening in America following George Floyd’s murder, DE&I has taken a larger role in strategic planning. At the corporate table, many companies hope to tie ROI in to this conversation as trainings, education, hiring practices, and many other initiatives… However, successfully measuring the success of corporate diversity work requires reflecting internal data — like minority representation in leadership — onto larger systemic issues like wage and mobility gaps.
Whether the focus is on attraction, inclusion, or profitability, the data shows that a more diverse and inclusive workforce is beneficial to everyone involved — the organization as a whole, individual employees, and surrounding communities.
Employee experience: Workplace inclusion and belonging has critical implications for employee experience. High belonging is linked to a 56% increase in job performance, 75% reduction in sick days, and 50% drop in turnover risk.
Retention: Increased representation at senior levels boosts retention for employees of color. Black men who had senior leaders of color were 15% more likely to stay with their company than those who did not.
Attraction: Employees see inclusion as a prime factor while considering employment. Nearly 40% of employees said they would leave their current organization for a more inclusive environment, and 80% said that inclusion was important when choosing an employer. Guild survey data shows that 24% of applicants at a major hospitality brand cited education and upskilling as a reason for applying for employment.
Performance: Organizations with an inclusive culture are 3x as likely to be high performing and 8x more likely to achieve better business outcomes.
Profitability: Companies in the top quartile of ethnic and cultural diversity on executive teams outperformed those in the fourth quartile by 36 percent in profitability.
Economic mobility: Employees using employer education benefits achieved 43% more incremental wage gains than non-participants. In fact, the incremental wage gains were largest for the lowest paid employees: Employees earning $30,000 a year achieved a 57% increase. Black associates, at a leading big box retail company, are 2.1x more likely to be promoted when participating in Guild’s education programs.
Innovation: Companies that are more gender and racially diverse outperform their peers in innovation, effectiveness, and see improved financial performance.
Yet still, compared to many other areas of business, DE&I does not have a large wealth of data behind it. In the next few years, we expect an increased focus on data collection as it relates to equity and diversity. Meaningful data can include diversity objectives, representation in senior management and senior-level roles, and mobility for underserved populations.
An increase of diversity, equity, and inclusion is linked to a myriad of positive business outcomes, so many that no matter the focal point, the bottom line is this: corporate culture, individual mobility, and surrounding communities would benefit from prioritizing DE&I.