Embracing equity, diversity and inclusion (ED&I) can transform modern workplaces.
According to McKinsey & Company, those companies which embrace diversity are 35% more likely to have higher financial returns than non-diverse ones.
And yet in times of financial constraint, it is ED&I budgets which so often seem to be the first in line for cutbacks.
A study by consultants Barnett Waddingham last year showed nearly three-quarters of the 300 human resources directors and c-suite professionals they surveyed said employee demands for an ED&I strategy represented a major concern for their business.
The study revealed growing business costs have led organisations to reduce their investment in ED&I, with 83% of them citing operational costs as the reason.
With the economy still stagnant, how can companies maintain a strong ED&I offering in times of financial constraint?
We interviewed Workplace Inclusion Architect at Mildon, Toby Mildon, on how organisations can keep equity, diversity and inclusion at the top of the agenda.
Q: How important is it for organisations to truly believe in the ED&I agenda and to maintain it during times of financial constraint?
A: Senior leaders need to check in with themselves and ask whether they fully understand why ED&I is so important for the success of their business, during challenging times as well as good ones.
When times are good, companies are more likely to spend more money on training events, PR activities, and those things that boost the ED&I agenda and foster inclusivity.
When times are challenging, they scale back on their expenditure and activities. This is very short-term thinking. In the long run, it’s very damaging to an organisation’s culture.
Business leaders, therefore, need to take stock and ask why exactly ED&I is so important. They may well get it on a cognitive level. They’ve read the McKinsey reports and the Harvard Business reviews, but do they understand how it relates to their unique business?
What you often find is that those companies which are spending less on ED&I because of financial pressure are the same ones which were doing very superficial tick-box style activities in the first place.
Those companies that really believed in it and were trying to get ED&I integrated into the DNA and culture of their organisation are doubling down on their efforts.
For me, that is good news because the superficial stuff, the box ticking and window dressing, is not impactful. It might raise awareness, it might make organisations look good, but it is scratching the surface and does not get to the root causes of any issues in a company.
If you are a senior leadership team and you are not pursuing ED&I authentically, people will sniff that a mile off.
Q: The temptation for organisations is to make cutbacks when finances are tight, but is there a danger that this short-term approach does long-term harm?
A: We need to think in terms of economic cycles and incorporate long-term plans rather than having a knee-jerk reaction in times of financial constraint.
The economy goes up and down, we have good times and bad. A lot of businesses are finding it difficult at the moment and are having to make tough decisions. This is leading to cost-cutting, redundancies, the reorganisation of the workforce and so on.
Firstly, we need to make sure that when organisations are responding in the short term they are doing so in a very fair and equitable way.
We know that when, for example, organisations make redundancies there are members of the workforce and society that face a more disproportionate impact than others. We need to make sure those people are not impacted adversely.
For leaders, that means checking in with your own biases and how that affects your decision making. Furthermore, organisations should conduct equality impact assessments to make sure people are not disproportionately affected.
Unconscious bias can result in leaders making improper decisions. Those biases are very natural. They are part of the human condition. We all have them and it’s not something we can change. Indeed, in some situations they can help us – but in others they are a hinderance. All this means leaders need to be aware of whether these biases are helping or hindering them, and whether their people are being assessed in an objective way when they are working out who is going to be asked to leave the business.
It is also important to get data and feedback from your employees – and there are a million and one ways to do this.
Organisations make too many snap decisions without referring to data. Instead, by conducting employee surveys or carrying out focus groups, with a keen eye on diversity and inclusion, then leaders can get the data they need to make better decisions.
Businesses also need to have an eye on the future, because eventually things will bounce back. We need to be thinking about the long-term as well, and must make sure that when we bounce back, we do so stronger.
Those organisations which do not rush to cut their DE&I budgets will ultimately be in the prime position to react to any upturn in the economy, and to take advantage of the diverse, inclusion and skilled workforce that they have nurtured, even in hard times.
Q: How important is it that DE&I should be embedded throughout the business and what impact does this have on the mindset of organisations during times of financial pressure?
A: We’ve talked a lot about the importance of senior leaders taking charge, and it is vital they do so, because very often DE&I is simply delegated to the HR department.
Many organisations see it as something that is not applicable beyond human resources, but every department has a stake in it.
Marketing needs to be thinking about how diverse their campaigns are. Procurement needs to be thinking about diversity in the supply chain. Your workplace or facilities management people need to be thinking about the inclusivity and accessibility of their buildings.
By doing this you are not only enabling your organisation to benefit from the advantages of DE&I – a broader range of views, the ability to recruit from a larger talent pool, better understanding of your customers, improved problem solving and innovation, and a stronger brand – but you are protecting it against cost-cutting in times of financial constraint.
While it is easy to cut an DE&I budget that is purely the preserve of the HR department, if it is imbued throughout your organisation, and you are reaping the benefits every day, then it is far harder to make that move.
Q: What benefits are there for organisations which continue to invest in DE&I?
A: When times are tough, organisations are naturally not looking to do as much recruitment and therefore will not be making as many diverse hires.
But that shouldn’t mean that they should stop doing DE&I activities. Instead, they should focus more on the culture of the company and retaining the diverse workforce that they already have.
If an organisation does have to make redundancies, they must avoid making unequal exits. Leaders also need to remember that at such times, those employees who remain with their company might be somewhat shell shocked. Employers who manage the process poorly, are unfair or unequal in terms of who is made redundant, will be left with employees who feel uneasy about their own positions and worried they will be treated the same way.
There is a danger that all the good practice brought in during better times will disappear when money becomes scarce, that DE&I will fall by the wayside. It is already happening in some cases.
But equally, if I just think about my own client base, there are organisations that are not only continuing to invest in DE&I but are doubling down on their efforts. In the long run, those organisations are going to benefit as they are still investing in their people and when things do get better, because the economy goes in those cycles, they will be in a stronger position.
How can progress be made in DE&I at a time when budgets are at risk of being cut? Sign-up to our webinar, ‘Maintaining and boosting equity, diversity and inclusion in times of financial constraint’.
