What is DEI & Why Does It Matter? by Xan Pearson





True to Service 

I’ve been thinking a lot about the “R” in CTLF’s HEART acronym lately. Regenerative encompasses a lot and we could have a whole course on it just to cover everything it entails. But at its core is prioritizing diversity. For leaders to be truly regenerative, they must embrace diversity of thought, perspectives, and experiences. Great leaders recognize the importance of fostering diverse, equitable, and inclusive environments.  

DEI is often misunderstood, and, unfortunately, has become divisive for all the wrong reasons. Diversity, Equity, and Inclusion (DEI) are not just buzzwords, and they are not about “quotas”; they represent a fundamental shift in corporate culture that goes beyond compliance and towards building thriving, innovative, and sustainable organizations. Everyone wants to hire the best candidate for the job. DEI encourages us to broaden our pool of qualified candidates with people who will add value to our companies and cultures through, in addition to their skills, different perspectives and experiences. Why wouldn’t we want to make decisions with input from teams who reflect the increasingly diverse consumer base in the United States and globally?  

Research and data consistently support the idea that Diversity, Equity, and Inclusion (DEI) contribute to the success and performance of companies. Research has shown that a commitment to DEI improves financial performance, fosters innovation and creativity, increases employee morale and engagement, enhances decision-making, market adaptability and customer relations, and strengthens competitiveness. Here are some key findings from research: 

1. Financial Performance: 

  • A study by McKinsey & Company found that companies in the top quartile for ethnic and cultural diversity on their executive teams were 33% more likely to have industry-leading profitability. 
  • Another McKinsey report indicated that gender-diverse companies are 21% more likely to outperform their less diverse counterparts in terms of profitability. 

2. Innovation: 

  • The Boston Consulting Group (BCG) conducted research that found a strong correlation between diversity and innovation. Companies with more diverse management teams reported higher levels of innovation revenue. 
  • According to a Harvard Business Review study, diverse teams are more likely to bring different perspectives and experiences to problem-solving, leading to more innovative and effective solutions. 
  • Research conducted by Deloitte Insights found that organizations with inclusive cultures, including age diversity, are six times more likely to be innovative and agile. The study also revealed a correlation between inclusive practices and higher profitability. 

3. Employee Engagement and Retention: 

  • Gallup research has consistently shown that employees who believe their organization is committed to DEI are more engaged and less likely to leave. 
  • A Deloitte study found that millennials, who make up a significant portion of the workforce, prioritize diversity and inclusion when choosing where to work. Companies that actively promote DEI are more likely to attract and retain top talent. 
  • The Harvard Business Review reports that age-diverse teams experience lower turnover rates. By fostering an inclusive environment, companies can retain experienced employees, reducing the costs associated with recruitment and training. 

4. Decision-Making: 

  • A report from Cloverpop revealed that diverse teams make better decisions up to 87% of the time compared to individuals. 
  • The National Bureau of Economic Research (NBER) found that gender diversity in corporate boards is associated with improved decision-making and governance. 

5. Market Performance: 

  • A study by the Peterson Institute for International Economics discovered a positive correlation between the presence of women in leadership roles and firm performance. A 30% increase in the proportion of women in leadership positions is associated with a 15% increase in profitability. 

6. Customer Satisfaction: 

  • Companies that embrace diversity are more likely to understand and meet the needs of a diverse customer base. A study by the Center for Talent Innovation found that 70% of employees surveyed believe that their company is better able to meet the needs of a diverse customer base due to a diverse workforce. 

It’s important to acknowledge that while the data supports the positive impact of DEI, successful implementation requires a comprehensive and ongoing commitment from leadership and the entire organization. Each company’s journey is unique, and the specific benefits may vary, but the overall trend is clear: embracing diversity, equity, and inclusion is not just a moral imperative but a strategic advantage for companies in today’s competitive landscape. 

Please join us on February 7th for our ReThink Happy Hour – Leading From the Middle: Where DEI is Made or Broken to hear from our moderator Yolanda Webb, and our other expert panelists. MORE INFORMATION HERE