- What is the value of DEI initiatives?
- Do DEI initiatives strengthen the bottom line?
Diversity, Equity, and Inclusion, why are these words so controversial in the corporate arena? The workforce is diverse, and I assume most organizations value equity and inclusion; that is equal recognition and compensation for comparable work performance. Yet corporate Diversity, Equity, and Inclusion (DEI) initiatives are facing cutbacks and legal challenges. Companies are coming under attack from conservative legal activists who argue that their DEI policies and programs constitute racial discrimination. Ironically, the history of systemic racial discrimination is the primary reason DEI initiatives were established.
Historically, people of color and women have been paid less for the same work and are often excluded from promotional opportunities. The aggregate pay and wealth gaps between the privileged and underprivileged in the workforce and society are staggering. Eliminating DEI initiatives is tantamount to permanently institutionalizing the opportunity gap for a segment of the population that has been systemically oppressed from the beginning of the republic. Due to the obstacles placed in their path, systemically oppressed groups may never catch up, but DEI initiatives are a step in the right direction.
Not only is DEI good for the underprivileged, but it’s also good for the economy. Every organization has three goals: make money, save money, and achieve a vision. Those who can tie DEI directly to one of those goals are more likely to sustain their DEI programs. According to Rita Men, numerous studies on DEI policies have found many positive impacts on corporate performance. In May 2020, McKinney Consulting reviewed data on over 1,000 companies from 15 countries. They found that the business case for inclusion and diversity is stronger than ever. The analysis showed in 2019, companies in the top quartile in terms of ethnic and cultural diversity were 36% more likely to report above-average profits than those at the bottom, slightly better than in 2014. And companies with the most gender diversity among executives were 25% more likely to outperform the market up from 15 % in 2014. A 2019 study that analyzed workforce diversity in the US federal government found that racial diversity is significantly and positively related to organizational performance.
In addition to corporate performance, there is a business case for DEI. According to an analysis conducted by Citigroup, the US economy has lost an estimated sixteen trillion dollars since 2000 because of anti-Black racism. Thirteen trillion was lost “in potential business revenue because of discriminatory lending” practices and an estimated 6.1 million jobs were “not generated as a result. Additionally, 2.7 trillion in income was lost because of disparities in wages suffered by African Americans, and 218 billion has been “lost over the past two decades because of discrimination in providing housing credit,” and 90 billion to 113 billion in lifetime income lost from discrimination in accessing higher education. According to Adrienne Bresnahan, “When you add up the losses, it’s clear that racism is digging into America’s pockets. Racism doesn’t create balanced budgets; it fosters inequity.”
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