#MeToo. #BlackLivesMatter. #StopAAPIHate. These are just some of the recent movements that have compelled Americans to reflect on the social injustices that exist in our country today. The scrutiny on these social issues has trickled down to the professional world. As employees discuss their discriminative experiences in the workplace, executives are scrambling to improve their organizations' hiring practices and company culture. This has led to the rapid expansion of corporate diversity, equity, and inclusion (DEI) programs. DEI, which was once seen as a sub-component under the human resources department, has now evolved into a core business function that large and small businesses alike have been aggressively investing in. Despite COVID-19’s effects on the U.S. economy, the number of DEI-related job postings increased by 123% between May and September of 2020. However, DEI’s explosive growth raises concerns: namely, whether or not the industry is here to stay in the long run.
History of DEI Programs in the Workplace
Although a limelight has been shone on DEI in the past decade, the DEI profession has been around for much longer than that. Workplace diversity training first emerged in the mid-1960s following the introduction of equal employment laws and affirmative action. Prior to this, many companies had known histories of racial discrimination. These new laws prompted companies to start diversity training programs that would help employees adjust to working in more integrated offices. Unfortunately, DEI training programs of the past have struggled to yield substantial improvement.
One popular approach to DEI adopted by executives was outlining a list of workplace do’s and don'ts. Employees underwent mandatory training days where they sat through long workshops and filled out various personality and bias questionnaires. Unfortunately, these programs were largely ineffective at improving workplace diversity and harmony; while employees could digest the information and rules presented to them, the positive effects of diversity training rarely lasted longer than a couple days. Reinforcing this conclusion, a 2019 Harvard Business Review experimental study found that bias-focused training particularly had little effect on the behavior of male or white employees — who typically hold the most power within an organization. Specifically, these mandatory training programs were sometimes poorly perceived by employees to be overly controlling. This compelled some employees to rebel and skirt around training rules, thereby making the DEI training somewhat counterproductive.
Another common DEI strategy utilized by companies to fight bias were hiring tests. These hiring tests allowed managers to assess candidates based on their technical knowledge and qualifications instead of their socioeconomic or racial background. However, similar to how employees rejected force-fed workplace rules promoting diversity, many hiring managers disliked being told they couldn’t hire whoever they wanted. As a result, hiring tests were not enforced consistently across candidates from different backgrounds.
Clearly, traditional diversity training methods have been negligible and ineffective. Change is long overdue.
Incentives for change
As aforementioned, social pushes for societal reform played a large role in driving this change. Specifically, the recent boom of the DEI industry coincides with current social movements. Misty Gaither, Director of Diversity, Inclusion & Belonging Business Partners at Indeed.com, notes that “[t]here has been a significant increase in the creation of [DEI] jobs since the beginning of the nationwide protests following the death of George Floyd in May .” Given the disheartening increase in Asian American discrimination and attacks recently, it is likely that the DEI profession will continue to expand in the coming months.
Besides societal expectations, firms also have a financial incentive to invest in improving diversity. An exhaustive 2015 article by McKinsey & Company found that businesses who rank in the top quartile for racial and ethnic diversity are more likely to have financial returns above industry medians. As such, investing in DEI programs is within the business’ best interests. Although diversity can bring value to the firm in many ways, it has a particularly positive impact on the following 4 aspects of organizational performance:
- Advantage in talent acquisition. A focus on racial, gender, and ethnic diversity significantly enlarges the sourcing talent pool. This mitigates the financial costs of talent shortages faced by many firms.
- Increased employee satisfaction. McKinsey research data has found that workplace diversity boosts career and personal satisfaction for women and members of minority groups. Similarly, employee satisfaction is unchanged at firms where DEI programs are a superficial “token” effort.
- Better alignment with customer base. An emphasis on diversity allows firms to better align themselves with an increasingly heterogeneous and globalized customer base. This enables firms to improve customer relationships and strengthen their brand.
- Improved decision making and corporate innovation. More workplace diversity equals more diverse solutions, ideas, and opinions.
The birth of a new profession
As outlined above, many businesses have invested in their DEI programs in hopes of improving their financial and operational performance. This can be most clearly observed through the sharp increase in hiring numbers of DEI professionals. Moreover, managerial attitudes towards DEI have also shifted positively. Instead of being perceived as a “chore” for the HR department, companies now see DEI as a key business function that creates value for all. An October 2020 survey conducted by Fortune and Deloitte revealed that 96% of CEO’s agree that DEI is a personal strategic priority for them. Executives have also invested in DEI initiatives in nearly every aspect of their business, such as talent recruitment, community engagement, executive leadership composition, and data and metrics transparency. The addition of the “Chief Diversity Officer” position to many executive boards has further cemented the value that diversity brings to a business’ performance and reputation.
Additionally, there has also been an increase in consulting firms who specialize in DEI consulting and related services. Industry-leading consulting firms such as BCG and Deloitte offer specialized DEI strategy services and program support to their clients. Other boutique consulting firms specializing in diversity and inclusion are also quite popular. These services and outside specialists allow businesses without a fully-developed in-house diversity program to receive the support and guidance they need.
Given the fast and sudden rise of the DEI profession, many are skeptical of its longevity. Although much progress has been made over the past few years, more needs to be done to eliminate harmful social biases and promote equity in the workplace and greater society. All workplaces should strive to foster an environment where all employees feel valued and heard. Thankfully, workplace attitudes towards DEI investment are overwhelmingly positive. From project teams to top-level executive boards, new DEI initiatives are being implemented at all levels and departments within organizations. Given that DEI has already evolved to become a core business function and priority, it is likely to stay in the long run. There is no shortcut to solving generations of discrimination in the workplace and greater society. As such, we ought to persist in our efforts to create a more diverse, equitable, and inclusive workplace.