Chief Diversity Officers Central to Business Success, Study Shows

Equipped with bigger budgets and growing C-suite influence, Chief Diversity Officer Roles (CDOs) are becoming more central to business success, a new study has revealed.

The 2021 study from United Minds in partnership with Weber Shandwick and KRC Research, found that since 2019, senior DE&I leaders in the US are now 2.6 times more likely to hold C-suite positions. They also oversee 4.5 times bigger teams and have a much bigger budget. Globally, 86% of senior DE&I leaders are satisfied with the resources invested in DE&I by their organisation, with 77% reporting budgets of over $10 million. In the US, nearly four in 10 (39%) senior DE&I leaders report budgets exceeding $50m – a 26% increase over 2019.

This latest study details the evolving role of CDOs and corporate diversity, equity and inclusion (DE&I) leaders over the past two years. It highlights an increase in resources, responsibilities and optimism for the future, despite significant adversity. Senior DE&I leaders are becoming more prominent members of their organisations. Amongst senior DE&I leaders, there is near-universal agreement (94%) that the external political and social environment has impacted DE&I efforts. Over the past year, 90% of senior DE&I leaders in the US have reported an increase in responsibilities (83% globally); including added investment and resources, increased scope of work and/or a change in reporting structure. The median number of people in an organisation who focus on DE&I directly in the US is 90; four and a half times higher than in 2019. 

INCREASING ALLYSHIP & SUPPORT

In addition to elevated titles and increased resources, senior DE&I leaders – of which more than half strongly agree that internal support is integral to DE&I success – are also experiencing increased allyship from within their organisations; reporting significant increases in support from IT and finance departments.

The global study of 227 of the senior-most professionals responsible for DE&I at their organisations expands upon the  2019 US-focused report and offers a look at the function before and after the global pandemic, racial justice movement and recession. The study, however, noted that barriers to DE&I progress remain. It revealed that recruiting and retaining diverse talent is waning as a top priority; with only 45% of CDOs agreeing that leadership views their role as a “must have”.

DIVERSITY & INCLUSION CHALLENGES

Additionally, despite an increased focus on societal inequities, senior DE&I leaders are continue to have to make the business case for the importance and impact of DE&I. More than three quarters (78%) agree that DE&I isn’t prioritised unless there is a visible or public problem; and only 45% now strongly agree that their role is seen as a “must-have” by the organisation’s leadership. This is compounded by the fact that more than half of senior DE&I leaders report unfair treatment (discrimination, harassment, and/or microaggressions) within their organisations. And even as companies continue to face the Great Resignation, the report shows priorities shifting away from retaining and recruiting diverse talent.

“We are seeing significant momentum in establishing and resourcing the critical role and executive function of office of diversity,” stated Tai Wingfield, Executive Vice president, Diversity, Equity & Inclusion of United Minds. “However, we also know that change takes time. A critical part of every diversity leader’s job continues to be getting buy-in on the importance of the work even as the business case is strengthened every day.”

WANING DEMAND FOR DIVERSE TALENT?

The report also revealed that recruiting and retaining diverse talent is especially at risk. As the Great Resignation continues its hold on companies globally, 43%  of senior DE&I leaders say turn-over is at least in part due to dissatisfaction with the level of support for DE&I. Senior DE&I leaders in the US attribute 39% of recent resignations to lack of confidence in organisational commitment to DE&I, a 23% increase over 2019. At the same time, recruiting and retaining diverse talent has decreased in priority from number one on the list in 2019 to number five in 2021.

“While it is possible that pandemic-related hiring freezes may have negatively affected the prioritisation of recruiting and retaining diverse talent, it is more important than ever that this pattern does not continue and companies understand the value that a diverse workforce adds to their organisation,” Wingfield said. “Other efforts to promote diversity, equity and inclusion mean very little if business leaders are not taking the necessary measures to ensure that they are hiring and keeping diverse talent on their teams.”

DIVERSITY & INCLUSION CHALLENGES

Although optimism is up, challenges persist. Overall, satisfaction remains high among senior DE&I leaders, with 82% approving of efforts to build a diverse, inclusive and equitable culture within their organisation. A majority (84%) also say that they’re optimistic about the future of DE&I; and in the US, nearly nine in 10 are optimistic (89%) – a 10% increase over 2019.

However, while nearly eight in 10 senior DE&I leaders say their organisation is equitable and inclusive, and three out of four say their organisation is diverse; more than half (54%) also report that incidents of discrimination and unfair treatment, harassment, and/or microaggressions have occurred at their current organisation in the past year. Top challenges standing in the way of DE&I include company-wide issues such as employee engagement, while role-specific challenges such as lack of integration with other functions and making DE&I outcomes visible externally also pose a threat.

EMPLOYEE RESOURCE GROUPS

Employee resource groups (ERGs) remain a bright spot for DE&I. Globally, 100% of senior DE&I leaders believe that ERGs and affinity groups benefit employees; especially when it comes to providing networking opportunities, executive visibility and fostering a sense of inclusion. And employees agree. United Minds’ companion study also showed that employees that are members of ERGs are more satisfied with their organisation’s commitment to DE&I and more satisfied with their job overall. In looking ahead to the next 12-18 months, overseeing ERGs increased the most as a top-three priority for senior DE&I leaders in the US; from being at the bottom of the list of most cited priorities (number 12) in 2019 to being near the top (number three, behind learning and development and advancing racial equity).

Although more companies are now talking about DE&I, many are still failing to back that talk with real action, according to a recent study. Click here to read more.