New research has revealed that companies are regressing in their diversity, equity and inclusion (DEI) progress, which is having a direct negative impact on talent retention, the ability to meet customer needs and their overall business success.
The report from global leadership consulting firm DDI also found an 18% decrease in leaders’ endorsement of their company’s overall DEI efforts in the last two years. The data also showed that the number of companies that didn’t offer DEI programs increased from 15% in 2020 to 20%. As leaders lose trust in their companies’ inclusion efforts, leaders who are women or from minority ethnic and racial backgrounds are significantly more likely to plan to switch companies to advance, especially among senior leaders, noted the study.
The research, entitled Diversity, Equity, and Inclusion Report 2023, highlighted that letting DEI slip impacts business performance. Organisations with greater leadership diversity are 2.4X more likely to outperform their competitors. Companies that rank in the top 10% among their peers in financial performance have at least 5% more leaders who are women and from minority racial/ethnic backgrounds than below-average performers, showing that even a modest increase can have significant results.
KEY DIVERSITY, EQUITY AND INCLUSION FINDINGS
Additional findings on DEI efforts and business results found that:
- Generational divides influence DEI perception. While leaders under age 35 are the most optimistic about their organisation’s commitment to DEI, their Gen X counterparts (age 46-55) are the most disappointed. This could be an indicator of experienced leaders’ frustration with slow progress, or a feeling of being overlooked as many programmes target younger workers, highlighted the report.
- Inclusion doesn’t require an office. DDI’s data shows that 34% of workers who work remotely report a strong sense of inclusion in their organisations, compared to only 29% of their peers who work in person. Among women leaders, only 21% who work in-person report a strong sense of inclusion.
- Preparing the next generation of diverse leaders remains a top concern. Burnout is soaring across all ages and demographics with over 75% of minority leaders and 72% of women leaders under age 35 feeling ‘used up’ at the end of each day. The combination of childcare responsibilities coupled with pressure for younger leaders to portray perfection is likely driving this trend. To overcome this heightened risk of burnout, leaders should prioritise showing empathy, acknowledging their own vulnerability and shortcomings, and inquiring about employees’ wellbeing, the report noted.
DEI DRIVES BOTTOM-LINE PERFORMANCE
“With the stress of economic uncertainty and labour challenges, companies have turned their attention away from DEI toward these urgent issues, but that has left many leaders, especially those who are women and from minority racial and ethnic backgrounds, questioning their company and role,” said Stephanie Neal, Director of DDI’s Center for Analytics and Behavioral Research. “If companies don’t act now to rekindle and reinvest in their DEI programmes, the loss of talent will have a profound impact on future business success.”
A key question posed by these findings is “how companies can create an inclusive remote work culture and embrace diversity in all aspects”, added DDI’s CEO Tacy Byham. “Gender, racial, and ethnic diversity in leadership is a clear business advantage, and you could be pushing away these highly talented leaders by taking away flexible work options. Options like remote work empower them to do their best work for the organisation, while meeting personal goals and family obligations.”
In addition to revealing these urgent trends, DDI’s DEI Report provides insight into what companies can do to reduce the risk of diverse talent loss and how quality DEI programmes drive bottom-line performance. The full report also details the five crucial components of DEI success to help companies implement best practices that drive engagement, inclusion, retention and performance. For more information, download the full report here.
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