You may already know how valuable diversity and inclusion (D&I) are to the satisfaction of your workforce and to your recruitment efforts and ability to retain top talent. But did you know that these important considerations can also pay off financially? And that D&I efforts can have a significant impact on your workforce’s productivity?
Many Finance leaders are catching wind, as Deloitte’s 2019 CFO Signals survey showed that two-thirds of finance heads from large companies said they now have a form D&I strategy in place at their organizations.
So, aside from D&I being top priorities for businesses because of the ethical and moral implications, it helps to recognize that there are additional benefits for the business’ bottom-line as well. In this post we’ll take a look at what the research shows about how D&I can help financial professionals drive business value and profitability.
Driving the value of your business
It’s now becoming common knowledge that a more diverse and inclusive workforce means stronger organizational performance. This can be broken down into several categories, including retaining talent, employee satisfaction and well-being, and greater workforce productivity.
Retaining talent. Workplaces that focus on D&I efforts and take steps to make employees feel more welcome tend to retain talent better than those that don’t. For example, a report from the Human Rights Campaign Foundation showed that 1 in 4 LGBTQ workers have stayed at a company because of an accepting environment. And it makes sense—employees who feel unrecognized and excluded are more likely to be unhappy with their job and ultimately, they will leave.
Employee satisfaction. On a similar note, it’s important to emphasize that welcoming workplace environments foster more satisfied employees. Modern workers want to work in environments that not only don’t discriminate, but that also encourage openness about differences.
Gone are the days when biases and discrimination are the norms in offices. Instead, creating inclusive, diverse environments drive business value because employees will be more fulfilled by the work they’re doing. An employee survey from Deloitte showed that there is a strong correlation between employees being happy at work and feeling valued by their company.
Greater productivity. More diverse teams tend to be more productive as well. The combination of differing perspectives make efforts more creative, and can open the eyes of team members to views they wouldn’t be able to otherwise see themselves. With more diverse skillsets, experiences, and ideas, organizations can produce and create in more innovative ways.
In addition to creating a more valuable workforce, D&I efforts have proven to contribute to increased profitability businesses as well. Research from McKinsey & Company shows that companies that have more racially and ethnically diverse workforces are 35% more likely to have greater financial returns than industry medians, and those with greater gender diversity are 15% more likely to see better returns.
McKinsey data also shows that in the U.S., for every 10% increase in ethnic and racial diversity on the executive team, annual company earnings rise roughly 1%.
A more recent study from Boston Consulting Group (BCG) shows that companies with above-average diversity on their leadership teams have a 20% advantage in revenue from innovative products and services for their companies over management teams with below-average diversity. These improved financial results come from the varying perspectives and insights that diverse teams bring to the table.
Effective strategies for addressing D&I in your organization
Clearly, there is a strong business case for a more intentional and thoughtful approach to D&I at your business. Aside from the fact that employees will be more satisfied and fulfilled, the business will likely perform better financially.
The strategies outlined below will help you get started with your D&I initiatives and sustain your program’s success in the long-term.
1. Make sure the strategy is known throughout the company
A good first step in addressing D&I is ensuring that the entire company knows about your efforts and that it matters to you and the entire executive team. Less than half of respondents in the Deloitte CFO Signals survey indicated that their D&I strategy is known throughout the company, so there’s still plenty of work to do in this area.
Start by sending around an email on these topics, initiating regular trainings related to D&I, or bringing up issues during company-wide, as well as departmental-wide, meetings.
2. Set up a measurement technique
As with any company strategy, a measurement process will hold you accountable and ensure that goals are being met. Try implementing things like regular employee surveys, and actually measure your diversity stats. Consider, who is underrepresented in each department’s management team? Gathering this data will help you to measure if your efforts are actually working, and you can update your strategy accordingly.
3. Update your hiring approach
These efforts go hand-in-hand with your HR department and the company’s hiring policies. First make sure that D&I is fully integrated into the employee handbook and other policy documents. This will make it clear to employees that it is a serious matter that is given priority at your business.
Then, make sure that hiring and interviewing techniques support these important policies. For example, what kind of questions are being asked on applications? Or in interviews? You must ensure that every employee the conducts interviews understands what type of interview questions are and are not acceptable, especially when considering sensitive D&I topics.
4. Don’t be afraid to admit fault
Finally, as the CFO or head of finance, you help set the example for much of the company. Part of being a genuine leader and exuding integrity is admitting when something isn’t where it needs to be.
This means that if a diversity goal isn’t being met—for example, if the company executive team includes solely older white males—you might admit that this is something the company is working on addressing to integrate more diverse perspectives. Then, you can show your workforce the strategies you’re putting in place to fix things. These tactics show departments across the board that you take D&I seriously and that you’re actually following through on promises.
Good leaders know when to discuss a challenge area instead of pretending like no areas for improvement exist.
D&I continues to drive high performance and profits for companies across industries. As a financial leader within your organization, it’s important that you realize the value D&I brings to any team, in addition to the steps you can take to make it happen.
- D&I helps increase business value by retaining talent, increasing employee satisfaction, and driving productivity.
- Your bottom line will thank you for your D&I efforts, as more diverse workforces and executive teams mean more revenue and increased business profitability.
- No matter the numbers, diverse perspectives bring invaluable expertise and viewpoints to teams to make them more creative and productive.
- Implement D&I into your strategy by:
- Distributing knowledge throughout the company
- Setting up ways to measure success
- Updating your approach to hiring and interviewing
- Admitting there are areas for improvement within the organization and creating a plan to improve these areas
In addition to these key takeaways, remember to always remain open to change and thus open to the broad range of perspectives that can exist within your company. This viewpoint alone will help you to give D&I the time and attention it deserves.