DE&I is a complicated endeavor, requiring significant investment, executive buy-in, and long-term commitment. And while the moral case for increasing diversity, equity, and inclusion efforts is clear, business leaders are also tasked with making the business case. There is much debate about what is the most appropriate case for DE&I, but the fact remains that there are considerable business benefits to the brands that are willing to commit to the work of diversity, equity, and inclusion.
DE&I is a Net Positive
The good news is that the right thing to do is also a smart business decision. An analysis from McKinsey found that organizations in the US and UK with more gender and ethnic diversity on their executive teams saw better profitability than those organizations with less diversity. Furthermore, a global study from the BCG Henderson Institute not only uncovered a connection between diversity and business success but also found that gender diversity specifically is predictive of future growth.
So why is it that DE&I seems to make business sense? Research indicates that there are multiple ways that these initiatives positively impact a company. Several studies from leading consultants like BCG and Bain found that diversity increases an organization’s capacity for innovation, which drives revenue. Fostering a diverse staff creates an environment with a wide range of talents that better equip companies to enact their strategies, making them more resilient and effective long-term. Employees from different backgrounds bring different skills to their respective teams, creating more agile and adaptive organizations that are better prepared to thrive in increasingly volatile and competitive markets.
But innovation isn’t the only benefit. Ensuring your organization is diverse and inclusive is a smart strategy for talent acquisition and employee engagement. Diverse organizations are more likely to attract top talent by virtue of appealing to a broader range of job seekers. But getting that top talent in the door is only the first step. Inclusive organizations have the upper hand here again since, according to research conducted by BetterUp, when employees feel a sense of welcome and belonging, they perform better, are less likely to leave, and are more likely to recommend their organization to others.
Brands with diverse leadership and staff can also better relate to their audience’s wants, needs, and challenges. This is critically important since knowing your customer is fundamental to business success, impacting everything from product innovation and marketing campaigns to customer engagement strategies and customer service protocols. Teams composed of members from your brand’s target audience can more easily craft messaging and strategies that resonate with those customers. And these same consumers are actively watching to see which brands are demonstrating a commitment to diversity and inclusion. In a recent CARAVAN survey Big Village found that 75% of US consumers say it’s important that a company or brand demonstrate that they are committed to DE&I when making purchasing decisions. “I like to believe that my purchases help support causes that are important to me,” noted one consumer. Another added, “I prefer to support brands and companies that actively support inclusivity and take steps to improve diversity in both their company and in their customer base.”
DE&I Must be Authentic to be Effectively Realized
Most business cases for DE&I focus on the need for internal strategy and people initiatives, and rightfully so. As we’ve seen, representation matters, especially when it comes to leadership positions. However, this is not just a job for CEOs and HR teams; everyone from marketing, sales, and product teams also has a critical role to play.
Consumers indicate that a brand’s commitment to DE&I must extend to how they market themselves and the products they offer to register as authentic. A CARAVAN study of US consumers uncovered that the top three ways a brand can indicate that they are committed to DE&I are through how they treat employees, diverse representation in advertisements, and offering a range of products and services useful to a diverse set of people.
In which, if any, of the following ways can a company or brand demonstrate they are committed to diversity, equity, and inclusion?
- 61% Treat all staff similarly and fairly
- 53% Regularly show people of different cultures, abilities, and beliefs in advertisements
- 49% Offer products and services that are useful to a diverse range of people
In consumers’ own words…
“For a company to authentically demonstrate a commitment to diversity, it should offer employee benefits that recognize and address the needs of people of all different abilities, religions, sexual orientations, gender identities, ages, etc.”
“I see them use diverse community in their promotional and marketing campaigns. I see models from different backgrounds, race and color and also disabled models.”
“The brand sells products that are for every sex and heritage. It allows people to fit in and looks good.”
This well-rounded authenticity also speaks to something deeper for many consumers. “It seems they care for their customers more and are not only concerned about making money,” said one such customer who also indicated an increased willingness to purchase from brands like this. It’s not simply a transactional relationship for these consumers; they want to feel as though companies actually care too. Of course, that is much easier said than done.
Opportunity Exists for Brands to Break Through
Despite the proven benefits of DE&I initiatives and its importance to consumers, examples of successful executions are limited. According to CARAVAN data, only 24% of American consumers say it’s very common for brands to demonstrate this authentic commitment to DE&I today.
With this in mind, Big Village Insights has endeavored to craft the DE&I playbook, a series of articles intended to help organizations with this critical work. We’ll answer critical business questions like:
- How do I define a DE&I strategy that resonates with my audience and aligns to my brand?
- How do I know if and how my brand has permission to delve into DE&I?
- How do I demonstrate authentic DE&I executions without alienating an audience?
- What are the drivers that cause behavioral change in consumers?
- What do I do if I fumbled an execution?