How diversity, equity, and inclusion are good for business
Business leaders can’t afford to treat diversity, equity, and inclusion (DEI) as afterthoughts.
Even before 2020’s explicit conversations and public protests on race and civil rights, statistics showed that a diverse business has as much to do with profit as principles.
A McKinsey study tracked six years of data and found that more ethnically and culturally diverse businesses are as much as 36% more profitable than the least diverse companies. The profitability gap widens to 48% between the most and least diverse businesses according to gender alone.
“The business case is glaring,” says Miriam Lewis, chief inclusion officer for Principal®. “Diverse companies with inclusive cultures outperform more homogenous companies. Revenue, market share, smarter teams, retention—there’s just no lack of evidence.
“While it's always the right thing to do to have equity in our organizations, it's also the profitable thing to do.”
With an expanding client list, BigBear.ai, a tech firm and military contractor, has also grown its workforce. But adding people isn’t as simple as filling office chairs and desks. Diversity plays a big role at this Maryland-based company, which has operations in four states.
“Our workforce is incredibly dynamic,” said Sean Battle, who previously was vice chairman and chief strategy officer for BigBear.ai. “More diversity has made it more rewarding for employees and makes us better by improving ingenuity.”
While it's always the right thing to do to have equity in our organizations, it's also the profitable thing to do.”
Miriam Lewis, chief inclusion officer
It helps to clarify definitions of these three intertwined yet distinct terms.
Diversity: Acknowledges all the wonderful ways in which humans differ, including race, color, and gender identity.
Equity: Fair and just policies and practices help an organization avoid perpetuating historical or systemic inequality.
Inclusion: An inclusive business makes its employees and other stakeholders feel they belong and are valued contributors.
Here are three ways DEI policies can help you add (and keep) valued workers, attract more customers, and grow your business over the long term.
1. DEI supports your recruit-retain strategy.
Two years on, the lockdown-required shift to remote work has evolved to a more permanent embrace of hybrid work. In fact, nearly nine out of 10 big companies say they’re instituting hybrid work—no matter what—going forward.
Hybrid work helps to expand the recruitment footprint, which also supports a commitment to DEI. “You're now considering talent outside of your local city or region, which could mean recruiting from more diverse communities,” Lewis says.
Tip: LinkedIn Learning offers free educational modules on topics such as unconscious bias and inclusive conversations.
2. DEI expands and solidifies your customer base.
Customers who see themselves and their concerns reflected in the products they buy become loyal to that business and brand, says Carlos Navarro, assistant vice president of customer experience for Principal.
“If you want to compete in the marketplace, you have to be inclusive,” he says.
The Principal Hola Futuro campaign reflects that, helping to bring culturally relevant financial resources to the Hispanic community so that businesses can better nurture employees. It’s more than just a Spanish-language website; the campaign provides digital enrollment and financial education designed around the lives of its target audience.
“We know that Hispanics are typically digital natives and are over-indexed on mobile, so we focused digital education and building out more mobile resources,” Navarro says. Hola Futuro initiatives include the Principal® app in Spanish, too. “We make sure the information we provide aligns with what's important to them culturally.”
Tip: The Massachusetts Institute of Technology offers a variety of resources to help enhance DEI in the workplace.
3. A DEI strategy can help drive both employee and business growth.
One of BigBear.ai’s DEI efforts is the Women of BigBear.ai, which supports women in the workplace by identifying and creating opportunities for their professional advancement and growth. Their DEI strategy is sustainable because it aligns with the overall business strategy and structure.
“That ensures we bring our best to market,” Battle said. “When employees see themselves in our efforts, and our voice echoes their concerns, they feel like an essential part of the team.”
Not every business’s approach to DEI looks the same. While smaller companies may lack the dedicated DEI executives and large committees of corporate America, they can make real progress by sparking employee conversations and raising awareness in an environment of mutual respect.
“As tennis icon Arthur Ashe once said, ‘Start where you are. Use what you have. Do what you can,’” Lewis says. “A holistic approach to diversity and inclusion is a challenge. But for those businesses that are really thinking big picture, it will be a win—one that we can all benefit from in the long run.”
Tip: See how Principal approaches inclusion in the workplace as part of our overall corporate social responsibility.
How do you assess what your business needs—today and a decade from now? The Business Needs Assessment from Principal can help you with ideas to meet your goals.
BigBear.ai is not an affiliate of any company of the Principal Financial Group®.
The subject matter in this communication is educational only and provided with the understanding that Principal® and its employees are not rendering legal, accounting, investment advice or tax advice. You should consult with appropriate counsel or other financial professionals and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.
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