A quick history – DEI and ESG evolved from the early Corporate Social Responsibility (CSR) movement where social and environmental concerns were aligned with business strategy, which saw a change in the bottom line.
But CSR also has an aspect of doing the right thing for selfish reasons – to build a good reputation, image, increase brand value and attract good people. This can be perceived as “greenwashing”, which could hurt organizations in the long run.
Cynicism about CSR gave rise to DEI and ESG – to do things right - demanded by the public and investors. However, ESG and DEI got politicized when governments started mandating it to measure and report as part of the governance process.
There are merits to voluntary DEI policies and processes, especially when inclusion enhances psychological safety for diverse organizations to thrive in.
Doing the Right Thing and Doing Things Right
Most leaders want to do things ‘right’ and do the ‘right’ things for the ‘right’ reasons. Being inclusive in a diverse organization requires anchoring on core values and the culture ‘walked the talk’ by the leaders.
Being inclusive is about capturing the uniqueness of diverse individuals to foster a psychologically safe environment. Being inclusive values and respects diverse individuals for their talents, skills and abilities to the benefit of the collective - and has a tremendous impact on the bottom line.
In a study published in Harvard Business Review, feeling included and a sense of belonging was linked to a 56% increase in job performance, a 50% drop in turnover risk, and a 75% reduction in sick days. Researchers calculated that for a 10,000-person company, this would result in annual savings of more than $52 million. [i]
A strong business case for ethnic diversity and inclusion according to a McKinsey report - complements psychological safety with a 39 percent increased likelihood of outperformance for those in the top quartile of ethnic representation versus the bottom quartile.[ii]
Caution on Formalizing and Measuring Equity and Inclusivity
Formalizing Equity and Inclusivity into performance management matrices can be challenging - fraught with risks as they are subjective and can demoralize people.
No rules, regulations nor processes can make someone accept or like another person. They happen organically through an inclusive leadership culture to accept new diverse and different people qualified and talented to be there, especially if the organization has been traditionally mono-cultural.
There has to be safe spaces for the status quo to ease into the new diverse realities - for individuals to deal with unconscious biases, fears and prejudices that are natural to any human being - with patience, safety and space for self-reflection.
Inclusion and Psychological Safety
An inclusive and appreciative culture evolves from an anchor on the core values of respect and integrity – lived by the leaders, actioned out by intentional activities and business processes - that help commune people to work and play together in a psychologically safe environment.
According to another McKinsey survey, an overwhelming 89 percent of employee respondents said they believe that psychological safety in the workplace is essential.[iii]
Psychological safety coupled with inclusive policies and actions leads to diverse team members feeling more engaged and motivated - because they feel their contributions matter and able to speak up without fear of retribution. It leads to better decision-making, as people feel more comfortable voicing their opinions and concerns. This leads to a more diverse range of perspectives considered. It fosters a culture of continuous learning and improvement, as diverse team members feel comfortable sharing new ideas or their mistakes and learning from them.
Just because DEI is taking a pummeling in the news cycles – do not throw the ‘baby with the bath water’. Inquire into its benefits with an open mind and examine the organizational culture and policies as diversity is the norm.
Create safe spaces for open conversations and do surveys to see where people’s minds are at - based on their feelings and needs - to being open to diversity, to be inclusive of others and to be included to have psychological safety - to find common ground - to bring everyone’s full selves to be a part of a high performing organization to enjoy and the celebrate diversity.
[i] https://thediversitymovement.com/what-is-workplace-belonging-why-is-it-important/
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