Our key takeaway: Creating lasting, meaningful initiatives for diversity, equity and inclusion (DEI) is no easy nut for companies to crack. The World Economic Forum’s (WEF) Centre for the New Economy and Society found that, in 2020, companies globally spent an estimated “$7.5 billion on DEI-related efforts, a figure that is projected to more than double to $15.4 billion by 2026.” Despite this financial investment and a seeming uptake and awareness of DEI issues by companies, the investment does not seem to be getting results. For example, “at the current rate it will take another 151 years to close the global economic gender gap at all levels,” and, what’s more, “[d]ata is still too sparse to systematically estimate global gaps for racial equity and LGBTQIA+ and disability inclusion, which presents a challenge in itself.” Global challenges like COVID-19, shifts in the types of jobs and skills needed for the future, and the possibility of automation eliminating 80% of occupations largely dominated by women, are not making company-level efforts any easier. Illustrated by 8 company case studies across sectors and geographies, WEF’s DEI Lighthouse Programme identified “five common success factors across the initiatives that yielded the most significant, scalable, quantifiable and sustained impact for underrepresented groups.” These include: (1) Building a nuanced understanding of root causes; (2) Setting meaningful and concrete definitions of success; (3) Building buy-in from business leaders and holding them accountable for progress; (4) Designing and embedding solutions that will work in the company’s specific context; and (5) Ensuring rigorous tracking and allowing for “course correction” where goals are not being met.
The World Economic Forum’s (WEF) Centre for the New Economy and Society, with McKinsey & Company, published the Global Parity Alliance: Diversity, Equity and Inclusion Lighthouses 2023 Insight Report (January 2023) to spotlight common success factors and actions for effective DEI initiatives:
- Delve into root causes by centering perspectives of impacted groups, and set meaningful definitions of success: The report calls on companies to build their DEI programmes based on a deep understanding of the “nuanced” root causes of discrimination and exclusion in their particular environment. This can start with doing a global scan of the organisation to identify areas for further exploration through data analysis and employee focus groups. Based on a review of illustrative case studies, the report explains that “[r]oot causes likely include a combination of internal barriers (such as organizational policies) and external barriers (such as cultural beliefs).” Yet a desktop understanding of the issues isn’t enough. A crucial element of creating a meaningful DEI programme is to hear the perspectives of the people at risk of discrimination, inequity and exclusion and to centre their inputs throughout the entire lifecycle of the initiative. Companies can do this by conducting surveys, interviews and focus groups at the start of the process, and continually seeking and implementing input from potentially impacted people during the design and piloting process. The report also provides recommendations on moving from identification of the issue into action, especially by prioritising higher risks and opportunities, “for example, by considering impact versus feasibility and urgency versus importance.” As part of the process of establishing an initiative, the right definition of success needs to be clear and quantifiable (“what and by when”) and in place from the very start, with buy-in from all levels of the company.
- Accountable and invested business leaders are some of the main contributors to success: The report counsels companies to lay the groundwork for short-term and long-term success of DEI initiatives by getting senior leadership on board as early as possible and creating real accountability structures that will ensure the continued flow of resources and support. For example, companies can establish the initiative “as a core business priority [by] formally incorporating DEI goals into quarterly and annual planning,” while “hold[ing] senior leaders accountable for outcomes, not just inputs or activities.” This could include creating outcomes-based performance incentives for leaders. In addition, it’s not enough for senior leaders to simply signpost support for DEI. Rather, the report finds that a crucial success factor is having CEOs and other high-level leaders take an active role. This could include serving as a public face of the initiative, for example in the media; leading the operation and driving resources towards it; and modeling themselves the desired behaviours. “Leaders tend to hold the most social capital in an organization and can use that to advance DEI initiatives.” Another crucial success factor where leadership can play a role is ensuring “resources for longevity in the budget, expertise and timeline” and bringing together cross-functional teams beyond just Human Resources.
- Solutions must be context-specific and rigorously tracked: “Driving effective, sustainable impact requires solutions that address the root causes of the problem and are integrated into day-to-day work.” The report points out that, “To effectively address the most critical root causes, the initiative’s solutions will likely need to be multifaceted. As an illustrative example, a coaching programme alone will not solve a gender parity problem. The solution set will also need to address systemic bias in hiring, performance management and other policies that disadvantage the target population.” This also requires embedding changes into organisational processes, culture and ways of working for “enduring change.” Employees at all levels should be both “upskilled” and held accountable for changing their own behaviours to meet programme objectives. To ensure that efforts permeate the organisation and have a sustained impact, they should be coupled with “rigorous tracking and course correction” throughout the life of the initiative. This is most effective when based on KPIs that track progress towards high-level aspirations, addressing root causes and specific initiative actions and inputs.