What’s the ROI of Diversity and Inclusion Strategies?: Voices from thought leaders

Posted on December 10, 2015

What’s the ROI of Diversity and Inclusion Strategies?: Voices from thought leaders

What’s the ROI of Diversity and Inclusion Strategies?

A successful implementation of a Diversity & Inclusion talent strategy and an inclusive organizational culture are now on many multinational organizations’ agendas. Many wonder about the exact return on investment of these mindset- and people-focused strategies. At Aperian Global, we have worked with clients to improve their D&I strategies across the globe for the past 25 years. We asked our D&I experts who continuously design and deliver these solutions, “What is the ROI of Diversity and Inclusion strategies for you?”

 

Business Performance and Output

“Aperian Global works with many clients on global Diversity & Inclusion initiatives. While ROI on specific initiatives is difficult to measure in the short-term because so many other variables also come into play, organizations can look at two specific areas over time (at two-year intervals) to gain meaningful insights: first, is the diversity of the senior-level leadership team improving? Second, are engagement scores for the general employee population, and more specifically for underrepresented demographic categories (by gender, cultural or national identity, etc.) improving? New research is showing that companies with greater national, cultural, and gender diversity at the senior level show better business performance.”

David Everhart, President at Aperian Global

As David mentions, there is a clear connection between business performance and inclusive leadership practices. Research shows that:

  • Companies with diversity outperform less diverse organizations (15% higher for gender diversity, 35% higher for ethnic diversity) – McKinsey, 2015
  • Organizations with more women in board positions outperform peers – Catalyst, 2004
  • Team-based assessments of inclusive teams show 80% better results – Deloitte Australia, 2013
  • Inclusive Talent systems as a talent strategy best predict the highest performing companies – Deloitte, 2015

Many organizations want a specific number to measure the effectiveness of diversity and inclusion. However, the return on investment is not limited to the company’s profit and output, but also extends to its people and their loyalty, engagement, and long-term investment in the company. These non-tangibles have a strong effect on the success of a company and need to be considered if you want to calculate ROI of diversity and inclusion strategies.

Talent War

The CEB Corporate Leadership Council was able to demonstrate in 2012 that not only the performance improves in inclusive organizations, but also the intent of employees to stay within the company was 20% higher than in peer organizations.

The war for the best talent is moving away from being a region-by-region affair, to become a global market with mobile high-potentials. By managing an inclusive diverse workplace and tapping into a talent pool that allows for a diversity of backgrounds, educations, ethnicities, genders and more, organizations are opening up new channels. Companies will gain valuable insights into new consumer markets, and at the same time will be exposed to different perspectives that will help them to innovate.

“One inherent ROI as a result of D&I (or I&D) initiatives, is the other ROI (the role of the individual). As people and systems learn to navigate through more complex workplace realities, they develop a “wider bandwidth” for successfully managing higher levels of complexity in the future. This ROI is usually not part of the measurement conversation when discussing D&I initiatives, but is huge in terms of Diversity and Inclusion maturity.”

Enidio Magel, Senior Consultant, USA

“There is a limited talent pool in today’s global marketplace and the research shows that talent is currently the rate-limit factor for organizations’ global success. As an organization, if your policies and practices exclude part of this talent pool, either implicitly or explicitly, then you are in danger of losing the global talent war.”

Christie Caldwell, Senior Consultant, India & co-Author of Leading Across New Borders

Global Leadership Skills

The implementation of Diversity & Inclusion strategies and training depends on breaking up old habits, making you aware of implicit biases, and questioning the way “things have been done.” Neuroscientific findings underline our human need for persistent habits and natural preferences that are set through many years of learning and socialization. Our neural pathways take time to rewire, as Dr. Jackie Jeffreys from Middlesex University Business School explains (HR Management International Digest, 2015).

“For me, the ultimate ROI of any D&I initiative is a new awareness that translates into behavioral change. If a team leader on a conference call suddenly thanks all team members who got up at 5 am to join, if the ‘single’ executive is no longer systematically assigned the late Friday night conference call because he ‘has no kids to pick up,’ or if the team members stop making offensive ‘blond jokes’  then the D&I initiative has created a successful and inclusive team dynamic.”

–  Simone-Eva Redrupp, Managing Director of Customized Solutions, France

Expansion of Markets

The fourth and final point that Aperian Global’s thought leaders voiced was about the need for relevance.

“Looking at the world’s key growth markets today, the reality is that the future of most organizations is linked to markets in which their leaders have little or no experience. If the company has not built a strong leadership pipeline reflecting the diversity of its future growth markets, then its strategy will be flawed and opportunities in these fast-changing, nuanced economies will be lost. No organization will be relevant within our future global economy without adjusting its thinking about where it is located, how it does business, what it produces and who will lead it.”

Christie Caldwell, Senior Consultant, India & co-Author of Leading Across New Borders

“The ROI is immeasurable. Given that relationship and group harmony play such an important part in how we work together in most parts of Asia, D&I initiatives provide an explicit forum for ensuring there is inclusiveness in action in our work environment. This leads to deeper understanding and collaboration amongst business partners, resulting in far higher productivity and effectiveness. As many fast growth markets are in Asia, D&I becomes a business imperative for organisations here.”

Mui Hwa Ng, Director of Consulting APAC

Aperian Global partners with global organizations to help navigate the best approach to D&I. For more information on how we can help your organization, please visit our Diversity & Inclusion solutions page.

Suggested Additional Reading: Leaders in Diversity and Inclusion: 5 Lessons From Top Global Companies

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