Diversity, equality and inclusion (DEI) should be taken seriously. Yet, for some businesses, these are merely buzzwords. Almost 10% of respondents to a recent Workday survey said their organisation denied the importance of diversity, while nearly 20% said it was trivialised.
We examine the risks companies face, such as discrimination claims and reputational damage and explore how DEI helps businesses make better decisions.
What does DEI look like in the workplace?
An internet search brings up anything from three to 30 different diversity types. But typically, workplace diversity aims to create an equal, open and welcoming environment, regardless of gender, race, religion, sexual orientation, age or disability.
However, if businesses think having a diverse mix of people on the payroll is job done, they need to think again. Equity and diversity is not a 'once and done' tick-box exercise. Organisations must also ensure they have an inclusive culture.
Inclusion is the catalyst that allows businesses to benefit from the rich blend of experiences and backgrounds offered by a diverse group of people.
To be truly inclusive, companies must ensure that everyone is comfortable enough to be themselves, achieve their full potential, and are empowered to speak out – and be listened to – without fear of reprisals, abuse or discrimination.
What is risk management?
Simply put, risk management is the process that ensures a business identifies, understands, manages and mitigates potential risk events – legal, financial, strategic, security and operational.
But risk management is more than minimising threats. It's equally about creating and maximising positive outcomes.
Are your risk management policies and processes up to date and still fit for purpose? Is the business expanding into new areas or transitioning internally? Your employees are potential consultants bursting with valuable insight, advice and expertise.
Organisations with a culture that encourages and invites people to actively contribute can learn from the wealth of experience and backgrounds a diverse workplace provides.
By listening to contrasting or different viewpoints and acting on their teachings, your business can ensure it is best equipped to face the expected – and the unexpected.
How DEI plays a critical role in risk management
Inclusive and diverse workplaces cultivate a better understanding of risk and, subsequently, make better decisions. Where teams are made up of one group – such as older, white males –organisations run the risk of 'groupthink', where people who are largely alike make poor, unchallenged decisions based on their limited sphere of influence.
And the more senior the groupthink team, the more likely these poor decisions will filter down, impacting both business and people.
A diverse range of backgrounds, expertise, experience and perspectives enables information to be run through a wider lens and thoroughly consider all angles.
Typically, an inclusive team also better manages conflict within the group and solves problems faster. The result is a natural and holistic blend of checks and balances that foster creativity and transparency.
What are the benefits of DEI in risk management?
Worldwide research collected by non-profit organisation Catalyst revealed gender-diverse boards outperformed their non-diverse counterparts in environmental, social and governance (ESG) activities.
Catalyst also found that women board directors are more likely than men to consider social issues like human rights, climate change and unequal pay as essential components of any corporate strategy. They're also more likely to embed practices designed to improve employee health, well-being and work/life balance.
According to social enterprise Diversity and Ability, 77% of disabled employees and 80% of leaders choose not to share their disability at work. In addition, 46% of LGBTQ+ employees are closeted while at work, while 75% of employees feel the need to mask or downplay their differences.
For all businesses, there is an inherent risk of losing expertise and experience, but people who feel uncomfortable or unwelcome – at all levels – will, first, quickly move on and, second, may well consider legal action for discrimination.
And people talk. Sites like Glassdoor, where people share their company experiences, will soon flag a business where 'banter', abuse or discrimination is unchecked. Companies run the risk of substantial reputational damage, reduced business and loss in profits.
Where people feel safe to be themselves, they are more engaged, productive and loyal. And being seen as a company that cares helps not only to retain key talent but attract it. Other businesses, too, demand more of the organisations they partner with.
For many, a commitment to DEI is necessary – one that shows they are working with a company that shares their values and enhances, rather than diminishes, its reputation.
How businesses can improve DEI
DEI is clearly key to reducing risks of all kinds. However, Workday's 2021 study across the UK and Europe revealed that one-third of businesses (36%) don't have a strategic approach to DEI, and only a fifth had taken the first steps to create one.
A clear DEI strategy is the blueprint for success. It needs to:
- Candidly assess the current state of play. Dig into the data. Do you know your staff demographic? Almost a fifth (17%) told Workday their organisation didn't monitor for any diversity characteristics.
- Identify the strategy's aims. Ensure these objectives and the timescale set to achieve them are realistic.
- Seek employee insight. No one understands the challenges of DEI better than those it directly affects. Ask employees for feedback on their workplace experiences, ensuring they can do so anonymously if they choose, honestly and without fear of reprisals. Act on the findings.
- Include training and education for all employees, including senior members of staff.
- Carry out due diligence. Ensure your compliance and legal teams thoroughly review the strategy before it goes live so you're not open to discrimination claims. Once launched, promote it and make sure all employees know where to find it.
- Regularly monitor the strategy's progress. If areas aren't working, be prepared to make changes.
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