Key Areas in DEI to Prioritize in 2024
February 6, 2024 – Workplace diversity, equity and inclusion (DEI) is in the midst of a perfect storm. The Supreme court decision to overturn race-based affirmative action policies in college admissions gave way to a series of legislative challenges targeted at workplace DEI. Now, organizations are grappling with the aftermath and continued close inspection on DEI, with many asking ‘what now?’. To address some of these crucial questions, Russell Reynolds Associates brought leaders from the academic and business world together to share their thoughts towards the future and its DEI evolution.
Russell Reynolds explains that DEI needs to be built-in, not bolted on. The legal context necessitates that leaders build-in DEI across everything. “DEI programs have been in the cross-fire lately, with conservative activists questioning the legality of initiatives designed to close the gap on outcomes for historically underrepresented groups,” the search firm said. “Underpinning this contention is the belief that creating targeted programs for select groups excludes others, thus giving cause for discrimination.”
Take, for example, a C-suite accelerator program targeting women of color, according to Russell Reynolds. “While these programs are valuable—especially in the aftermath of the US racial justice movement—when they exist outside of the standard C-suite succession process, their exposure to legal contention is heightened,” the firm said. “Instead, organizations need to build in equitable succession practices into the overall succession process and include all employees. The difference to bolt-on or build-in may seem subtle, but it can be the marker of establishing evergreen solutions that remain intact in a changing legal landscape, whilst ensuring maximum impact for all groups.”
“It is critical to start with the company strategy, whether that be three-year or a yearly strategy,” said Sherida McMullan, VP of diversity, inclusion & belonging at GitLab. “Understand what the top priorities are and how DEI aligns across those priorities. If your company has values, is DEI one of them? If not, your implementation will be tougher.”
Russell Reynolds explains that beyond supporting a more systemic approach to DEI, external affinity-based associations can also play a vital role in complementing workplace DEI initiatives with affinity focused programming. “We heard from many associations leaders that, despite the evolving legal environment, they are continuing to offer programming designed to supplement gaps in board and executive attraction, development, and retention,” the firm said.
“By virtue of being a connector of professionals and companies in a corporate environment, member associations are uniquely positioned to gather together constituents across industries and the community to strengthen and build our collective DEI knowledge, share information, and conduct research, which can in turn be used to enhance people/talent practices,” said Anna W. Mok
president, executive board chair, and co-founder of Ascend & Ascend Foundation.
“The Latino Corporate Directors Association and our peers recognize a unique opportunity to reinforce our commitment to inclusion by placing a strong emphasis on talent development,” said Ozzie Gromada Meza, president and CEO of the Latino Corporate Directors Association. “By providing targeted resources and initiatives, we aim to equip executives and board members with the skills and insights necessary to navigate the complexities of the corporate world. This talent-centric approach also recognizes the inherent value of diverse perspectives in driving innovation and sustainable business success.”
DEI Needs to be in Service of Your Business Outcomes
Working backwards from business outcomes will ensure impact and sustainability of DEI, Russell Reynolds Associates explains. Organizations leading the charge with a built-in DEI strategy are also connecting DEI to their business outcomes. The firm notes that this approach centers on the ability to identify business outcomes (i.e., market growth, customer activation, community engagement, talent attraction and retention), and consider how DEI can enable said outcomes. “Working backwards from this, DEI principles and practices can be baked into all layers of the business to drive collective impact,” the firm says. “What’s more, by tying DEI closely with the business, the opportunity for impact increases and becomes more sustainable.”
“The current economic and business environment places a premium on achieving business results, making DEI a vital enabler,” said Deepti Sodhi Jaggi, board member, Envision Pharma Group and Technology Credit Union (Tech CU).
Across industries, Russell Reynolds observed how DEI can act as critical driver of business. In fact, via RRA’s DEI governance survey, we know that 96 percent of chief diversity officers and HR leaders with DEI responsibility connect their DEI and business strategies. When it comes to DEI operations, 40 percent of DEI leaders reported an approach which saw DEI activity happening at the business unit level, alongside a more traditional centralized approach.
“This year, one of our company objectives is to continue building and retaining a diverse team of high performing talent,” said Ms. McMullan. “To achieve this, I met with our CEO and his staff to discuss where each division’s objectives & key results (OKRs) align to that objective. Our People team developed global aspirational DEI goals in alignment with our CEO. Similar conversations occurred for each group leader and hiring area, allowing us to focus our efforts and set OKRs aligned across division leaders, people business partners, people operations, and the talent acquisition team.”
DEI Needs to be Treated as a Governance Issue
The shareholder environment necessitates boards with DEI knowledge to manage risk & enable impact. Russell Renolds explains that as DEI topics become intertwined with broader macro trends, business outcomes, and risk mitigation – DEI governance has become a board priority. Over the past three years, shareholder requests for DEI audits have grown, despite a small rise in ‘anti-ESG’ proposals. For the 2023 proxy season, approximately 89 pro-Human Capital Management proposals were submitted—of which DEI made up 61 percent. “DEI reporting requirements from listed companies, as well as emerging state-level diversity legislation, have also elevated DEI to a governance issue,” Russell Reynolds says. As of an October 2022 report by EY, 41 percent of S&P 500 companies included DEI among their compensation committees’ areas of oversight, and 11 percent had a separate sustainability committee.
“Yet while the DEI agenda looks here to stay, we’ve heard concerns about the boards preparedness to effectively govern it,” the search firm said. “Now, more than ever, DEI subject matter knowledge will be an important differentiator for future boards.”
“With the socio-political environment in flux, there has never been a more complicated or challenging time to be an executive and board member,” said Ms. Mok. “We all need to continue to relate to our many different stakeholders in an inclusive and holistic way that helps all be successful… the leader’s job is not to know everything, but to have the skills and embodiment to navigate through uncertain and unpredictable times through felt authenticity and deeper connections to other people.”
“Boards play a pivotal role in ensuring DEI practices are not just implemented, but consistently reviewed,” said Dr. Sodhi Jaggi. “Governance structures should be designed to prevent bias or quotas, instead focusing on equity, inclusion, and belonging. Regular reviews of DEI metrics enable organizations to track progress and make necessary adjustments.”
Despite our current climate, the leaders Russell Reynolds spoke with were optimistic and energetic about the road ahead. “Whilst DEI is at a crossroads between challenge and opportunity, activating its benefits to create balanced, successful, equitable organizations remains the ultimate goal,” the firm said.
Related: Achieving Diversity in Private Equity
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Executive Editor; Lily Fauver, Senior Editor – Hunt Scanlon Media
