When diversity and inclusion (D&I) functions are closely aligned with corporate business strategies, companies see a positive impact on reputation, employee retention and financial success, according to new research from comms giant Weber Shandwick and management consultancy United Minds, in partnership with KRC Research. The firms surveyed 500 senior-level corporate D&I professionals at high revenue companies for their new study, Chief Diversity Officers Today: Paving the Way for Diversity & Inclusion Success.
“It has long been understood that strategic D&I alignment requires organizational commitment from the top,” said Gail Heimann, CEO and president of Weber Shandwick, in a news release. “While our study shows a strong correlation between alignment to the overall business strategy and positive business results, the fact is that companies can do more to maximize the benefits of their D&I initiatives. Our study should be a call to action to companies to bring the D&I function even closer to the organization’s overall business strategy.”
The D&I Alignment Continuum
The survey classifies D&I professionals into three distinct segments according to their stated strategic alignment with business goals—Well-Aligned, Aligned and Misaligned—and provides recommendations and best practices on how companies can realize the returns on their D&I investments. Each of these segments show distinctive differences in their actions and behaviors toward reaching D&I goals.
Four in 10 D&I professionals (39 percent) strongly agree with the statement, “The diversity and inclusion function at my company is well-aligned with the overall business strategy of the company,” and are labeled “Well-Aligned” in the study. They serve as the model for best in class D&I functions. The largest segment of D&I professionals, accounting for 46 percent of D&I professionals, are in somewhat agreement with the statement. This level of D&I function has room to improve upon its alignment with business strategy. The “Misaligned” segment (14 percent) have great lengths to go to achieve alignment. They are a stark contrast to their Well-Aligned counterparts.
3 glaring issues to be remedied:
The business case for aligning D&I with business strategy
In an era where competition for quality talent is high and company work culture is often in the limelight, the study found that organizations need to consider the benefits of alignment and the risks of misalignment on their workplace, reputation and financial success. The study identified the following business results INSETbased on the level of alignment:
- Alignment has a tangible outcome on hiring. D&I activities are estimated in the study to have an impact on 30 percent of new hires and 13 percent of resignations, on average. However, Well-Aligned companies have a significantly higher rate of acceptances (33 percent) due to D&I issues than Aligned functions (28 percent) and Misaligned functions (24 percent).
- Alignment positively impacts company reputation. Eight in 10 executives in Well-Aligned D&I functions (79 percent) strongly agree that D&I is an important driver of company reputation. This rate is significantly higher than those of executives in Aligned D&I functions (44 percent) and Misaligned D&I functions (30 percent).
- Alignment positively impacts company financial performance. Two-thirds executives in Well-Aligned D&I functions (66 percent) strongly agree that D&I is an important driver of financial performance. Again, this rate is significantly higher than that of executives in Aligned D&I functions (27 percent) and Misaligned D&I functions (12 percent).
- Alignment creates a competitive advantage. The survey asked D&I professionals to assess their departmental efforts relative to those of their competitors. Those in Well-Aligned D&I functions are significantly more likely to identify their efforts as above average than Aligned and Misaligned (70 percent vs. 44 percent and 30 percent, respectively).
“Our research demonstrates that companies with the most successful D&I functions commit the resources to D&I and ensure it is integrated into the culture and larger business strategy of the organization as well as Human Resources,” said Tai Wingfield, SVP and lead of Weber Shandwick’s DEI offering, in the release. “Alignment doesn’t happen by accident, it is fostered deliberately through leadership, CEO support, financial accountability and strategic communications.”
The role of the Chief Diversity Officer today
One-third of all the D&I professionals surveyed (34 percent) hold the senior-most D&I position in their organization. Such professionals often have the title of Chief Diversity Officer (CDO), and the study uses that term to define this top position. The remainder of D&I professionals either share senior level decision-making (40 percent) or report to a CDO (26 percent).
CDOs have a very positive outlook for D&I and the expansion of the CDO position in corporate America. Eight in 10 (81 percent) are optimistic about the future of D&I and half (51 percent) predict that in the next five years, most U.S. companies will have CDO position. Below is a summary of their job responsibilities today.
- A majority of CDOs are global. More than half (55 percent) have responsibilities that extend beyond the U.S.
- CDOs have multiple reporting lines, with an average of 2.1 people they report to. They most typically report to the CEO (39 percent) followed by the Board of Directors (29 percent). Nearly one-quarter report to a business unit head (23 percent).
- The top priorities that CDOs anticipate focusing on over the next 12 to 18 months are equally, at 33 percent each, recruitment and retention of diverse talent; D&I training, learning and development; and fostering a diverse and inclusive culture.
- CDOs report that the top three most important measurements of their success are employee engagement (73 percent), retention rates (62 percent) and recruitment (61 percent).
- CDOs say that their top personal job challenge in achieving their D&I goals is making the business case for D&I (27 percent). When it comes to what their company is challenged by, CDOs identify organizational culture as the top D&I challenge (32 percent).
- CDOs identify several background experiences that they consider important for D&I leadership success. The top three are human resources (34 percent), extensive D&I background (29 percent), local community work or activities, and global work (22 percent each).
Guidelines for aligning D&I to organizational business strategy and achieving success
Best practices for alignment and success are gleaned by comparing the behaviors of Well-Aligned D&I functions to Aligned and Misaligned functions and identifying where Well-Aligned differ dramatically. The guidelines below are based on key differences.
- Appoint a D&I leader. Well-Aligned D&I functions are significantly more likely to have a dedicated D&I leader (43 percent vs. 28 percent and 25 percent, respectively) and to have a CEO who considers the senior D&I position to be a “must have” (68 percent vs. 30 percent and 13 percent).
- Establish a line of sight to the CEO. D&I professionals in Well-Aligned D&I functions have many more annual interactions with the CEO (15.1 on average vs. 8.2 and 6.9) and Board (9.9 on average vs. 6.6 and 5.1).
- Be diverse from the top. Well-Aligned D&I functions are exceedingly more likely to have ‘very’ diverse C-suites (45 percent vs. 18 percent and 17 percent) and Boards (43 percent vs. 18 percent and 14 percent).
- Make D&I part of the culture. Most professionals in Well-Aligned D&I functions report their companies have employee resource groups (76 percent vs. 69 percent and 57 percent), business resource groups (68 percent vs. 54 percent and 39 percent) and executive D&I councils (81 percent vs. 64 percent and 49 percent), all at significantly higher levels.
- Connect D&I to company’s overall business success. D&I professionals in Well-Aligned D&I functions are significantly more likely to say their job performance is measured based on their company’s financial performance (74 percent vs. 51 percent and 45 percent).
- Integrate D&I with Marketing and Communications. Professionals in Well-Aligned D&I functions are significantly more likely to consider both corporate marketing and corporate communications/ public relations ‘very’ vital to achieving the company’s D&I goals (63 percent vs. 30 percent and 22 percent for corporate marketing and 72 percent vs. 41 percent and 38 percent for corporate communications). They are also significantly more likely to be making internal D&I communications a top priority for the next 12-18 months (32 percent vs. 23 percent and 22 percent).