Now Is The Time to Lean Into DEI
Mon., Jan. 16, 2023
The headlines are disturbing. Major employers as diverse as Walmart, Ford, Tesla, Amazon, and Re/Max have announced massive layoffs. The vast majority of CEOs expect a recession in 2023, and 50% of companies are planning layoffs.
With the dual threats of economic weakness and high inflation, how should we as leaders balance short-term headwinds with long-term Diversity, Equity, and Inclusion (DEI) goals? Past economic cycles reveal that DEI efforts are first on the chopping block. Is now the time to pull back?
On the contrary, companies should remain committed to diversity and inclusion, especially during recessions. New McKinsey research reveals that companies with authentic DEI programs increasingly outperform during both downturns and upswings, while companies lacking diversity are increasingly disadvantaged.
“Combatting inequity and creating opportunity for all is not just smart business, I believe it’s the moral imperative of our day. In the words of Dr. Martin Luther King, Jr., “The time is right to do what is right.”
Diverse and inclusive companies outperform in numerous ways. Recent academic studies show that diverse work groups have better anticipation, coping, and adaptation skills and are more resilient during downturns. They have more strategic agility and better problem-solving skills to navigate economic uncertainty. Diverse teams are more innovative, spot opportunities faster, and are 45% more likely to gain market share and 70% more likely to capture new markets.
A large new study on 1600 companies reveals that companies with inclusive cultures outperformed the S&P 500 significantly during the Great Recession (+14% versus -35%). These companies also enjoyed 4x the performance of the S&P from the period of 2006-2019.
With 10.5 million US job openings, the war for talent still rages on—with 2 jobs for every jobseeker in Colorado. The best-performing companies acquire assets during recessions, while others shed them. Top talent is no exception. Three out of four job seekers and employees prize diversity in the workforce, and diverse companies will continue to win the talent war.
Not just a recruiting aid, successful DEI efforts help companies maintain morale and avoid the reputational harm of backtracking on equity. Truly inclusive cultures are more successful at retaining key talent.
There are myriad reasons to lean into DEI, but the most compelling is that it’s the right thing to do. Time and again, downturns have most severely impacted women and people of color. Colorado, the 12th most prosperous state, ranks 37th for the racial inclusivity of our economy. And the COVID pandemic dramatically widened the disparity in employment, income, and wealth experienced by under-resourced Coloradans.
Combatting inequity and creating opportunity for all is not just smart business, I believe it’s the moral imperative of our day. In the words of Dr. Martin Luther King, Jr., “The time is right to do what is right.”
Now is the time to recommit to authentic diversity, equity, and inclusion. Let’s keep our eyes on the prize.
Helen Young Hayes is the Founder and Board Chair of the Colorado Inclusive Economy, a 150-member CEO-led movement to build multicultural workforces from the top down and inside out. She is also the Founder and CEO of ActivateWork, a nonprofit recruiting, training, employment, and coaching organization that launches economic mobility and IT careers for exceptional and diverse technologists. Helen was the recipient of the CWCC Top 25 Most Powerful Women in Business Award in 2021.