Diversity, Equality, Inclusion
Diversity, Equality, Inclusion

Understanding the Relationship Between Inclusion, Diversity & Compliance

As DEI programs become a hot topic of conversation across industries, demand for varied initiatives and funding increase. We’ve talked a bit about the importance and benefits these programs can offer your organization, and they really are worth the effort.

Unfortunately, the truth is that it may be challenging for employers that lack experience with diversity compliance programs to know how to practice and teach nondiscrimination and ensure equality and fairness.

To overcome this obstacle, many organizations establish compliance programs to ensure there is a workplace environment of diversity compliance. However, before you allocate money to DEI training programs, you need to build a good foundation of diversity, equity, and inclusion understanding, and mutual respect in your workplace.

There are a few different diversity compliance initiatives your organization may want to take into consideration. Based on what you decide is most important to begin with, you’ll want to define the most accurate meaningful diversity and inclusion metrics to measure your progress and ensure you’re taking the right steps.

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Developing a diversity compliance initiative

There are four major phases in developing a DEI initiative:

1. Collect and analyze data to determine the need for change

Before you can set up an effective program or initiative, you need to know how your workforce compares with the labor market. Taking note of any inequities is how you can best understand if they’re being caused by demographics, gain a better understanding of your own employee makeup, and determine what you may need to change in your organization.

As we mentioned in the metrics breakdown, collecting this information can present various challenges but most can be overcome with the right approach. Beyond understanding how your workforce breaks down demographically, it can be helpful to collect information about the current company culture regarding diversity, equity and inclusion. This will give you some insight into how your DEI culture is appreciated or where it may be lacking.

Based on the information you gather, you can identify which areas are problematic and need to be addressed. For instance, you may see that your HR department hires only females, and white females tend to be promoted at a higher rate than their black counterparts.

2. Identify business objectives

The next step is to identify how a diverse, equitable and inclusive workforce will support your organization’s business objectives. Once you identify those objectives, your DEI strategy needs to align with them. Do you strive to be more innovative? Do you want to focus on increasing your profitability? Perhaps you want happier employees to increase retention. Or better relationships with your vendors – the possibilities are vast.

Identifying the relationship between your DEI initiatives and your business goals will also help secure the necessary support from senior management. It’s also the time to set out who will be held accountable for supporting and engaging in your DEI goals, and how they will do so. Setting up diversity committees is a popular way to ensure someone is being tasked with the implementation of the chosen initiatives.

3. Create and implement an action plan

It’s time to come up with a plan of action, setting clear goals for the initiative. Define responsibilities, action items, and deadlines. You need to clearly communicate your DEI initiatives and goals both within the organization to stakeholders and without, to media and vendors, as appropriate.

4. Evaluate and optimize

As you measure the results based on your chosen diversity and inclusion KPIs, be sure to communicate them throughout the organization to demonstrate success.  Or, alternatively, tweak your efforts to optimize your action plan. Reviews will have to be ongoing, as results may take time to change and efforts will need to be adjusted to reflect your changing business and DEI goals.

Tweak your efforts to optimize your action plan to reflect your changing business and DEI goals.

Benefits of combining diversity compliance and inclusion

Recruit top talent

As Forbes found in this study on Global Diversity and Inclusion, “A diverse and inclusive workforce is crucial for companies that want to attract and retain top talent. Competition for talent is fierce in today’s global economy, so companies need to have plans in place to recruit, develop, and retain a diverse workforce.”

As more organizations adopt new DEI initiatives, job seekers consider the diverse environment that a potential employer offers. According to Glassdoor, a whopping 67% of job seekers consider workplace diversity an important factor when considering employment opportunities. So it’s definitely worth the effort; neglecting the proper DEI considerations could actually hurt your chances of recruiting top candidates. Additionally, as you put more DEI recruiting strategies into place, it will also offer you a wider pool of talent to recruit from.

Drive innovation

The same study by Forbes also found that,

Diversity is a key driver of innovation and is a critical component of being successful on a global scale. Senior executives are recognizing that a diverse set of experiences, perspectives, and backgrounds is crucial to innovation and the development of new ideas. When asked about the relationship between diversity and innovation, a majority of respondents agreed that diversity is crucial to encouraging different perspectives and ideas that foster innovation.

This has been proven in a number of studies. Deloitte found that 74% of millennials believe their organization fosters innovation when an inclusive culture exists. Harvard Business Review found that companies with higher-than-average diversity had 19% higher innovation revenues. Need we go on?

Retain employees

As with recruiting top talent, diversity and inclusion also means higher retention rates. This speaks directly to employee happiness; diverse workplaces are happier, and happier employees are both more productive and less likely to leave their jobs.

Fostering a diverse work environment means higher levels of innovation and employees who feel more valued for what they can bring to the table.  According to Social Work Today, “The more diverse a company’s workforce is, the more loyal, happy and productive its employees tend to be, according to a new study led by a Ryerson University professor.”

Understand customers

As you diversify your workforce, it’s only natural that you will strengthen your relationships with customers. According to this study by Quantum Workplace, roughly 48% of employees believe that respect is the most essential factor for a culture of inclusion. Happy, satisfied employees that understand the importance of inclusion are better able to understand and serve clients, as they value differences in culture and perspectives.

What are the risks of DEI noncompliance?

But let’s look at the flip side of the benefits argument.  Culture change costs money; are there significant risks and costs if an enterprise decides to not invest in DEI compliance and training?  There absolutely are.

Regulatory risk

This is obvious: Regulators have, for years, been look for companies to demonstrate they’re investing in equality of hiring and opportunity as part of promoting a fair and equitable workplace.  So it won’t be surprising to see even more regulation or enforcement.

Employee attrition, falling productivity, and sliding morale

Employees who endure harassment or discrimination, or are aware it’s going on, are likely to leave.  That can cost a company a significant amount of money, both in terms of replacing them any legal challenges that may arise.  Just as Fox News about the costs of a toxic workplace culture.  Even if employees don’t walk, there’s damage to productivity and engagement.

Management and governance continuity risk

See Fox News again, or any number of other firms where officers and executives have been forced to depart due to violations of DEI policies or legal and regulatory challenges.  Losing leadership and experience at all levels of an organization can be harmful to business success.

Reputation and brand risk

Your stakeholders, the media, and regulators all expect a company to prevent harassment, and make improvements around DEI.  But failing to do so creates the risk of permanent or at least lasting damage to your reputation and brand equity in the marketplace.  It’s why Aunt Jemima was retired, after all.

Market share erosion

If you lose brand standing, you’re going to lose sales, period.  It’s why no company can afford to stand pat on DEI, because the expectations of the market and stakeholders have swung: they expect, even demand, action.

Customer/client losses

Legal departments are driving DEI in the legal industry by insisting on supplier/partner compliance with DEI initiatives.  If you’re not on board with that, you’re going to lose that client, and this will probably become more prevalent across more sectors of the corporate world, not just the legal ecosystem.

Vendor network risk

It’s not only about your own policies and culture; the market or regulators may hold you accountable for the failures of your suppliers.  Or key suppliers may even have a hard time countenancing you as a customer if you’re guilty of infractions that might drag them down, too.

Insurance costs

Not dealing with DEI matters and allowing harassment to continue can drive up your insurance costs.

Where to start with diversity compliance

So those are the four major steps of developing a DEI initiative, but you may be wondering: Where do I begin within my own organization? Here are some suggestions to nudge you in the right direction in kick-starting your DEI programs, and which areas to consider for initial implementation.

Educate leaders about unconscious bias

One of the most popular forms this process of education takes on  is training programs. Most organizations begin their DEI learning as unconscious bias training, a fundamental concept for understanding discrimination and inequality. This process should start at the top: encourage leadership to honor others’ opinions and promote sharing ideas and constructive debate. Uncovering biases and understanding how to change your approach and behaviour is key to making a difference.

On the same note, it’s just as important to include your DEI initiatives into leadership development programs that already exist. It should be added to training regimens wherever possible, from talent acquisition programs to new manager training.

Develop a diversity and inclusion scorecard and measure business impact

This is a straightforward way to hold leaders and management accountable and to identify outliers in your diversity and inclusion initiative. As we mentioned earlier, measuring your business goals is a fantastic way to show that DEI is more than a socially conscious undertaking. 

These are just two of the more popular ways that many organizations kickstart their DEI program. You may like this approach, or want to explore other options – no matter what your decision may be, it’s undeniable that having a diversity compliance initiative in place will offer real returns on that investment.

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