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How campanies can advance diversity, equity & inclusion

Most business leaders, when they set out to build a DEI strategy, focus their attention inside their organizations—on things like hiring policies, strategies for retaining and advancing employees from underrepresented groups, and the cultural factors that promote or inhibit greater diversity, equity, and inclusion. Yet in our experience working with some of the country’s largest and most successful businesses to advance their DEI goals, leaders who look beyond their own ‘four walls’—focusing as much on external stakeholders as on their own workforces— are poised create more significant impact with their DEI strategies than are their peers.

By Elyse Rosenblum* & Julie Coffman* I Forbes

How a company acts, and is viewed, externally when it comes to DEI has a big impact on its relationship with both internal and external stakeholders. For example, 50% of all employees say they would consider switching jobs for a company with a more built out DEI strategy or greater pay equity. And besides reinforcing internally focused DEI efforts by building trust and loyalty among their workforces (and attracting future talent), robust DEI programs can gain or increase customer loyalty by responding to the 51% of US adults who say that who say they would be either “more likely” or “much more likely” to support a company that makes a public commitment to DEI initiatives.

At Bain & Company and Grads of Life, we’ve developed a framework of five core areas of business operations that effective DEI strategies span. Four of these areas of operation are internal, while the fifth—external engagement—looks outside a company’s walls to embed DEI in things such as supply chains, customer and product strategy, community engagement, and communication with the general public.

There are many ways businesses can embrace this important component of DEI leadership. In a report published in 2021, for example, we explored how supplier diversity programs can create powerful ripple effects within communities historically excluded from the economic mainstream. Here we look into three additional actions companies can take to build strong DEI external engagement strategies and advance equity beyond their four walls.

Report externally on DEI efforts, goals, and outcomes

By reporting consistently and transparently on DEI goals, efforts to meet those goals, and progress towards target outcomes—businesses can signal a clear commitment not only to the principles of DEI but to the hard, ongoing work that goes into living out those principles.

Such external reporting signals commitment in more ways than one. It demonstrates that a company has already invested in data collection and tracking systems, affirming that DEI is a strategic priority for the business. Public disclosure of DEI data also increases business accountability and can lead to more meaningful action: when leaders know information will be public, they are more likely to behave in ways aligned with their stated principles and goals. A good example of a company publicly reporting on its DEI efforts is Accenture, a founding member of the OneTen Coalition; in 2020, Accenture publicly disclosed its DEI goals as part of an effort to create accountability and accelerate progress on DEI.

As a commitment to DEI becomes more and more important to the next generation of talent, a growing number of jobseekers are also demanding transparency: 21% of jobseekers say they would not apply to a job if the company does not publicly share its employee demographics and goals to increase diversity (a kind of statistic that seems especially significant amid the Great Resignation). Likewise, there have been several recent calls from U.S. regulators and members of the investor community for increased DEI data transparency.

Despite the clear benefits, however, only one third of companies tracked by JUST Capital disclose DEI data on racial and ethnic diversity representation. The opportunity for greater transparency remains significant, and we’ve seen some strong early actors in this space. For example, Yelp’s approach to building a more diverse workforce includes setting explicit targets for diversity, implementing focused strategies to achieve those goals, and communicating details externally via recruiting materials and an annual diversity report. And Yelp has increased the number of women in technical positions in the company by 8%, and Black and Hispanic employees by 5%, in only three years.

Build inclusive and equitable customer experiences

Customers are obviously a critically important group of external stakeholders for any company. And businesses have a responsibility to carefully consider how their own product and service offerings—and the way they deliver these to customers—may be perpetuating inequitable status quos.

We’ve found that a helpful starting point for companies to assess how equitably they are serving customers can be to examine customer data. For example, discrepancies between a company’s customer mix relative to the local population could point to certain demographic groups being excluded due to lack of physical or digital access, product affordability, exclusive messaging, or other barriers. Furthermore, differences in customer satisfaction scores can indicate service level discrepancies for different demographic groups. Leading companies also measure how specific customer equity outcomes generated by their products/services (e.g., time to recovery for hospitals, or loan approval rates for banks) may differ by key diversity vectors such as gender and race.

Such data can be a powerful indicator of where a company’s products or services may contain inherent biases that perpetuate inequities, even and especially if these