Building the Business Case for Maintaining ID&E Efforts

Over the past decade, Inclusion, Diversity and Equality (ID&E) efforts inside leading organizations have been on the rise. Within the context of the last few years, however, we saw a significant spike in those efforts, as more and more voices were not just asking, but demanding to be heard. Unfortunately, as with any pendulum swing, momentum has recently started to move in the opposite direction, as economic considerations continue to dampen investment in and prioritization of ID&E. It’s a worrisome trend that seems to be missing the economic case for doing more.?

With the recent US Supreme Court ruling rolling back Affirmative Action in college admissions and its potential implications for the corporate sector, the importance of senior leadership across organizations advocating for and investing in ID&E should be amplified—now is the time to step up, not aside.

To better understand the current state of ID&E and give perspective on why it truly matters, we recently undertook research analysis of over 1,100 companies based in the US, the UK and Canada. We reviewed more than 84,000 earnings calls to see the frequency with which ID&E was mentioned at an executive level to help us develop our ID&E Prioritization Index.

Specifics uncovered through our analysis proved interesting and showed us the following:

• Over the longer period of the past decade, there were 300% more conversations at senior executive levels regarding ID&E compared to a decade ago.
• The beginning of 2020 brought a spike to ID&E mentions during earnings calls, followed by an even greater spike in 2021, with executives frequently prioritizing ID&E conversations in earnings calls.
• 2022 saw a significant downfall, as ID&E discussions dropped by nearly 28% when compared to 2021.
• Over the longer period of the past eleven years, when progress was seemingly being made, a full 34% of companies sampled had no ID&E pronouncements or discussions whatsoever in their earnings calls—a finding which seemingly flies in the face of “universal progress”.

Although our research found that ID&E discussions have scaled back, overall three times more companies are discussing ID&E today compared to a decade ago—and there is good reason for that. Our new research also clearly confirms what’s been known for a while: companies that do commit to consistent ID&E support and tangible actions are more likely to have better financial returns and are associated with having a more productive workforce and greater employee engagement than those that do not.

Research from MAHA, an Accenture ecosystem partner, found that companies that are more transparent about their ID&E values and practices are more likely to be those that enjoy better financial returns.

Some of the key research findings related to ID&E business impact include the following:

• Companies that invest in their ID&E policies, leveraging more mature practices, can enjoy premiums in financial performance, demonstrating higher Revenue and EBITDA growth (at 2.8% and 3.1 % higher, respectively).?
• The most considerable results of mature ID&E practices can be seen in boosted productivity levels (EBITDA per employee)—on average 9.1% higher.
• Maturity of ID&E efforts is also positively correlated with employee satisfaction and company reputation.

Our Accenture research also showed that there are three types of companies: Champions, Adopters and Laggards. As you might imagine, Champions are leading the charge, making consistent effort to invest in ID&E. Out of our 1,100 companies, 288 had a maturity score in the top 75th percentile. Adopters come in next with another 288 falling in between the 50th and 75th percentile. The Laggards made up the remainder, with some having made no visible ID&E efforts at all.

We also explored whether there was a positive relationship between ID&E efforts and organizational KPIs like career opportunities, culture and values, and work-life balance—as well as overall reputation of companies. We found that there is indeed a positive correlation, meaning any improvement in ID&E practices could be expected to also positively impact employee satisfaction across various dimensions, including the aforementioned employer ratings, culture and values and career opportunities.

Consumer Facing Industries Are Leading on ID&E Engagement

Consumer-facing industries are leading ID&E engagement with proactive conversations. We found that the top five industries on ID&E engagement were Utilities, Software & Platforms, Retail, Banking and Health.?

Our ID&E Prioritization Index—which specifically measured the proactivity of companies toward ID&E efforts based on their language and positioning of ID&E in their earnings calls—found that over time, many companies are becoming increasingly proactive when they are setting goals and launching campaigns or initiatives to promote ID&E within their workplace. However, most industries continue to use broader language and have been engaging in reactive conversations rather than developing and pursuing strategic approaches (although we have seen in recent years, with the backdrop of global events after 2020, some laggard industries and organizations have moved to more proactive conversations).

Moving Toward Tangible Actions

?The bottom-line is both simple and important: companies that do commit to consistent ID&E support and actions are more likely to have better financial returns and are associated with having a more productive workforce and greater employee engagement than those who do not.

The good news is that a firm and promulgated C-suite commitment can meet both financial and moral imperatives. And if companies are able to broaden the conversation around the benefits of ID&E beyond the moral imperative so as to include the economic case, the present slowing of investment may—and hopefully will—shift course. Companies that are not elevating or prioritizing ID&E initiatives are leaving money on the table, losing out on productivity gains and exposing themselves to possible reputational risk and regulatory implications.

There is a clear connection between ID&E and economic value—but it is up to leaders to help amplify that conversation. To learn more about our research and our ID&E Prioritization Index, please reach out to our research team at [email protected].