Redefining Priorities: The Evolving Landscape of DEI in Corporate Culture.
Richard Odufisan
DEI Lead | Multi-award winning Inclusion Leader | Helping leadership to build and nurture a more inclusive employee Experience | Ex-Wayve | Ex-Deloitte Black Network Co-Lead | Podcast Co host | Public Speaker
It feels like there is something new every week either stepping back from DEI commitments, or actively advocating against doing the work in the first place. This week, I saw an article about how ASOS is dropping their DEI bonus targets, as their execs are being told to focus on profit instead. When it was posted in the WhatsApp group I’m in with other equity leads, the general consensus was that this was disappointing but not surprising. But it’s much more than just disappointing, it represents a much wider concerning trend over the last few years. After the pandemic, companies invested heavily in diversity and inclusion roles, commitments and initiatives, but now, as the economy has worsened, it seems it was never as important as their bottom line. So are inclusive policies still en vogue or not? Let’s dive in to look at the broader implications of inclusive policies in the corporate world.
The role of Inclusive Policies
Dozens of studies and decades of research have all come to the conclusion that diverse teams are more successful than homogenous ones (see Further Reading for more details), and that is often the justification for the hard stance taken by many leaders in this space when trying to advocate for greater investment. But being honest, we’re still working out how to actually do any of this. We’re literally working to create a version of a world that doesn’t exist yet. So why were we SO upset about ASOS dropping this one initiative? Do we actually think about the impacts of the policies we’re coming up with (or sometimes just copying), or are we also guilty of rolling out homogeneous initiatives because it makes us seem like we’re trying??
Let’s take a look first at the psychology behind diversity. Diverse teams aren’t better just because of some benevolent higher power, they are better at correcting faulty thinking, generating ideas, and considering broader factors in planning partly because of what clinical psychologists call cognitive elaboration. By thinking more deeply, challenging thinking and not just accepting things at face value, these diverse teams tend to come to better conclusions. But the benefits of that diversity don’t materialise just by bringing together individuals in the same problem space. The policies we put in place (including bonus schemes and benefits) to bring in new talent mean nothing unless people feel valued and as if they have a voice (aka included) when they actually arrive. ASOS’ DEI bonus targets could feel a bit like quotas going by another name, so dropping them isn’t necessarily the worst thing.
The policies need to look holistically beyond just recruitment to advancement and development. They need to address more than just the relationship with bosses and the execs, but also with peers and colleagues. If the culture wasn’t right, keeping the DEI bonus targets wouldn’t have made any difference anyway. Employees would just end up leaving the organisation, or worse, stay but not contribute. Diversity without inclusion only creates a revolving door of talent.
Case study: ASOS’s decision
In the most recent financial report released by ASOS their annual bonus payments were 15% based on revenue, 25% adjusted profit before tax, 35% adjusted free cash flow and 25% strategic and ESG indicators, and that strategic/ESG portion was partly based on achieving 50% female and over 15% ethnic minority representation across their combined leadership team by 2023, and at every leadership level by 2030. For its current financial year, that’s shifted to 75% based on EBITDA (Earnings before Interest, Taxation, Depreciation and Amortisation), and the other 25% based on closing stock, adjusted gross margin and cost-to-service targets.
ASOS’ official reasoning was that they “do not wish to detract from our emphasis on profitability” but, at least at face value, it feels more like they’re just prioritising revenue. It’s hard to see this as anything other than a message that DEI isn’t important at all for their leadership…until you read their annual report. Acknowledging the recruitment and attraction challenges facing the broader Technology & Retail sectors, they’ve shifted to an internal-first approach with a third of vacancies filled by internal talent, which, when combined with their existing representation statistics, may actually have the bigger impact towards their objectives. They also detail the wide range of initiatives aimed at improving inclusivity in their hiring processes, people development and community impact beyond just gender and ethnicity.
All these initiatives are good in principle, and sound like valuable initiatives to run, but we can’t just ignore the impacts of the decision on the broad perception of their commitment to DEI. Compare it to other companies like Japanese firm, Shiseido, who had similar objectives around accelerating gender parity at board and executive management levels, and used “social value indicators” as part of senior business leaders’ performance metrics that were tied to their compensation. They kept those indicators, and actually made DEI a key pillar of their corporate strategy. Their efforts led to a 24% increase in the ratio of women leaders in five years (2017 to 2022). Their Next Leadership for Women programme saw 44% of participants promoted to vice-president or director roles from 2017 to 2021.
It goes without saying that the contexts are very different, geographically, and timeline-wise, and I don’t know what conversations have gone on behind the scenes at ASOS or the specifics of their DEI, but it’s definitely a situation to monitor for the impacts the shifted focus will have on both their ambitions and their perception as a brand. It’s easy to take things purely at face value when assessing the motives behind corporate decisions, especially when we’re only seeing it from the outside. As commentators, and colleagues in this work we need to be aware of how our own biases can cloud the way we interpret these things, even when it seems to be part of a growing trend, and extend grace to those working alongside us to make a difference.
Impact of reducing focus on DEI
There is evidence of a continuing trend of diminishing priority of DEI efforts across the corporate world. Since 2022, DEI roles have been among the highest proportion of jobs lost as part of the harsh layoffs in the tech industry. At Twitter, the diversity, equity and inclusion team is down to just two people from 30. This year we have seen companies like Amazon, Meta, Netflix, and Disney all reduce the size of their DEI teams, but still claim to have the same commitment to their DEI objectives.?ASOS have actually hired a DEI Director this year, but it remains to be seen how they will be supported in their efforts to deliver the strategy, if the economic pressures remain.
And it’s not looking like stopping as we go forward. 42% of C-suite business leaders said they see DEI as a low priority across their recruitment and retention strategic plans for 2024. It is almost the mirror image of what we saw in the wake of the various social justice movements in 2020, and gives the impression of the initial efforts being more for show than substance.?
But there is a tangible cost of this de-prioritisation. Without strong leadership and proactive policies aimed at fostering an inclusive environment for all employees, companies run the risk of developing an atmosphere of disengagement from their employees. We have already seen one of the symptoms of that disengagement with “quiet quitting” being one of the most unwanted trends of the post-pandemic world: ?A Gallup survey found 59% of 122,416 of global workers?say they're not engaged at work. This then contributes to greater costs around recruitment and retention, and a reduction in their ability to react to evolving market conditions and customer bases (all things that probably aren’t great for these profit-chasing firms).
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Conclusion
As someone who has struggled with what has felt like stagnancy in our industry, I understand the outcry against anything that appears to be even a small reduction in DEI efforts. We have tried to appeal to both brain and heart, make the moral and ethical case alongside the financial case, and none of it seems to have worked. At the start of this article I asked whether DEI was still fashionable, but maybe that was the problem all along. We can’t treat DEI like fast fashion, or we end up in this situation where imitation on a budget becomes the focus over sustainable efforts, we over-invest in trendy initiatives and once they’re not, we dump them without the strategic thinking of whether they’re still needed.
If we truly believe what we’re saying about the inherent value of DEI, we need to challenge ourselves to think differently about our why. Do we want DEI initiatives that just look good or actually do good? If it’s the latter, then maybe we need to accept both sides of the story. We can’t just deprioritise DEI because money’s tight, but if it’s grounded in a strategic ‘why’, sometimes changing direction can be the right thing too.?
Technology Strategy, Operating Model and Service Management Leader, Board of Directors - itSMF
11 个月Thanks so much for sharing this insights amd thoughts!