Joe Santana is an advisor, author, speaker and CEO of Joseph Santana, LLC. He helps companies prepare for a diverse 21st-century workplace.
I have a paperweight my wife gave me years ago with a quote from Albert Einstein: “In the middle of difficulty lies opportunity.” Unfortunately, great opportunities are often squandered by short-sighted decisions. I believe a prime example of this today is how some companies in the United States are restructuring their diversity, equity and inclusion (DEI) efforts.
Recently, several major corporations have announced a scaling back of their DEI efforts. What do many of these companies do when walking back pledges, heritage celebrations and public relationships with social justice organizations? Unfortunately, they often fire their chief diversity officer (CDO) and leave the remaining DEI responsibilities in the hands of HR. I think that is a huge strategic mistake for the bottom line and there is an alternative.
When DEI Efforts Can Fail To Deliver Business Value
Some companies cannot pinpoint a single instance where their DEI practices had a bottom-line revenue impact. Why? The primary issue I see is that DEI efforts have historically been orchestrated by the human resources department. However, HR’s focus on compliance and employer branding does not align with the broader goals of increasing market share, competitiveness or driving revenue. Even when companies hire CDOs, having them report to HR can reduce their efforts to symbolic gestures used as proof of a good faith effort toward compliance and PR. These tactical activities might protect companies from lawsuits and make HR look good, but they don’t unlock new revenue streams. They were never designed to do that.
DEI efforts under HR can also fail to concretely show success in creating inclusive workplaces. Many employees, especially those from underrepresented groups, distrust HR and anything connected to HR, perceiving the entire HR ecosystem as protecting management’s interests over employee well-being—even when managers behave unethically or illegally. Research from Secure Data Recovery revealed that 43% of employees feel uncomfortable confiding in HR, and over a third don’t trust the department. In this “fear-bound” environment, few employees are likely to voice their disengagement or feelings of exclusion.
Furthermore, studies indicate that HR is prone to presenting an overly rosy picture of their inclusive workplace success. A Workhuman study found that while HR departments rated their inclusion effort success at 97%, employees scored it at just 37%. So, what’s happening here? Well, it appears that HR is measuring its success based on its performative efforts, which employees are not buying. This disconnect means business leaders may be misled by reports of success in creating engagement and inclusion while silently bleeding millions in turnover costs from disengaged employees leaving at a faster rate.
How Demographic Insights Can Lead To Economic Opportunity
While many companies flounder with these ineffective programs, I see others seizing economic opportunities created by demographic and market shifts to reduce costs and increase market share. Here are just three examples:
• A major online retailer and a top snack food brand leveraged demographic insights to develop new products and unlock entirely new revenue streams.
• A major airline used travel data from specific demographics to fill empty seats, generating over $1 million in additional revenue.
• During the pandemic, a Wisconsin-based healthcare system identified a lack of awareness among non-English-speaking patients about their telehealth services. By targeting Spanish-speaking communities through strategic advertising, they significantly expanded their patient base and boosted revenue.
These companies show us how demographic insights presented at the proper levels in an organization can translate into competitive advantages and measurable financial gains. The good news is you can use this time of restructuring to place yourself in a similar position.
3 Tips For Restructuring Your DEI
If your organization is going to restructure its DEI, I recommend the following approach:
1. Create a Chief Demographic Advisor role.
This could be your former CDO if you deem them to have the appropriate business acumen, but they should report directly to the CEO or COO, not HR. Task the CDA with bringing demographic insights into core business strategies to lower operational costs and unlock new revenue streams.
The CDA should work across departments with top sales, marketing, operations and supply chain leaders to ensure demographic shifts are leveraged for business advantage.
2. Leave compliance and branding to HR.
I believe there are some tasks HR is better equipped to handle, such as compliance, branding and Equal Employment Opportunity responsibilities. HR and legal can assess risks and decide whether to pursue or abandon external social justice commitment PR.
3. Periodically poll employees.
The CDA can periodically poll employees and look at turnover gaps to broaden insights into HR reports on the success of its workforce and workplace inclusion efforts and identify operational cost reduction opportunities. This structure can drive growth and provide leadership with more accurate, actionable insights into workforce and marketplace dynamics.
Disruption, as noted by Einstein, creates opportunity. By leveraging the current state of flux to transform the CDO role into a CDA reporting directly to business leadership, letting HR continue running all the compliance employer branding tactics and pulling the fluff out, you can join other successful organizations in leveraging demographic shifts to fuel innovation, competitiveness and financial success.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
