Companies with DE&I Initiatives Are 35% More Profitable. Why Aren’t There More of Them?

CHANNEL PARTNERS CONFERENCE & EXPO, LAS VEGAS — DE&I initiatives are more than a trend among such tech giants as Google and Facebook.

They are economic imperatives according to the panelists who spoke Monday at the Channel Partners Conference & Expo session, the Business Case on Diverse Talent.

There’s one statistic that stands out.

Business teams that are more diverse—whether that’s racially, socioeconomically or educationally— are 35% more profitable than organizations that are not, according to McKinsey & Company.

AppSmart’s Mayka Rosales-Peterson

Mayka Rosales-Peterson is senior program manager, managing partner program at App Smart.

“The people who are signing the contracts and who are now decision makers are women, Latinos or African American people, right? So, if your organization is not reflecting the communities that it wants to serve or communities that it wants to tap into, it’s a huge issue.”

A Demographic Shift

The demographic changes in the United States speak to Rosales-Peterson’s outlook, something the panelists discussed. By 2050, a majority of the U.S. population will be non-white, and that diversity will reflect itself in the workforce. Additionally, Deloitte says: “The labor force participation rate of women aged 25 to 54 is projected to rise between 2014 and 2024 (from 73.9% to 75.2%), while the rate for men in the cohort is expected to decline (88.2% to 87.3%).”

Beyond cultural and gender backgrounds, diversity is also about life experience, the panelists reiterated. This could mean hiring someone who didn’t go to college.

Five9’s Kelli McMillan

Kelli Ballou-McMillan is founder of Xposure and global partner director at Five9.

“Whether they finish college, whether they were entrepreneurs first and then decided to transition back into the workforce…these are diverse hires that a firm is then able to use to create additional relationships with customers.”

Few DE&I Programs

Despite the documented benefits of DE&I initiatives, less than 15% of corporations have a DE&I strategy, the panelists said. Part of this may stem from management not placing importance on DE&I initiatives. However, for other firms, it may be a question of not knowing how to start and pay for them.

MSP Growth Coalition Juan Fernandez

Juan Fernandez is chief encouragement officer at MSP Growth Coalition.

“As a business owner we often think, how am I going to be able to afford this. There’s a lot of different ways you can fund [DE&I initiatives] and employee retention credits is one of them.”

Fernandez said that by not taking the lead on DE&I programming, employers run the risk of establishing hostile work environments. And in the age of the great resignation, employers may find themselves in a situation of employee mass exodus.

“The great resignation was really one of those moments where people voted with their employment and they said, ‘I don’t see myself being successful here.’”

The business imperative for DE&I goes beyond increasing profits and avoiding a hostile workplace. Establishing and evolving these programs means staying competitive.

FIG Strategy and Consulting Firm’s TaChelle Lawson

TaChelle Lawson is founder and president of FIG Strategy and Consulting Firm.

“So, not only are we creating hostile work environments by not addressing this, but you’re also leaving the market wide open for competitors to walk in,” Lawson said. “Can you survive these major demographic shifts without adjusting and taking diversity seriously? The answer is no.”