How to develop a successful DEI strategy

Diversity, equity and inclusion (DEI) continues to gain frequent mentions as one of the top people and business priorities. But how many employers are still falling short on transforming their DEI strategy into action? And is it still a priority at an organization’s highest levels?

Certainly, changes to the legal landscape and increased scrutiny of DEI programming have caused leaders to think twice about their approach. However, DEI progress continues to offer proven benefits, and leaders would be remiss if they didn’t take note.

This article explores actionable steps employers can take to remain committed to DEI by developing a DEI strategy that won’t get stuck in neutral.

Defining DEI

Diversity, equity and inclusion, or DEI, is a group of organizational practices that focuses on creating an environment where people from diverse backgrounds feel respected, valued and included. Though DEI is often referred to together, each element has a unique meaning:

DEI is often implemented through policies, practices, programming, training and monetary investments. These efforts are intended to promote understanding among different groups of people, improve representation, and challenge biases and systemic inequalities within the organization.

What is a DEI strategy?

A DEI strategy is a plan of action that provides structure and direction to an organization’s approach to DEI. A DEI strategy establishes goals, budget limits, key performance indicators, a timeline for achieving goals, and other important strategic elements. It also helps determine who has ownership over DEI and define the organization’s commitment to DEI.

The business case for a DEI strategy

Research shows that improvements in DEI lead to improvements in talent and other business-related key performance indicators.

With respect to talent, the Brightmine (formerly XpertHR) 2023 global DEI survey found that organizations that prioritize DEI are “significantly more likely to report improvements in key talent turnover, employee engagement, and net promoter scores (NPS).”

Chart 1: DEI prioritization and business outcomes

Other research shows that workplace DEI also improves innovation, employee productivity and financial performance. In fact, McKinsey & Company’s research on the financial performance of diverse teams—which has spanned now almost 10 years—found that the likelihood of outperformance has actually grown over the years. That is, diverse teams are even more likely to financially outperform homogenous teams today than they were in 2015.

By recognizing these benefits, organizations can build a workplace environment that drives growth while supporting better people outcomes.

Developing a successful DEI strategy

What makes a DEI strategy successful? The answer may vary slightly for every organization. The following, however, are key steps that all organizations should consider:

1. Set strong goals that you’re prepared to commit to

Setting appropriate goals sets the stage for any strategy. Given the impact a DEI strategy has on the employer brand and DEI program compliance, it’s extremely important to choose DEI goals carefully. Goals for a DEI strategy should be meaningful, specific, realistic and aligned with the organization’s mission, values and business strategy.

The importance of authenticity

When setting goals, take extra care to ensure that the organization can truly commit to and take action on them. Making unrealistic commitments can lead to being perceived as inauthentic, which will ultimately harm your DEI and business outcomes.

“It’s easy to say something,” says Sabina Mehmood, pay equity leader at Brightmine. “Walk the walk, not just talk the talk may be a cliché, but that’s still where we are to a degree.”

To show that an organization’s commitment to DEI is authentic and sustainable, Mehmood stresses communicating with employees at all levels of the organization, even if it means acknowledging the need to do more. “It’s ok to say ‘we got it wrong, but this is what we’re doing now and will prioritize,” says Mehmood. “You can pivot as long as you’re explaining what’s happening and why.”

Allocating Resources

For a DEI strategy achieve its goals, it needs to have the appropriate resources. When setting short- and long-term goals, be sure to consider what resources are needed to make sustainable progress on each goal. This may include:

• Enabling technology.
• Expertise.
• Funding.
• Personnel and management.
• Space.
• Time.

2. Ensure DEI is top priority

Organizations that make DEI a top priority see more benefits (employee engagement, turnover and NPS) than organizations that do not.

One way to do this is by having the organization’s Chief Diversity Officer—or a powerful equivalent—reporting directly to the CEO as part of the C-Suite. Doing this ensures DEI doesn’t become peripheral initiative, but rather a core component of the organizational strategy.

Unfortunately, recent analysis found that from 2022 to 2023, the number of Chief Diversity Officer searches was down by a whopping 75%. And in June 2023, the US Supreme Court ruled that affirmative action in higher education is unconstitutional. This downward trend in prioritizing DEI has been attributed to a few things, including the fear of legal repercussions and backlash within organizations.

Regardless of the trend, this shouldn’t discourage you from ensuring leadership commitment to the DEI strategy. In fact, in a time when DEI is facing new legal and social challenges, leadership commitment and oversight is even more important to ensure alignment and compliance.

3. Leverage DEI-focused people analytics

People analytics can provide leaders with the DEI metrics needed to measure progress on DEI and hold stakeholders and themselves accountable. At the outset, people analytics helps establish a baseline for DEI by measuring where the organization currently stands. While implementing the DEI strategy, key DEI metrics can continue to be measured over time.

The self-identification challenge

People analytics capabilities and software have made huge advancements in recent years. But in the realm of DEI, a big challenge remains: the lack of self-identification among employees.

To measure certain DEI metrics, employers need demographic information about their employees. This information is usually only available through self-identification. And, it’s still often difficult to come by, as employees often choose not to self-identify for fear of discrimination.

For many, it can still feel easier to “stay in the closet,” says Joy Stephens of New Heights A&L Consulting. She promotes having an environment where supervisors ask, “What do you need to make this easier?” That way, employees do not feel a need to hide a part of who they are.

Additionally, ERGs and mentorship programs can go a long way to making people feel more comfortable self-identifying and having a greater sense of belonging. “Generation Z, in particular, expects ample ERGs and is pushing that in the workforce,” adds Stephens. Other generations are taking note too, and view the existence of a broad array of ERGs as an important element when evaluating employers.

4. Prioritize removing systemic barriers

Systemic barriers continue to exist for many segments of the workforce. A common refrain among some employers is that they wish to further diversify their ranks but are having trouble finding talent. But that lament doesn’t hold up for Sabina Mehmood.

“Don’t just say there aren’t enough women in tech,” says Mehmood. “You may not be looking in the right places.” Having a diverse recruiting team helps in this regard as does undertaking specific efforts, such as reaching out to likely sources of diverse candidates. Likely sources include:

• Women’s colleges and universities.
• Historically Black colleges and universities (HBCUs).
• Diverse professional groups.

It’s also critical to understand representation at each level of the organization. For instance, an employer may be doing well with diversity overall, but what are the numbers up the managerial chain?

Companies can address systemic barriers by looking at the challenges facing each specific group. This includes ensuring there are formalized mentorship programs in place so that all employees—including underrepresented employees—have access to promotional opportunities.

Also, don’t be afraid to reevaluate what is being measured and adjust as you go. For instance, Mehmood notes that a company can have a great family leave policy, but it’s important to examine when people are coming back. “If 24 weeks leave is available, but women are coming back nine or 10 weeks early, you need to find out why,” she says. This also applies with other forms of leave.

5. Advance pay equity

Advancing pay equity involves establishing policies and practices that ensure fair pay for all employees. Though it’s often discussed the context of gender, pay equity among other demograhics is also a top DEI issue that impacts talent management, engagement and more.

The best way to get started on pay equity is to conduct a pay equity audit to identify gender pay gaps, pay gaps based on race and ethnicity, and other gaps that help bring visibility to pay practices among diverse employees.

Once you have baseline of your current pay across employee groups, it’s easier to understand how pay decisions are made, how they may need to change, and what strategies can help ensure fair pay for all.

One popular and effective strategy to advance pay equity is to implement pay transparency practices. This includes disclosing realistic pay ranges in job postings, disclosing pay to candidates during the interview process, or disclosing pay internally to employees. Now that state transparency laws are on the rise, many employers are legally required to implement pay transparency practices.

6. Measure progress on key DEI metrics

Once a DEI strategy is in motion, it’s time to measure progress to ensure the organization’s efforts are resulting in real, sustainable improvements.

In addition to monitoring traditional diversity-focused metrics, such as employee representation and recruitment success for diverse employees, it’s imperative that organizations also monitor equity and inclusion metrics.

This often requires reviewing common people analytics metrics through a DEI lens, including:

• Job statisfaction.
• Engagement.
• Well-being.
• Promotion rates.
• Net promoter score (NPS).
• Average employee tenure.
• Psychological safety.
• Other metrics that speak to the employee experience.

Data collected to measure progress should be both quantitative and qualitative. And where employee feedback is requested, be sure to provide anonymity.

7. Address compliance risks of your DEI strategy

Since the Supreme Court decision on affirmative action in higher education, employers have faced new challenges to their DEI programs, including a renewed interest in lawsuits alleging DEI programs violate Title VII of the Civil Rights Act and state equal employment laws.

Unfortunately, these lawsuits have chilled DEI conversations at work, and in many cases, deterred further DEI investments.

But new challenges shouldn’t deter a DEI strategy. They should help shape it. To navigate new compliance requirements and increased hostility towards DEI, review DEI policies, practices and any programs to ensure they comply with current equal employment laws. Also, keep local counsel in the loop on any new DEI programs or program changes, particularly when it comes to setting eligibility requirements.

Conclusion

Advancing DEI ultimately is a marathon, not a sprint. Accelerating these initiatives with a DEI strategy takes time. But building steady momentum through the above steps is crucial for an organization to make meaningful progress.

And remember: there is no one-size-fits-all approach. DEI is about growth and retention, and ensuring that employees are seeing progress in the form of opportunities, investment and outreach.

“Continue moving away from check-the-box themes and remember there are real people behind these numbers,” advises Mehmood. And above all, communicate and be transparent in addressing any gaps that may exist.