Article originally published in the World Economic Forum’s Agenda blog.
The events of the past year and a half have forever altered how business leaders approach DEI. As our society is slowly emerging from the chrysalis of the global pandemic, many leaders are discovering that a fundamental transformation has taken place — from which there is no turning back. A focus on DEI and environmental, social, and governance (ESG) values was once the purview of the most enlightened organizations. It has now become table stakes for every business.
The ongoing impacts of COVID-19 on the global workforce — and the concurrent attention brought to racial justice and accountability — have catalyzed what had previously been painfully slow, incremental progress toward diversity and inclusion worldwide. In the crucible of recent events, it has become a top business imperative for leaders not only to transform their organizations to try to enhance DEI — but to center DEI in a way that helps transform society at large. Leaders who fail to understand and act on this change will not only lag behind — they will put themselves and their companies at risk.
DEI, which historically has occupied a less prominent seat at the corporate table, has become intrinsic to and synonymous with organizational health in today’s world. This is partly because wider social forces have encouraged organizations to listen to and empathize with a broader group of stakeholders whose interests they affect — from investors to customers, employees, suppliers, vendors, communities and governments.
This broader, more diverse stakeholder model also means we are using new criteria to evaluate performance success for organizations. Moving beyond simple financial metrics, organizations are now incorporating different dimensions of stakeholder capitalism — such as reporting both internally and externally on the representation of different demographic groups across career levels, job families, business units and geography.i
Traditional financial investors and external shareholders are also beginning to formally include DEI criteria in their investment approach. For example, in the US, the SEC has begun to require disclosures on human capital metrics, including DEI. Likewise, prominent investors such as BlackRock have prioritized diversity and inclusion,ii and financial firms like Bloomberg have built investable indices based on DEI and broader human capital management.iii
To document and explain this shift in how companies and their stakeholders are approaching DEI, Mercer has partnered with the World Economic Forum to publish a new white paper — Pathways to Social Justice: A Revitalized Vision for Diversity, Equity and Inclusion in the Workforce
In this paper, we break down the forces that are driving change and offer leaders a roadmap for hardwiring DEI into business processes — including outlining five steps leaders can take to accelerate the DEI journey within their organizations.
Repositioning DEI as a strategic business imperative must start at the top of the organization. Engaged leadership — and, in particular, an engaged CEO and even the board — can expedite organizational buy-in and hardwire DEI into the business — helping to ingrain the values and behaviors that will resonate with the diverse populations of workers and communities they serve.
Unilever offers a powerful example of this principle in action. One of the organization’s key business imperatives is to help build a fairer and more socially inclusive world. The CEO and leadership team stepped in to craft a plan that included ensuring suppliers earn a living wage or living income by 2030; spending €2 billion annually with suppliers owned and managed by underrepresented groups by 2025; and equipping 10 million young people with essential skills to prepare them for job opportunities by 2030.iv
To build a workforce strategy that is both impactful and actionable, Mercer and the WEF have proposed a strategic framework that builds on research — purposefully measuring and analyzing experiences through multiple lenses:
Create an aligned and committed workforce and leaders
Root your strategy in proof, data and analytics
Integrate DEI into policies, practices and programs
Set goals, mesure progress and share transparently
Here’s a summary of how this looks in practice, drawn from the recently published white paper:
1. Engage: Create aligned and committed leaders and workforces
A business-wide issue with significant impact calls for engaging all senior leaders to drive DEI efforts via a holistic strategy permeating the entire organization — including the supply chain, customer demographics, shareholder expectations and workforce needs. To do so:
2. Diagnose: Root the strategy in proof, data and analytics
With the ever-expanding array of DEI interventions available to leaders, organizations too often fail to implement those that would have the most positive impact. Similar to how virtually all critical business decisions are made, leaders should rely on comprehensive DEI data and insights to develop the strategy, set goals and measure progress:
3. Take action: Integrate DEI into policies, practices and programs
Hardwiring DEI into day-to-day operations across the enterprise ensures effective and sustainable results. While many organizations have taken ad hoc actions, leaders seeking to accelerate their organization’s DEI journey should consider the broad range of opportunities:
4. Accountability: Set goals, measure progress and share transparently
Developing and enforcing a DEI strategy is critical — but one of the most critical indicators of success will be establishing accountability:
5. Change management and communication: Establish a strong foundation
Creating a holistic DEI strategy is not just a one-off project, but a whole system change. To make it work, build a culture of DEI that is reinforcing and sustaining. Consider the culture broadly and take into account how employees experience the impact of policies and programs that might be changing. Training managers to effectively communicate and support change will help foster an inclusive environment where employees are better prepared to embrace and positively participate in the change process.
[i] World Economic Forum. Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation, 2020, available at https://www.weforum.org/reports/measuring-stakeholder-capitalism-towards-common-metrics-and-consistent-reporting-of-sustainable-value-creation.
[ii] BlackRock. “Racial Equity and Inclusion,” available at www.blackrock.com/corporate/about-us/social-impact/advancing-racial-equity.
[iii] Bloomberg. “The Evolving S in ESG,” available at www.bloomberg.com/company/stories/the-evolving-s-in-esg/.
[iv] Collective action is needed to build a society that promotes cohesion. See Unilever. “How We’ll Help Build a More Equitable and Inclusive Society,” available at www.unilever.com/news/news-and-features/Feature-article/2021/how-we-will-help-build-a-more-equitable-and-inclusive-society.html.