July 13, 2023
July 13, 2023
Many boards and executive leadership teams have already embraced the premise that diversity, equity, and inclusion (DE&I) initiatives when done well can yield many benefits, from improved talent attraction and retention rates to better decision-making by inviting in more diverse perspectives. What is less discussed is that the absence of well-run DE&I efforts is a business risk.
The absence or misalignment of well-executed DE&I initiatives can introduce unintended challenges, potentially derailing the achievement of objectives. For example, if your organization publicly signs on to a new DE&I initiative or takes a position on an issue, there will be reactions from stakeholders—some may be positive, but some could be negative. Companies may also face employee, customer, and public backlash to inaction or performative goal setting for goals that are never achieved.
Avoiding these types of risks and capturing the full potential of DE&I efforts make effective leadership imperative. What does effective DE&I engagement look like at the board and management level? Below, we explore three common missteps organizations make in their DE&I efforts and strategies to overcome them.
Too often, the pressure to deliver quick DE&I wins can lead to a “blunt-force” approach. DE&I work done well is nuanced, is thought through, and takes time and resources to deliver sustainable change. Getting trapped in any of the common pitfalls captured below can introduce new risks and inadvertently set the DE&I agenda back.
Better Strategy: The same level of care boards and executive teams take to align goals and resources to deliver any business objective should also be taken for DE&I objectives. The board and executive team should work with a CDIO to set achievable goals on realistic timing and allocate appropriate resources to implement systemic solutions that meaningfully change culture and representation. With complete stakeholder alignment and support, CDIOs and their DE&I agendas are set up for success.
2. Pitfall: Focusing on a narrow set of metrics to define the success of DE&I efforts. Seeing an uptick in underrepresented hires is an incomplete goal, yet this is where many organizations focus their attention and action. Overreliance on a single metric or narrow set of metrics creates a risk of missing some critical underlying issues that must be solved. It can also create unhelpful short term-focused behaviors in the hiring process.
Better Strategy: Examine all aspects of the employee life cycle, understanding opportunities in hiring as well as talent development and retention. What are the underlying cultural dynamics and behaviors driving the current data, and what evolution is needed in the culture to create different outcomes?
3. Pitfall: Setting bold goals without a data-based foundation. At times, the excitement to demonstrate a deep commitment to progress can drive some organizations to make outsized promises without doing all of the homework on how that goal could be achieved. Sometimes, these promises come in the form of fast shifts in representation without analyzing how many hires are done in a year or typical turnover, for example. Companies may also promise to commit significant resources to outside partnerships before working closely with those possible partners on how the resources would be deployed and what benefit they will provide.
Better Strategy: Base goals on solid data analysis and due diligence. This may require proper resourcing of an analytics team, collecting data in new ways, taking partnerships one step at a time, and codesigning programs that work for both parties—all actions that take precious time. But investing time up front is critical to achieving the desired outcomes. Unfulfilled promises can leave stakeholders feeling disappointed and skeptical.
While DE&I work is ripe with opportunities, boards and executive leadership teams must also consider the risks that come from an absence of real DE&I progress. Companies need the right decision-making structures within the DE&I agenda to move forward while appropriately mitigating reputational risks. As with cybersecurity, you can’t predict an attack, but you can ensure that you set up the right systems and protocols. Getting DE&I right from a risk and opportunity perspective requires a thoughtful and nuanced approach rather than a blunt-force strategy that seeks quick wins.
Chuck Gray is the coleader of the US CEO and Board Practice at Egon Zehnder. Cynthia Soledad is the coleader of the Global Diversity, Equity & Inclusion Practice at Egon Zehnder. Blair Jones is a managing director and Anna Natapova is a principal at Semler Brossy.
Semler Brossy is an NACD partner, providing directors with critical and timely information, and perspectives. Semler Brossy is a financial supporter of the NACD.
NACD: Tools and resources to help guide you in unpredictable times.