Where DEI Fails; Cultural Competency Excels: It’s Time to Change How We Think About DEI in the Workplace

As we enter 2024, the bloom has fallen off the proverbial rose as we discuss DEI. Many workplace champions are facing some backlash or resistance. Are the principles and values that pushed DEI to the forefront no longer relevant or needed? On the contrary, with a tightening job market and a more diverse society, the payoff is still there.

Does DEI bring a real Return on Investment?

Data suggests DEI increases:

1. Financial Performance: McKinsey & Company’s research reveals a strong business case for diversity in corporate leadership. Their 2019 analysis found that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than those in the fourth quartile. Additionally, companies with more than 30% women executives were more likely to outperform those with fewer women executives. In terms of ethnic and cultural diversity, top-quartile companies outperformed those in the fourth quartile by 36% in profitability.
2. Employee Engagement and Retention: Companies that employ strong DEI measures are significantly more likely to retain their workforce. Businesses that remove barriers and promote DEI initiatives are 2.6 times more likely to increase employee engagement and improve retention. This is partly due to the creation of a sense of belonging and connection among employees.
3. Workplace Productivity: Inclusive teams are found to be 35% more productive, as per the Research and Markets report. Companies with more diverse teams and inclusivity are better able to lead change than those with a more homogeneous workforce.
4. Cash Flow and Business Growth: Diverse companies earn 2.5 times higher cash flow per employee compared to their less-diverse peers. This statistic underscores the financial benefits of having a diverse workforce.
5. Organizational Mission and Values: A significant percentage of HR professionals feel that DEI initiatives improve an organization’s mission, vision, and values. This perspective is critical in shaping an organization’s culture and overall performance.
6. Representation and Equality: Despite these benefits, there are still significant gaps in representation and equality within many organizations. For instance, women and people of color often lag behind in management promotions, and employees with disabilities face higher unemployment rates.

What is the problem with workplace DEI Execution?

Why aren’t people welcoming DEI with open arms? Let’s just ignore American history, in particular the 1800s, and the relative strengths and weaknesses of the “free market” and the “slave labor” economic systems. If I were to mention it, I would note the strength of the Union’s industrial and broad economic capacity versus the South’s smaller industrial base and an agricultural economy based upon slave labor. I will simply point out that since our founding racial justice, politics, growth, and labor have been inextricably intertwined. Leaders in the 21^st are not facing new concepts. Good leaders have always had to read the room and respond to societal changes because of changes in our understanding of:

1. Morality
2. Changes in the political/cultural landscape
3. The impact of technology on labor and production

The reason DEI programs are perceived to be ineffective is that many companies are simply implementing the strategies poorly or implementing poor strategies.

The Harvard Business Review article “Why Diversity Programs Fail” by Frank Dobbin and Alexandra Kalev discusses the ineffectiveness of traditional diversity programs in workplaces. It highlights that efforts since the 1960s, such as diversity training, hiring tests, and grievance systems, often backfire or have limited impact. The authors suggest that these methods can activate bias instead of eliminating it. Table 1 shows the evolution of workplace diversity initiatives. Sadly, some practitioners and organizational leaders are stuck in a remedial ideology.

Table from: The Society For Diversity

In The Failure of the DEI-Industrial Complex, Lily Zheng wrote, “In my experience as a DEI practitioner and strategist, organizations large and small are often eager to fund one-time, “inspirational” events to “raise awareness” of inequity, but far less enthusiastic about medium-to-long term interventions that change incentive structures, shift the balance of power and resources, or reimagine personnel processes like evaluation, promotion, and conflict resolution. And so regardless of which interventions actually “work,” so long as organizations continue seeking out 60-minute unconscious bias and racial sensitivity training full of “business case for diversity” rhetoric, practitioners will keep providing it with the rationale of “an imperfect intervention that might not work is still better than nothing at all.”

The Trouble with DEI Language

Pejoration and amelioration are two processes through which the meanings of words can change over time in a language. HR professionals and CEOs are going to change both how we talk about DEI in the workplace and the tools that we use.

1. Pejoration: This is a linguistic process where a word’s meaning deteriorates or becomes more negative over time. Essentially, a term that once had a neutral or even positive connotation comes to be used in a more negative or disparaging sense. For example, the word “silly” in Old English initially meant “happy” or “fortunate,” but over time, its meaning shifted to “innocent,” then “pitiable,” and eventually to “lacking in good sense” or “foolish,” which is its contemporary meaning.
2. Amelioration: The opposite of pejoration, amelioration occurs when a word acquires a more positive connotation over time. A word that might have initially had a neutral or negative connotation becomes more positive or is held in higher regard. An example of amelioration is the word “knight.” In Old English, this word (“cniht”) meant “boy” or “servant.” Over time, it came to refer to a military follower of a king or other superior, and later to a person of noble birth trained to arms and chivalry, which is a much more esteemed position.

Both pejoration and amelioration reflect the evolving nature of language and how cultural, social, and historical contexts can influence and change the meanings of words over time. I think the good work of “DEI” and inclusive leaders has been hijacked by pundits with misleading sound bites and triggering social media posts. Say this with me, “politicians want votes, and influencers want likes.” Your goal as a successful business leader is to reach our business goals, which is typically profitability. The data suggests that well-executed DEI is still a competitive advantage, just like most well executed data-driven business plans.

How do we move forward with DEI in a changing landscape?

• Changing how we talk about DEI – I am a big fan of discussing intercultural competence in the workplace. Cultural competence is the capacity to bring into its system different behaviors, attitudes, and policies and work effectively in intercultural settings to produce better outcomes. The “inter” prefix specifically acknowledges that we need to think about relationships between, among, and among ALL stakeholders in workplace settings. It broadens DEI beyond race, and in my opinion, it is more inclusive without undermining the principles of intersectionality and intra-cultural needs of specific groups, including underrepresented groups.
• Changing how we do DEI work and who we hire for the work – Organizational leaders need to be strategic in planning DEI programs and hiring consultants. Consider alternative approaches to your current DEI practices, like engaging managers in solving diversity problems, increasing contact between different employee groups, and fostering social accountability. These strategies, including voluntary training, mentoring programs, and task forces, have shown more promise in improving workplace diversity. Be sure to check out my past blog on Four Questions You Should Ask When Developing Your Workplace Diversity and Inclusion Strategy.

Are you ready for the next steps with your team? Don’t hesitate to reach out. Contact Glen today.