Beyond Buzzwords: The Tangible Impact of DEI in Organizations

By Eli Sanchez, Associate Member ASHRAE

Welcome to the age of Diversity, Equity and Inclusion (or DEI for short). These three words have become the guiding stars for organizations navigating the ever-changing landscape of the global workplace. We live in an increasingly diverse world, with the U.S. diversifying faster than predicted, making DEI not a luxury but a necessity in today's organizations (ACCA, 2021). Organizations far and wide have launched these initiatives, moving past mere lip service to real strides in policy changes and heightened awareness about DEI. However, this journey is not without its fair share of hurdles. Implementing DEI initiatives can feel like navigating a labyrinth filled with challenges at every turn. Consensus-building can be tricky, especially when some view such initiatives as unwarranted or politically motivated (ASHRAE, 2023). And are we sparking meaningful change to bolster employee engagement? That is a tall order. However, take heart because every challenge is an opportunity in disguise. With insights from different sectors, from corporate to institutional to grassroots, we can learn to maneuver through these complexities and implement DEI initiatives that genuinely make a difference. It is time to embrace the transformative power of DEI and unlock new opportunities for our organizations. Let's roll up our sleeves and get started.

From my perspective, embracing DEI goes beyond satisfying societal norms or ticking the box of moral duty; it is a strategic powerhouse that showers an organization with undeniable benefits. And I am not the only one saying this. Hunt, Layton, and Prince (2015) have the numbers to back it up. Their study revealed that organizations that champion racial and ethnic diversity, placing them in the top quartile, are 35% more likely to score financial returns that eclipse their industry medians. On the flip side, those bunched up in the bottom quartile tend to find themselves in the shadows. This got me thinking, a company that takes the inclusive path is setting the stage for a progressive increase in its market share. But the goodies do not stop there; DEI initiatives also serve as launchpads for innovation and put decision-making prowess into the hands of teams. Phillips, Liljenquist, and Neale (2009) bolster this point in their research, emphasizing that diverse teams outmaneuver their more homogenous competitors by igniting a more thorough information processing style, an attribute often found lacking in homogenous groups.

As I delve into the matter, I find that despite DEI's clear advantages, stark disparities persist in specific sectors. Take, for instance, the glaring underrepresentation of women in several industries, a fact pointed out by the Workplace Gender Equality Agency (WGEA) back in 2019. According to WGEA, women make up less than a quarter of the workforce in fields such as construction, mining, HVACR, and certain manufacturing sectors. This gender imbalance is more than an issue of equity and inclusivity; it is a missed opportunity. By sidelining women, these industries lose out on the wealth of diverse perspectives and skills they offer. Recall what we discussed earlier. A workforce that reflects a wide range of perspectives can significantly enhance decision-making processes, leading to better business outcomes. So, here is my understanding: When DEI becomes a core part of an organization's mission, it is not just about doing what is right but about unlocking a host of opportunities. And this is not merely my viewpoint, but a body of recent scholarly research supports it:

1. Improved Financial Performance: Research has indicated a positive relationship between diversity and business performance. For instance, a study by Lorenzo et al. (2018) found that companies with more diverse management teams reported 19% higher revenues due to innovation.
2. Enhanced Innovation and Creativity: Diversity brings different perspectives, experiences, and ideas, leading to increased innovation and creativity. Diverse teams are better at problem-solving and show higher creativity and innovation (Lorenzo et al., 2018).
3. Increased Employee Engagement: Inclusive workplaces can increase employee engagement. Employees who feel valued and included are likely to be more committed and engaged. A study by Nishii (2013) found that an inclusive climate positively impacts the performance of diverse groups.
4. Better Decision Making: Dunbar-Hester (2020) suggests that inclusive and diverse teams contribute to a more dynamic decision-making process. In her book "Hacking Diversity: The Politics of Inclusion in Open Technology Cultures," she explores how diversity and inclusion lead to better results by fostering a broader range of perspectives and ideas. This echoes the sentiment of multiple studies indicating that decisions made and executed by diverse teams can lead to significantly improved outcomes.
5. Improved Company Reputation: Companies committed to DEI often enjoy an enhanced reputation, making attracting top talent and retaining existing employees easier (Dobbin & Kalev, 2016).
6. Enhanced Work Culture: A commitment to DEI enhances financial performance, fosters innovation, and positively shapes work culture, mitigating the risks of toxic environments that can harm employees' mental and physical health (Gallagher, 2022). This emphasis on respect, acceptance, and equitable treatment leads to healthier and more productive employees.

As we traverse the diverse terrain of 2023, the roles of DEI in the corporate world are strikingly evident. These principles have become more than just buzzwords – they are integral components of a winning organizational strategy. When organizations weave DEI into their core operations, it is not just a nod to inclusivity. They are also making a strategic move to embrace a diverse workforce and position themselves to harvest the rich benefits that such diversity brings. This is not just about ticking the right boxes – it is about shaping the success of an organization in a world that's as diverse as it is dynamic.

References:

ACCA. (2021). Diversity, Equity & Inclusion - HVAC Business Tips. ACCA HVAC Blog. https://hvac-blog.acca.org/how-do-i-promote-diversity-equity-and-inclusion/#:~:text=To%20put%20it%20simply%2C%20DEI%20is%20a%20term

ASHRAE. (2023). Diversity Equity and Inclusion In ASHRAE. Www.ashrae.org. https://www.ashrae.org/about/diversity-equity-and-inclusion-dei

Dunbar-Hester, C. (2020). Hacking diversity: the politics of inclusion in open technology cultures. Princeton University Press.

Dobbin, F., & Kalev, A. (2016, July). Why Diversity Programs Fail. Harvard Business Review. https://hbr.org/2016/07/why-diversity-programs-fail

Hunt, D. V., Layton, D., & Prince, S. (2015, January 1). Why diversity matters | McKinsey. Www.mckinsey.com. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/why-diversity-matters

Lorenzo, R., Voigt, N., Tsusaka, M., Krentz, M., & Abouzahr, K. (2018, January 23). How diverse leadership teams boost innovation. BCG Global. https://www.bcg.com/publications/2018/how-diverse-leadership-teams-boost-innovation

Nishii, L. H. (2013). The Benefits of Climate for Inclusion for Gender-Diverse Groups. Academy of Management Journal, 56(6), 1754–1774. https://doi.org/10.5465/amj.2009.0823

Phillips, K. W., Liljenquist, K. A., & Neale, M. A. (2008). Is the Pain Worth the Gain? The Advantages and Liabilities of Agreeing With Socially Distinct Newcomers. Personality and Social Psychology Bulletin, 35(3), 336–350. https://doi.org/10.1177/0146167208328062

Schulz, K., & Brainerd, E. (2022). Toxic Work Culture Harms Your Employees’ Mental and Physical Health | Gallagher USA. Gallagher US. https://www.ajg.com/us/news-and-insights/2022/dec/toxic-work-culture-harms-your-employees-mental-and-physical-health/#:~:text=The%20Gallagher%20white%20paper%20Toxic%20Work%20Culture%20Harms