Blog Post

The DEI Imperative: Minimizing Risk and Maximizing ROI in an Unpredictable Market

By Amy Bourne
January 9, 2023

The volume of consumer and stakeholder voices is escalating and the interconnectedness of employee experience to talent retention is undeniable. Demonstrating commitment to culture, inclusion, transparency, and action has never been more vital.

Strong DEI performance has shown to contribute to ROI and mitigates all types of organizational risk; however, most companies continue to underinvest in DEI people and initiatives. The average DEI team has fewer than seven staff, even for the largest organizations, and the average spend on DEI programs is only $44/per employee. Inevitably, this leads to an overstretched and under-resourced team that is unable to drive the systemic changes required to meet stakeholder, employee, market, and board expectations. 

On the contrary, progressive companies are redoubling investment to fortify their DEI initiatives and strategies, ensuring that no matter what uncertainty lies ahead, their talent pipeline, brand reputation, corporate culture, market valuation and board confidence are secure. DEI is no longer a moral imperative; it is a business imperative in today’s climate.

Consumer Confidence and External Stakeholder Sentiment Can Help or Harm Brand and Market Value

According to Seramount’s recent insight paper, 86 percent of consumers think companies should actively implement ESG best practices. Furthermore, they are 76% more likely to buy from companies that champion environmental and social issues and that practice ethical governance. Marketing missteps, such as cultural appropriation or use of non-inclusive language and images, can lead to significant consumer backlash. On the other hand, strong performance on DEI metrics can bolster brand, revenues, market share and stock valuations.

Employee Engagement and Satisfaction Are Deeply Tied to DEI Priorities

46% of employee turnover is due to an unhealthy company culture. Employers need to understand what their employees truly want from their workplace and invest in these imperatives to retain and attract the right talent. As Gen Z enters the workforce, 53% of them expect to see more diversity in leadership positions. This influential group has made it clear: they will not stay at a company where leadership doesn’t reflect the larger workforce (and currently less than 8 percent of the F500 has a diversified C-suite). Don’t risk waiting until you lose top talent to discover vulnerabilities in your culture. Now more than ever, fostering inclusivity and trust between leadership and workforce is crucial to culture health.

Pressure from Boards is Mounting for Sustained Focus on and Investment in Change

Poor performance on DEI metrics, unfulfilled promises on investments, and all-talk-no-action can impact company valuations, stock prices and M&A potential. Boards are mandating transformation and looking beyond DEI and HR for this commitment toward everything from leadership teams, suppler diversity, and ESG policies, to Learning and Development curriculums.

Key Takeaways

DEI teams are taking on expanded roles and responsibilities as pressures mount to address societal crises, workforce experience and engagement, and retention pressures in an uncertain talent market. New tools and strategies will be required for success in this landscape. Successful organizations will need to:

  • Mitigate the “disengagement tax” and “quiet quitting”
  • Be quick and thoughtful in their response to social crisis and turbulent news cycles
  • Support and train overstretched DEI staff
  • Create clear measurement and communication of progress on DEI goals
  • Follow through on DEI commitments for building inclusive talent strategy
  • Align goals of ERGs with the larger business goals
  • Build effective partnerships

Interested in learning more about how Seramount solutions can help integrate DEI strategy with the business strategy? Contact us.

About the Author

Amy Bourne
Head of Marketing and Events