Janine Yancey is the CEO of Emtrain, an eLearning and analytics technology company that develops and measures respect and inclusion.
Practicing diversity, equity and inclusion (DEI) in the rough economy of 2023 is quite different than in the last two years. From 2020 to 2022, capital was cheap, companies were overstaffing and the C-suite was focused on demonstrating their commitment to DEI and their social responsibility. In other words, it was a no-brainer to invest in DEI.
It’s not that easy this year. This year, capital is expensive, companies are drastically reducing their staff and the C-suite is primarily focused on demonstrating their commitment to efficiency and good unit economics. So what is the best way to invest in and develop DEI in 2023? By packaging DEI as just that: a tool for efficiency and good unit economics.
Here are two ways people leaders can make the business case for their DEI efforts to the C-suite and beyond:
They reduce expensive employee HR claims.
DEI can be very practical and “nuts and bolts” for organizational efficiency and reducing costs. How? By developing and measuring employees’ inclusion skills, DEI leaders can help identify and reduce employee conflicts, which inevitably lead to lost staff time and claims expenses.
A 2022 research paper between my company (Emtrain) and the Center for WorkLife Law at the University of California-Hastings found that strong DEI correlates to reduced claims of harassment and bias. The opposite is also true. We are all working in a multigenerational, multiracial and multicultural workforce. That’s a lot of different communication styles, expectations and ways of working—and all those differences cause misunderstanding and friction.
By strengthening inclusion skills, such as allyship, valuing differences and mitigating biases, we strengthen our DEI muscle, and a strong DEI muscle allows us to navigate differences without a lot of friction or claims. Based on a recent HR Acuity report, employers experience about 2% of their total workforce in employee claims every year. Figuring in the number of hours of staff time spent on a typical case, as well as the cost of legal fees if a claim goes to litigation, we estimate that a 1,000-person company will require 497 hours of internal staff time and upwards of $280,000 in legal fees for the estimated 23 HR claims filed per year.
Our client experience demonstrates that strengthened DEI skills (DEI “muscle”) can reduce HR claims by 10%. For that same 1,000-person company, that 10% savings translates into 50 hours of saved internal staff time and one saved claim from going to litigation, which saves a minimum of $28,250 in lawyers’ fees.
Building DEI skills allows a workforce to better withstand and navigate the friction stemming from all of our differences, which translates into saved staff time and saved litigation expenses. As business executives focus on the bottom line this year and there’s less appetite for investment into aspirational goals, it behooves DEI leaders to repackage their value into real dollars and cents.
They keep valuable employees from leaving.
While it can sometimes be challenging to convince the C-suite and boards of directors of the financial value of DEI efforts, it is easy for them to understand that it costs more to find good employees than it does to keep good employees.
The Society for Human Resource Management estimates that it can cost an additional six to nine months of an employee’s salary to find and train their replacement. Why are employees leaving? A wide range of sources have surveyed employees about their decision to leave, and in many cases, poor workplace culture is at or near the top of the list. For example, Flexjobs found that the No. 1 reason 62% of people left their jobs was toxic company culture.
So how do companies get a handle on their culture? By building inclusion skills through targeted training where inclusion skills are measured. You can’t fix what you don’t measure. So HR/DEI leaders can and should pursue a multi-threaded strategy of developing and measuring employees’ inclusion skills through engagement surveys, ERG discussions, measurement from learning programs, exit interviews, etc.
It can be tough for those of us in the HR/DEI space to think of our jobs in terms of dollars, profit and losses. That’s just not something that is in our DNA. But if we are to continue to drive real change in our companies through DEI efforts when budgets are tight, we’ll need to learn to speak in a language that CEOs, CFOs and boards of directors understand.
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