How to Reduce Risks of DEI Programs

Publicly espousing the importance of DEI without backing that with substantial commitment, robust data, actionable steps, comprehensive policies and an effective monitoring process is risky. Organizations need an authentic, focused DEI plan to address gaps and become more resilient to potential risks.

It has been said that sunshine is the best disinfectant. The more light we shine on a problem, the more voices and issues emerge. Discrimination is no exception. As media have highlighted high-profile incidents of discrimination, research shows the number of reported workplace and societal incidents of discrimination linked to companies increased globally, with 2020 showing a massive uptick of reported incidents.

Also, companies who announce more initiatives to address diversity and anti-discrimination tend to see an increase in reported incidents related to race and ethnicity. According to the researchers, shallow DEI efforts come with DEI risk: “We can say that the findings suggest that to mitigate ESG risks related to racial and ethnic controversies, companies need to do more than come up with more initiatives. They have to implement these initiatives in a more meaningful way.”

The Risk of DEI Rhetoric Without Results

The study found that companies are making big claims but often minimum effort: only 15% of the included firms had diversity initiatives that went beyond the base level of legal compliance and less than 30% had managerial or board-level accountability. 

Firms who invest in DEI with ownership up through the highest ranks of the workforce are posited to be less likely to face adverse backlash from their conduct, experience less employee discrimination, avoid business penalties and restrictions and run less reputational risk.

Organizations that boast big DEI initiatives without real action, particularly in a litigious society, are especially vulnerable to (often perception-based) legal claims. Additionally, slapping in place haphazard visible fixes, taking impulsive quota-driven action, or firing white employees to advance diversity goals, for example, can fuel anger and resentment - not to mention reverse discrimination claims.

Ultimately, it is risky to publicly espouse the importance of diversity without backing that with substantial commitment, robust data, actionable steps, comprehensive practices and policies and an effective monitoring process. Also, real questions exist around DEI data transparency: what to disclose, when to disclose, who to disclose to. Without an authentic, focused DEI plan to address gaps, organizations can open themselves to scrutiny and legal exposure by pointing out only the issues.

"The Diversity Risk Paradox" - a paper in the Vanderbilt Law Review by Professor of Law Veronica Root Martinez - reflects that organizations are at risk if they publicly boast big diversity statements and then fail to walk their talk. Secondly, organizations find themselves held back in walking their talk by the risk of increasing their zone of legal liability by doing more than is legally required. Yet, organizations face bigger risks by not addressing the real DEI challenges: such as employee dissatisfaction, unchecked bias in processes leading to inequitable outcomes, narrow recruitment pools, and legal action.

Bottom line: if the company rhetoric says that DEI is critical to the company mission, then actions need to be strategically (not sloppily) aligned to that - or companies put themselves at risk, whether from employees or shareholders. Ultimately, you want to make your intentions, investment and actions bigger than the expectations you set.

According to Martinez: “when deciding when and how to act above what is legally required to address the diversity risk paradox, firms must consider what actions are likely to lead to the creation of a culture of equity and inclusion throughout the firm. By elevating the concerns of equity and inclusion, firms can engage in more productive risk assessments about what diversity efforts to pursue.”

More than words, organizations need to proactively oversee DEI initiatives and visibly (in the ways that matter = equity and inclusion) walk in the integrity of their talk.

Important Strategic Data And Team Decisions

The way to move with impact in DEI (like any area of business) is to collect data and metrics that establish the baseline state of affairs, identify blindspots and opportunities areas, and measure progress. The question is not whether to collect data, but what data to collect, how to manage it and what to disclose to whom on what timeline.

1. Be prepared to act on what you find. The hesitation to know whether a problem exists stems from a barrier/indifference to do anything about it or a lack of confidence in your agency to impact the issue. Neither of these need be obstacles in the DEI realm: but efficacy does require focus, persistence, patience and willingness - as well as leadership championing and budget. If you’re unwilling to clean up problems with action, conducting a massive data collection effort and disclosing that data (without a clear DEI strategy) will only air dirty laundry. (Although, it’s worth noting dirty laundry left unattended also tends to ‘out’ itself in undesirable ways.)

2. Collect process diagnostics and inclusion metrics not only outcome metrics. As articulated in HBR, “Outcome metrics indicate only whether you have a problem. Process metrics will tell you exactly where to focus your attention to bring about meaningful change.” To be able to address demographic inequities requires metrics that help you to pinpoint and dig into different stages of processes such as hiring, evaluation, promotion, sponsorship. Pulsely goes further by assessing workforce analytics (outcome and process), inclusion data, performance indicators and inclusion competencies to take the pulse of invisible experiential dynamics at play.

3. Create a multidisciplinary DEI team. The internal DEI committee should include not only HR, but also executives, business development, compliance, communications and in-house legal. A multi-disciplinary team can consider all nuances and perspectives as they ensure DEI objectives align to the organizational vision, decide how core DEI is to your values and what level of risk you’re willing to accept, decide what DEI data to collect (to support objectives), explore principles and process of communication around DEI data, align on budgets and what corrective strategies will support your objectives based on data findings, and how you will monitor progress.

4. Involve a DEI data specialist partner. A DEI data analytics consultant like Pulsely, who draws upon the experience of partnering in the DEI-metrics-to-DEI-outcomes journey with diverse organizations, will help your multi-disciplinary team to navigate the DEI strategy and data collection process, create honed targets for intervention, develop comprehensive DEI plans and monitoring, address communication principles and ultimately, support you to walk your talk. Above all, it will help keep your DEI focus on creating equity and inclusion: the real ticket in mitigating DEI risk.

Authenticity and Inclusion Is the Best Strategy 

When words speak louder than actions, authenticity and integrity is amiss. Traditional DEI training simply highlights the matter of diversity, overly focusing on behaviors without fundamentally shifting perspectives within your culture. So behavior becomes more salient but also contentious

When leadership meaningfully embraces inclusion as a core value, and defines the purpose-based framework for metrics, strategy and action, then your organization intentionally weaves a more DEI risk-resilient approach based on small, incremental improvements that matter and ultimately add up to measurable wins you can celebrate. If an initiative doesn't support inclusion, it doesn’t belong.

Why? Inclusion requires that all employees have equitable opportunity to fulfill their potential, so actions must not have an adverse impact on any individual or groups. An inclusion-based approach focuses on intentional interventions to address imbalances rather than brash performative moves that only create new imbalances, DEI risk and employee discord.

Additionally, inclusion pivots the focus away from DEI initiatives to support individuals to DEI initiatives around creating more equitable processes and practices (hiring, promotion, pay, sponsorship) - and addressing bias in systems. A culture of inclusion engages everyone in the mission, creates psychological safety, includes internal (safe and receptive) channels for complaints of discrimination or misconduct, and changes employee perceptions, all of which would build more DEI risk-resilience. 

Does your organization simply have a DEI narrative, or does your workplace demonstrate its commitment through a data-reinforced living embodiment of that narrative?

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