What businesses can learn from the social sector about racial equity

By Jasmine Arai, Katherine Dean, and George Hardy

Just a couple of years ago, a company making significant investments in racial equity and in the workplace would’ve seemed unusual—the efforts of companies especially committed to social responsibility or organizations eager to make media “Top Places to Work” lists. But the growing awareness of systemic racism in America following the murder of George Floyd (and other Black community members) and hate crimes toward Asian Americans have changed the calculus.

Addressing racial equity is no longer optional for many organizations. Businesses are increasingly being held to a different standard by consumers and employees alike: a company’s actions (or inactions) around racial equity matter. According to the 2021 Edelman Trust Barometer survey,¹ 42 percent of respondents said that they have started or stopped using a new brand because of its response to calls for racial justice within the past year. Four in ten respondents said they would avoid employers that fail to speak out publicly on systemic racism, and 55 percent said that racism in the workplace had damaged their relationship with their employer.

Yet despite the best of intentions, many companies still find it difficult to figure out how to develop a clear and effective strategy for addressing racial equity.

At the Monitor Institute by Deloitte, the specialized social impact strategy unit of Deloitte, we’ve come to believe that some of the best advice for companies may actually be found in the social sector. Nonprofit and philanthropic organizations have years of experience trying to (and in some cases were found to) intentionally integrate equity and inclusion into their systems, processes, and structures.

While they are still on their racial equity journey and continuing to learn, organizations like The James Irvine Foundation, New Profit, and Braven can serve as valuable illustrations of what it means to try to embed equity within an organization’s strategy. Drawing from the experience of these and other social sector organizations, we’ve identified four critical insights that we believe can help for-profit companies more strategically address racial equity:

1. Get clear on what you mean and let your language reflect it.
   Finding the right language for your racial equity work can be challenging to figure out, but is critical to do. It provides clarity around the “what” and the “who” of an organization’s racial equity efforts. Using clear language helps you figure out and target the right actions to take, define tangible goals, and assess progress over time.
   
   But most organizations are not clear enough when it comes to language. Trying to be inclusive of everyone often results in not being truly inclusive of anyone. By not recognizing that different groups have different lived experiences, an organization fails to acknowledge their specific needs and challenges. DEI (diversity, equity, and inclusion) statements and programs can sometimes feel like they lump everyone’s experiences into one bucket. As a result, efforts end up addressing the lowest common denominator and aren’t targeted to real people’s actual problems—so actions can end up feeling vague, insincere, and out of touch with the realities of any one group of people. If you mean racial diversity, don’t just say “diversity,” which can take on many different meanings and dimensions. If you mean Black, say “Black,” rather than “people of color” or “BIPOC (Black and Indigenous People of Color).”
   
   The James Irvine Foundation, for example, knew they wanted to specifically address anti-Black racism in response to the moment of racial reckoning in the Summer of 2020. The leadership team and Board moved to allocate $20 million toward efforts that address anti-Black racism and advance racial equity. Irvine established a board-staff steering committee, chaired by its CEO and Irvine’s Board Chair, to develop the criteria and priorities for initial grants.² Because the Foundation specifically named anti-Black racism as the focus and priority within their racial equity work, it enabled them to facilitate specific learning conversations across the entire organization and identify potential grantmaking opportunities (e.g., Irvine chose to initially focus on Black-led organizations). Irvine recognized that if they started the work with a generalized focus on racial equity, they risked addressing the moment inadequately and potentially diluting their learning and impact.
   
   
2. You have to start somewhere in order to start at all.
   One of the biggest barriers to organizational change on racial equity is the perception that you need to have all the pieces in place before you can get started. Once you’ve gotten clear on the objectives of your racial equity efforts, we recommend that you put a stake in the ground with a few activities that you know are aligned with those goals and get to work. While thoughtful planning is important, you don’t have to have a comprehensive plan to get started. The actions don’t have to be huge, and there are many ways to begin.³ They don’t have to change your entire organizational culture at once. As one philanthropy executive told us, “You have to start somewhere in order to start at all.”
   
   It’s also important to recognize that advancing equity will take time and multiple tries. Centuries of systemic racism aren’t going to be undone overnight. An organization needs to be aware of the time and patience required to push an equity agenda—both the time to put in place policies but also the time required for the people and organizational culture to shift to behaviors and attitudes that reinforce the agenda. The latter can be particularly challenging when some are on the receiving end of iniquity, while others benefit from those inequities. As a result, no one solution is likely to satisfy everyone, although equity interventions are likely to benefit all people across the organization; efforts will inevitably be messy, imperfect, and uncomfortable. By shifting your mindset to continuous, active improvements over time, the solutions will evolve along with the organization itself.
   
   So our suggestion: identify one way that your organization can counter systemic racism and get started. Then try another. Then another. Openly wrestling with your organization’s visible and invisible beliefs and biases can help compound and lead you to other issues that need to be addressed.
   
   
3. Perfection isn’t a requirement, but transparency is.
   Don’t be afraid to admit that your organization’s racial equity agenda is still a work in progress—all organizations are at different stages in their racial equity journey.  Racially and ethnically diverse workers can diagnose whether equity is an authentic priority for your organization or not: it’s their lived experience, their everyday life as a part of your organization. So pretending that these employees don’t recognize or experience racial inequity only does your organization a disservice. Not talking about racial equity doesn’t mean the problems go away. They just get swept under the rug. And this severs trust and belief in the sincerity of an organization’s efforts.
   
   If (or rather, when) your organization faces challenging times, be open about it. Transparency is more important than perfection. Whether it’s through leadership communications, policies, or data, you should strive to be transparent about where things stand and what work is being done to change the status quo. Oftentimes, it’s the lack of transparency that leaves racially and ethnically diverse workers distrusting the system and believing that it is not built for them.
   
   And the need for transparency extends beyond just your organization’s racial equity efforts. After decades of historical bias, many diverse workers simply don’t trust that established systems will treat them fairly. So it’s important that processes, expectations, and decisions be made transparent and explicit so that people can feel more comfortable that organizational choices are being made equitably.
   
   For example, Braven, a leading education nonprofit, makes a point to provide transparency and equity as organizational values. So when employees shared their questions about pay and how the organization lives out its commitment to equity, Braven’s leadership team committed to radically increasing the transparency around compensation decisions. Braven responded by hiring external compensation consultants who used labor market data to benchmark roles, created a pay equity tool to evaluate compensation and recommend adjustments, eliminating negotiations from offers to ensure pay equity, and hosted roadshows to share their compensation philosophy and pay structure at regular, small-group, department meetings.⁴ Braven recognized that although the pay is a personal and sensitive topic, explicit processes and transparency into those processes were the best way to ensure equity and promote trust across the organization. As Braven’s CEO explained, “We strive to be our best selves, knowing we are imperfectly human—we still have to try.”⁵
   
   
4. Make sure your insides match your outsides.
   As you get underway with equity efforts, the key is to make sure your activities are all aligned with your goals and values. Addressing racial equity is most effective when it is intentionally embedded in systems and structures and infiltrates multiple aspects of the organization—not just your visible public actions. For example, many firms have focused on hiring more diverse workers, but there doesn’t seem to be enough thought about ways that they then support the growth and success of those individuals through complementary activities, such as performance management. We have found in our conversations that racially and ethnically diverse workers often feel they don’t get as much direct feedback as their white counterparts. But the lack of honest and real feedback about performance ends up being a significant barrier to the growth and development of many diverse workers. Paying attention to aligning these sorts of complementary systems (through activities such as training and guidance around performance feedback) can help an organization ensure that its internal processes better match up with its external actions around diversity in recruiting.
   
   In another case, New Profit, a funder that has advanced racial equity as a core part of its mission, committed to a new goal of investing 50 percent of its grantmaking in BIPOC leaders, but the leadership realized that effectively making this external shift would also require them to re-examine their own team and staffing. They redefined competency requirements, restructured their compensation philosophy, and reevaluated how education and tenure were valued as key indicators of success. This led to more leaders from diverse backgrounds being elevated into roles that would oversee the new strategy and helped demonstrate that New Profit was not only committed to doing the work externally to support BIPOC leaders, but internally as well. Doing this work externally and internally was a direct impact on having racial equity embedded in their strategy; it drove and influenced the work across the entire organization.⁶
   
   While organizations are unlikely to synchronize all of their systems and processes to identify and address bias at once, over time there needs to be alignment, reinforcement, and consistency across the company. Otherwise, contradictory activities could potentially risk coming across as inauthentic, hypocritical, or tacked-on and can undercut even the best of intentions. As our colleague, Kerri Folmer likes to put it, when working with organizations on equity issues, “Your insides should match your outsides.”

Getting started

The social sector has long looked to businesses for inspiration and ideas for how to operate more efficiently and effectively. But the growing national imperative around addressing racial equity has turned the tables, and the corporate world should recognize that there’s much that can be learned from nonprofits and foundations on this subject. This isn’t to say social sector organizations have equity figured out, but many do have a head start on the work. And learning from that small head start may be just what many companies need as inspiration to take the next step on their racial equity journey.

Authors:

• Jasmine Arai is a manager with more than 10 years of experience working with for-profit and nonprofit leaders on organizational effectiveness.
• Katherine Dean is a senior consultant with a breadth of experience in creating programs and processes to engage stakeholders in social change.
• George Hardy is a senior consultant with over a decade of DEI experience in the private and social sector.
• The authors would like to thank Candace Stanciel of New Profit; Aimée Eubanks Davis and Catherine Deutsch of Braven; and Amy Saxton, Rajib Guha, and Vaishalee Raja of The James Irvine Foundation for their candor and insights as we developed this piece.

References:

¹Edelman, Richard. “2021 Edelman Trust Barometer Special Report: Business and Racial Justice in America.” Edelman, 6 May 2021, https://www.edelman.com/trust/2021-trust-barometer/business-racial-justice.

²Interview with Vaishalee Raja, Amy Saxton, and Rajib Guha, from The James Irvine Foundation, on September 9, 2020.

³For some initial ideas about equity focused activities, take a look at the recommendations in Deloitte’s recent report, The Equity Imperative
https://www2.deloitte.com/us/en/pages/about-deloitte/articles/the-equity-imperative.html

⁴Interview with Aimée Eubanks Davis, from Braven, on September 19, 2020.

⁵Interview with Aimée Eubanks Davis and Catherine Deutsch, from Braven, on August 20, 2021.

⁶Interview with Candace Stanciel, from New Profit, on October 1, 2020.