Taking bold action for equitable outcomes

Co-authored by Steve Hatfield and Lauren Kirby.

Diversity, equity, and inclusion (DEI) are often treated as a single monolithic objective, rather than separate but mutually reinforcing sets of actions—with diversity and inclusion being necessary prerequisites to achieve equitable outcomes. DEI progress has traditionally been measured based on activities and effort, often with little consideration for actual outcomes achieved. DEI actions should be in service of achieving equitable outcomes in the workforce—and broader society—while boosting an organization’s innovation, competitiveness, and long-term business success.

In the last two years, large multinational organizations made more than 1,000 public DEI commitments and pledged more than US$210 billion to DEI initiatives,¹ inviting increasing accountability for DEI-related promises. Workers across the ecosystem, customers, suppliers, shareholders, and society now expect organizations to fulfill their commitments and responsibility to make a positive impact on the world² not simply by demonstrating activity but by proving progress and living up to the expectations of a social enterprise.³ For example, Generation Z and millennial workers who are satisfied with their employers’ societal and environmental impact, and their efforts to create a diverse and inclusive environment, are more likely to want to stay with their employers for more than five years.⁴ Meanwhile, performative actions—those focused on appearing to address issues without the commitment of time and resources to achieve real outcomes—may erode trust in leadership and the organization, potentially impacting attrition and employer brand, particularly among marginalized identity groups.⁵

Some organizations are making progress on DEI actions. Specific to diversity, there has been a 1% increase in the representation of women in the global workforce since 2017, and a 6% rise in the number of women in C-suite roles (although only 26% of C-suite roles are filled by women).⁶ As it relates to inclusion, we have observed that many organizations are making progress in that there are increased perceptions of being able to bring one’s “authentic self” to work. This is the case at Deloitte, as our 2022 DEI Transparency Report reveals a year-over-year increase in the perceptions of bringing one’s “authentic self” to work across several identity groups.⁷

However, actions and programs that are diversity- or inclusion-focused do not always result in equitable outcomes. As an illustration, many organizations have developed leadership programs for women in pursuit of more gender diversity in senior leadership roles. These programs often are intended to promote diversity and enable a culture in which the program participants feel included. Yet, many organizations may not update systemic processes, such as internal mobility or performance management practices, that may serve as barriers to equitable advancement. A focused program does not guarantee equity for those program participants. Instead, equity acknowledges that the organization as a system is designed to give everyone—with both consideration for and regardless of identity—equitable opportunities to thrive. While the representation of women in the workforce may be increasing globally, the fact remains that for every 100 men who are promoted, only 87 women are promoted—and women leaders are still leaving organizations at higher rates than men.⁸

Organizations face four common challenges in furthering DEI progress:

• Too much emphasis on activities, not enough on equitable outcomes. According to the Deloitte 2023 Global Human Capital Trends survey, 23% of organizations measure progress regarding diversity commitments through adherence to compliance standards—which may focus on activities instead of the impact of those activities. For example, the existence of mentoring programs for specific identity groups versus the outcomes of those programs produces such as intent to stay and perceptions of fairness.

• More focus on solving for the individual than on solving for the system. Organizations typically prioritize DEI activities that address professional development, unconscious bias, and inclusive behaviors at the individual level. Often this comes in the form of training alone, yet research shows that individual-focused DEI training alone, which is point-in-time and widely distributes accountability, generally does not instigate the behavior change required to improve equitable outcomes.⁹ Focusing on the individual is insufficient in overcoming the underlying institutional (within the organization) and structural biases (acknowledging that an organization is a system within broader systems of culture and society) that are barriers to DEI progress.

• Over-aggregated data to report progress or results. Many organizations do not proactively collect and synthesize data needed to deliver actionable insights on DEI beyond workforce representation (i.e., diversity)—and even then, the data may be over-aggregated, making it difficult to surface equity challenges facing specific identity groups. For example, organizations often track internal mobility of workers by identity groups, but fewer analyze internal application rates to understand potential disparities in the number of attempts to apply for internal roles—potentially surfacing inequities across identity groups in accessing internal mobility opportunities.

• A disconnect between DEI objectives and other business objectives. Social enterprises prioritize societal value as a component of (not separate from) business outcomes. Deloitte calls this the “Purpose Premium,” suggesting that organizations with a focused strategy that articulates the differentiated role it serves in society realize value and competitive advantage through improved reputation, innovation, market valuation, operational efficiency, risk mitigation, and talent outcomes.¹⁰ Similarly, decades of research has revealed correlations between more diverse and inclusive organizations and core business objectives such as innovation and profit. Yet, according to Deloitte 2023 Global Human Capital Trends survey respondents, only 15% (diversity) and 30% (inclusion) indicate that their organizations connect diversity and inclusion progress—which contribute to equitable outcomes—to business outcomes such as increased profitability or productivity. Equitable outcomes should be considered business outcomes, not separate from “the business.” Senior executives, in collaboration with DEI leaders, should consider taking the lead on systemic change. Although more than 90% of CEOs have built DEI into their strategic priorities/goals,¹¹ bold actions are required to achieve equitable outcomes.

The readiness gap

In the Deloitte 2023 Global Human Capital Trends survey, 86% of the business leaders we surveyed say embedding DEI into everyday ways of working and teaming while measuring outcomes is important or very important to their organizations’ success. Yet only 25% feel they are very ready to address the issue.

According to the Deloitte 2023 Global Human Capital Trends survey, most organizations have prioritized diversity and inclusion actions over equitable outcomes. In fact, the top benefits of organizations’ DEI efforts are primarily focused on inclusion-related outcomes such as “worker engagement and well-being.” Meanwhile, equitable outcomes such as “stronger leadership pipeline and increased talent access” and “contributions to positive community or societal outcomes” fall within the bottom four, along with “increased innovation” and “enhanced ability to anticipate future disruptions and agility in meeting business and workforce needs.”

Looking ahead 2–4 years, surveyed respondents expect their organizations’ DEI efforts to have a large impact on “increasing brand recognition” (27%), but much less of an impact on achieving equitable outcomes such as a “stronger leadership pipeline or increased talent access” (9%) and “contributing to positive community or societal outcomes” (10%). What’s more, 24% of organizations are not establishing accountability or measuring progress in their equity commitments. Our conclusion in evaluating these survey results is that there may be a DEI “commitment drift” on the horizon.

The new fundamentals

Re-orient to outcomes, not activities. It’s important to measure DEI success according to DEI outcomes (that is, what is changing?), not what is being done (such as dollars spent, trainings completed, or participation in affinity groups). Organizations should identify the specific inequities that exist across identity groups within their own organizations, uncover the root causes of those inequities, and design interventions and solutions to address them. Just as every business strategy is tailored to the individual organization’s customer needs, achieving equitable outcomes requires a tailored approach specific to each organization’s strategy, context, and history of engagement with communities.

Focus on the system, not the individual. Inequity is a dynamic, systemic challenge requiring a systemic response. Deloitte’s Equity Activation Model (figure 2), introduced in The Equity Imperative,¹² presents a systems-based view of how businesses can activate equitable outcomes within and outside of their own organizations. The model is structured around three primary spheres of influence (each of which includes activators and enablers) that are within every organization’s reach: workforce, marketplace, and society, all of which are encircled by organizational culture.

To unleash an organization’s potential to make DEI impact in the marketplace and society at large, organizations should first prioritize equitable outcomes for the workforce. Yet, many DEI efforts have historically focused on single workforce processes (such as talent acquisition or succession planning) rather than the interconnected system of workforce processes across the talent life cycle. Systemic change requires that DEI efforts cascade across the talent life cycle and traverse multiple talent processes to mutually reinforce equitable outcomes.