Create a People-First Diversity, Equity, and Inclusion Strategy

Build a sustainable strategy by focusing on lived experiences to uncover and address systemic inequities.

Executive Summary

McLean & Company Insight

Diversity, equity, and inclusion (DEI) is a continuum – an ongoing journey of unlearning and learning the deeply rooted dogmas that guide the way organizations operate. The DEI strategy is a mechanism through which systemic issues and the ingrained way things are done at organizations can be challenged and changed. Creating a scaled and purposeful strategy, upheld by strategic pillars and customized DEI initiatives, kick-starts the journey.

Situation

• Most organizations recognize that there are several benefits that come from being inclusive to diverse groups of employees.
• However, despite the implementation of numerous DEI initiatives, organizations are still having trouble with making progress.

Complication

• DEI is complex and heavily nuanced. This means that every DEI strategy needs to be based on the specific DEI challenges the organization faces.
• DEI often reports up through HR, but everyone has a role to play as allies, leaders, and champions when it comes to creating an organization that has diverse groups of employees and is diverse, equitable and inclusive. However, it is not always clear how everyone participates in creating a diverse, equitable and inclusive organization.

Solution

• Organizations must create a DEI strategy that is based on their specific organizational DEI challenges. Assess the current state of DEI through organizational data and focus groups, not based on current trends and fads in DEI training.
• With a DEI strategy project team, identify a clear purpose for DEI that is upheld by defined strategic pillars, carried out by specific DEI initiatives (e.g. inclusive leadership behavior training, implementing sponsorship programs, expanding campus recruitment strategies to more diverse schools), and overseen by a governance model.
• Implement DEI across the organization with initiatives that support all parts of the employee lifecycle.

Take a planned approach and start with the DEI strategy before embedding inclusion into your culture

1. Strategy — Build the Diversity, Equity, and Inclusion (DEI) Strategy

   While it's important to have an inclusive culture, the organization must start with defining a DEI strategy. The strategy sets the tone and direction for DEI at the organization. A defined strategy includes clear roles and accountabilities along with specific goals and initiatives that are customized to the organization's DEI needs and challenges.

2. Culture — Embed Inclusion Into the Organization's Culture

   Once the organization has defined the DEI strategy, inclusion must be embedded into the culture. For DEI initiatives to succeed, the organization needs to ensure that all employees feel a sense of belonging, valued for who they are, and empowered to participate and contribute freely.

See McLean & Company's related research:

• Articulate and Foster Organizational Culture
• Embed Inclusion Into the Organization's Culture
• Environmental, Social, and Governance (ESG) Primer

McLean & Company Insight

Diversity, equity, and inclusion must go hand in hand. Having a diverse employee base will not achieve benefits such as higher rates of innovation and profitability if the culture is not inclusive. It is essential that organizations seek to be both diverse and inclusive.

Review the Diversity, Equity, and Inclusion Primer

Review the Diversity, Equity, and Inclusion Primer to understand key concepts such as allyship, intersectionality, and privilege. Use the primer as a reference as you work through this blueprint and create the DEI strategy.

This resource can also be provided directly to employees, managers, and senior leaders to expand individual knowledge on key DEI concepts.

Diversity

The unique traits that individuals possess. It can be understood in two general ways:

• Inherent diversity, e.g. race, gender, sexual orientation, or disability
• Acquired diversity, e.g. diversity of thought, cross-cultural communication, language, or social skills

Equity

It considers individual differences and focuses on the outcome of "fair treatment." While equality focuses on equal opportunity, equity takes it a step further and addresses the accommodations required to achieve a fair outcome. Fairness looks different based on an individual's power and privilege in society.

Inclusion

It is a state in which all employees feel a sense of belonging, valued for their differences and empowered to participate and contribute freely.

Belonging

The feeling of being accepted for your authentic self.

DEI brings several benefits to organizations

Organizations with diverse employee bases perform better than their less-diverse peers

• Gender diversity — The performance differential between the most and least gender-diverse organizations is 48%.
• Ethnic and cultural diversity — Organizations in the top quartile of ethnic and cultural diversity, on executive teams outperform those in the bottom quartile by 36%.
(McKinsey, May 2020)

When organizations act on DEI:

• Larger revenue growth

  Companies in the top quartile for gender diversity are 25% more likely to have above-average profitability. (McKinsey, May 2020)

• More positive employee experience

  Organizations that act on DEI are 19% more effective at creating a positive employee experience. (McLean & Company, HR Trends Report 2023; n=535)

• Better retention

  Organizations that are not focusing on creating an environment of DEI are experiencing 1.6x more voluntary turnover than those that are focused on it. (McLean & Company, 2022 HR Trends Survey; n=414)

Compared to organizations with no strategy, organizations with a DEI strategy are:

• 1.4x more likely to report high overall organizational performance.
• 1.8x more likely to be high performing at social and environmental sustainability.
• 2.4x more likely to be high performing at DEI.
(McLean & Company, HR Trends Report 2023; n=842, n=769, n=841)

Appreciating diversity strengthens teams and builds trust — Understanding the demographic and geographic factors that influence identity and the stereotypical assumptions team members hold reduces conflict (Sparkman).

However, many organizations are struggling to have diverse groups of employees and an inclusive culture

Leaders and employees are not on the same page when it comes to DEI

68% of leaders feel they create empowering environments where employees can be themselves, raise concerns, and innovate without fear of failure.

However, only 36% of employees agree.

Additionally…

The proportion of employees who do not feel included in their organization is 10x higher than what leaders believe.

("New Accenture Research," Accenture, 2020)

Priorities for DEI are shifting — DEI efforts continue to be deprioritized, shifting downward, from being the 4th of 12 HR priorities in 2021, to 5th in 2022, to 6th in 2023 (McLean & Company Trends Report, 2022; N=850, n= 826; McLean & Company, HR Trends Report 2023; N=1,075).

Current DEI initiatives are not making an impact

• Almost half of the organizations tracked by McKinsey have made little to no progress in increasing diversity at their organizations since 2014 ("Diversity wins," McKinsey, 2020).
• Despite the benefits of DEI to innovation, organizations often discontinue or lose focus on DEI during external crises ("Diversity still matters," McKinsey, 2020).
• More than 50% of employees think their company should be doing more to increase diversity among its workforce (Glassdoor, 2021).

Organizations need to go beyond acquiring diverse groups of employees and ensure they are retaining diverse groups of employees

• 74% of employees and job seekers reported DEI was important when considering job offers.
• 62% of employees surveyed said they would consider leaving their organization if DEI initiatives were not prioritized.
(Glassdoor, 2022)

McLean & Company Insight

Leaders must listen, put people first, and put their own perspectives and assumptions aside. It's imperative that leaders understand and prioritize DEI challenges as they control budgets and influence employee behavior.

Diverse representation is an ongoing issue

Although there is gender representation in Fortune 500 companies…

In 2020, the number of women leading Fortune 500 companies rose again, hitting an all-time high (This all-time high represents only 7.5% of Fortune 500 companies.).

Number of female Fortune 500 CEOS

• 32 | 2017
• 24 | 2018
• 33 | 2019
• 37 | 2020

…there is very little diverse representation across racial groups. In Fortune 500 companies, there are only:

• 3 | Women of color CEOs
• 0 | Black women CEOs
• 4 | Black male CEOs
(Fortune, 2020)

Nearly 60% of Black executives who oversee major lines of business at Fortune 500 companies felt they had to work 2x harder and accomplish 2x as much to be seen as equal to their peers (Korn Ferry, 2020).

The gender pay gap differs across various races

Overall, women earn $0.82 for every dollar earned by men.

However, there are significant differences when this is broken down by race:

• $0.90 | Asian Women
• $0.79 | White Women
• $0.62 | Black Women
• $0.57 | Native American Women
• $0.54 | Latina Women
(National Women's Law Center, 2020)

See McLean & Company's HR Spotlight: Close the Gender Wage Gap: Organizational Strategies Built for 2023 for more on the wage gap.

DEI challenges are systemic and covert

Systemic versus systematic

Systemic inequalities or structural inequality refer to how the unequal treatment of specific minority groups are maintained through policies, programs, systems, and structures, contributing to or resulting in inequity.

While systemic inequalities have deep roots in organizational structures, some forms are harder to see than others.

Systematic inequalities are intentional practices that maintain inequities such as wage secrecy policies or segregation.

An example of systemic inequalities:

Dress code policies are often used to determine how employees should dress in the workplace. However, for Black women, such policies have been used to define natural hair as unprofessional. The enforcement of these policies have marginalized and institutionalized prejudiced notions that Black hair is unprofessional.

To address this issue, California passed the CROWN Act (Creating a Respectful and Open World for Natural Hair). This bans policies or actions that discriminate against those with natural hairstyles (HR Dive, 2020).

Microaggressions are covert acts of sexism and inequality that are common in the workplace

Intersectionality explains why people experience inequality in society differently from others with whom they share some identity categories. It highlights that characteristics of one's identity are not mutually exclusive but rather coexist to create unique experiences for everyone.

Double bind is a set of assumptions that get at our implicit assumptions about men, women and leadership (NPR, 2016). For example, women often get judged more harshly than men when they show behavior that is considered too aggressive or assertive while also being criticized for not being assertive enough when they fail to speak up or take charge (Medium).

An example of a common microaggression in workplaces shows intersectionality and the double bind in play.

Black women report needing to provide evidence of competence more than white men, Black men, and white women:

• 26% | White Men
• 33% | Black Men
• 27% | White Women
• 36% | Black Women
(SHRM, 2021)

For more information and examples, see Paving the Way for Workplace Equity: The Roots of DEI Concepts in Black Leaders' Work and Moving Toward a Shared Win for All Women.

To be successful, DEI strategies require support across the organization

Organizations need to enable DEI learning and unlearning across all levels…

Organizations that leverage competency-based training, including inclusive leadership, antiracism, and allyship, are 40% more likely to be high performing in DEI compared to those leveraging awareness-based training (McLean & Company, 2022 HR Trends Survey; N=375).

… And build capacity to implement DEI plans:

The lack of dedicated time for DEI work and the lack of resources and funding are the top barriers to DEI progress (McLean & Company, HR Trends Report 2023).

Fifty-seven percent of organizations report they do not have a dedicated DEI team or dedicated resource even though organizations with a dedicated DEI resource are 34% more likely to be high performing in DEI than those without (McLean & Company, HR Trends Report 2023; n=796, n=790).

A commitment to DEI at the senior leadership level has a positive effect on all levels of leadership. When senior leaders are committed to DEI, 83% of employees report that their direct managers are also committed to DEI and 86% say that their direct managers create a feeling of psychological safety.

To be successful, organizations need to ensure all leaders are committed to diversity, equity, and inclusion. (BCG, 2023)

Diversity leaders take a holistic approach to DEI

Diversity leaders are organizations that have shown sustained improvement and are approaching gender parity. These organizations:

• Take an intentional and organizational-led approach to DEI.
• Have a strong culture of accountability.
• Deploy innovative and ambitious interventions.
• Display strong leadership commitment.
("Diversity wins," McKinsey, 2020)

McLean & Company Insight

It is not enough to just have the C-suite champion DEI – everyone needs to understand that they have a role in ensuring the organization is diverse, equitable, and inclusive for all people.

Creating a comprehensive DEI strategy helps organizations achieve their goals

McLean & Company Insight

Diversity, equity, and inclusion is a continuum – an ongoing journey of unlearning and learning the deeply rooted dogmas that guide the way organizations operate. The DEI strategy is a mechanism through which systemic issues and the ingrained way things are done at organizations can be challenged and changed. Creating a scaled and purposeful strategy, upheld by strategic pillars and customized DEI initiatives, kick-starts the journey.

Follow McLean & Company's four-step process to create a people-first DEI strategy

Step 1

Conduct a current state assessment

After completing this step, you will have:

• Created a DEI strategy project team.
• Gathered organizational data to uncover DEI gaps and challenges.
• Conducted focus groups to uncover the employee experience.
• Reviewed the organization's broader strategic goals and priorities.
• Completed the DEI Assessment.
• Gathered external data to understand the broader DEI landscape.

Document the current state assessment in the DEI Workbook

Use the DEI Workbook to document:

• The DEI strategy project team (tab 2)
• Organizational data (e.g. engagement, new hire/exit survey) (tab 3)
• Focus group results (tab 4)
• Organizational strategic goals and priorities (tab 5)
• External data (e.g. competitor DEI programs) (tab 6)

Review the DEI strategy project team's roles

This team is responsible for creating the DEI strategy.

Tip: The DEI strategy project team is not the same as a DEI committee. The DEI committee is part of the governance model discussed in Step 3. However, some individuals from the project team may also be members of the DEI committee.

McLean & Company Insight

Developing a DEI strategy is a lot of work. When building a project team, be conscious of who would think or feel it burdensome. To build an impactful and sustainable strategy, involve people who are passionate about championing DEI efforts and initiatives.

Recruit members for the DEI strategy project team

Select members who are:

• Influential. Include individuals who have a degree of influence in the organization and can act as DEI champions.
• Knowledgeable. Include individuals who have the skills, knowledge, or background specific to the anticipated DEI issues that need to be addressed.
• Representative. Include a cross-functional and diverse group of individuals (i.e. departments, identity categories). This will ensure the organization is represented holistically and all groups have a spokesperson to bring issues that impact them to light.

Recruit project team members using the following approaches:

1. Communicate the project and ask for volunteers:

   • Have the executive champion introduce the DEI project to the organization in a town hall meeting or communicate it via email, newsletter, or an intranet, indicating what a DEI strategy is and what it hopes it achieve.
   • Ensure the information they share includes:
     • The intent of the project and why it's a priority for the organization.
     • The desire for input and assistance from employees at every stage of the project.
     • HR contact information for any individuals who are interested in participating on the project.

2. Involve key stakeholders:

   • If the project manager is aware of specific individuals who are passionate about DEI and would be good additions to the team, reach out directly and ask for their participation.
   • Reach out to individuals who have formal or informal influence in organization. Their support helps generate buy-in throughout the organization.
   • If the organization already has a DEI department or employee resource groups, they can provide input for project team members.

Avoid common biases when conducting data analysis

• Past-Experience Blindness

  Individuals instinctively categorize and identify patterns leading to the use of a practiced rather than a new approach.

• Confirmation Bias

  Individuals are more likely to lend more weight to information that confirms pre-existing beliefs.

• Conjunction Fallacy

  Occurs when multiple events are projected to have a greater probability of occurring together than apart.

• Self-Serving Bias

  Individuals give themselves credit for successes while avoiding blame or deflecting responsibility for negative outcomes (Verywell Mind).

• Hero Mindset

  Leaders often feel it is their responsibility to make all decisions, as they have the most experience and knowledge and are accountable for organizational welfare.

• Optimism Bias

  Individuals overestimate the likelihood of positive events taking place while underestimating the likelihood of negative events or underestimating their impact.

• Inside-Out View

  People focus on their unique circumstances and rely on personal experiences, ignoring broader patterns that tend to be more predictive of future events – this often holds true even when they are aware of the broader patterns (Kahneman).

See McLean & Company's Biases & Heuristics Catalog for more information.

McLean & Company Insight

Having a diverse project group with different backgrounds and experience levels and from different functions will mitigate these biases and improve the accuracy of the external analysis.

Gather organizational data to uncover DEI gaps and challenges

Refer to the Appendix 1 for sample inclusion survey questions if an inclusion survey is being created in-house.

Tip: Build the DEI strategy to address specific challenges occurring in the organization. For example, if exit surveys show higher turnover of people of color (POC), the strategy must address how to retain POC employees.

Conduct focus groups to understand the employee experience

Why?

Discrimination often goes unreported. Listening to employees share lived experiences shines a light on key narratives that are good indicators of deeper or broader DEI-related issues in the organization.

Tip: Use shared lived experiences as high-level indicators of broad trends and as signals to probe deeper into a situation.

Keep in mind that focus groups on DEI require careful and intentional execution, as it touches on personal and sensitive topics. Ensuring employees are psychologically safe will enable authentic discussions.

Plan focus groups thoroughly

Determine facilitators:

• Inclusion is a sensitive topic. Evaluate whether an external facilitator would result in more honest discussions. Source language interpreters where required.

Draft agenda and questions:

• Use quantitative data gathered to guide probing focus group questions to help explain the "why."

Confirm anonymity:

• Communicate that feedback collected will be anonymized and participation will be confidential.

Focus group composition

• Create voluntary sign-up sheets. Allow employees to sign up for the focus groups in which they feel the safest.
• In addition to general focus groups, organize optional focus groups for any identity categories.
• Do not make focus group questions unique to these identity categories.

Note: Due to the sensitive nature of the topic, provide an option for employees to share their experiences in one-on-one interviews.

Draw out employee experiences on:

• Empowerment
• Openness
• Belonging
• Leadership

Refer to the Appendix 2 for best practices on how to conduct focus groups on inclusion and how to analyze focus group data.

Use McLean & Company's Standard Focus Group Guide to prepare for focus groups.

Identify shared DEI challenges at the organization

Review organizational data and focus group feedback to identify shared DEI challenges. Shared challenges are categories of similar insights that appear across the data collected from different sources. For example:

• Focus group theme

  Parents found rigid work hours make it difficult to attend to the needs of their children.

• Engagement data

  Low engagement results on "I can maintain a balance between my work and my personal life" among parents.

• Exit data

  High turnover of employees (primarily women) within one year of returning from maternity or parental leave.

Shared challenge: Parents at the organization are finding it difficult to feel like they belong with the organization due to work-life balance conflicts.

• Focus group theme

  LGBTQ2IA+ employees agreed that non- LGBTQ2IA+ coworkers often seemed uncomfortable when they would talk about something related to their sexual orientation.

• Engagement data

  Low engagement results on "my co-workers care about me as a person" question among employees who identify as LGBTQ2IA+.

• New hire survey

  Low scores on "my manager invested time to get to know me" question among employees who identify as LGBTQ2IA+.

Shared challenge: Coworkers and managers make LGBTQ2IA+ employees feel like outsiders or that their whole selves are not welcome.

Review the organization's broader strategic goals and priorities

Align DEI

The DEI strategy must be aligned with all other organizational priorities and initiatives, such as:

• Talent programs
• Sustainability goals
• Vendor, supplier, and procurement strategies

Evaluate areas such as:

• Talent/organizational strategy
• Corporate social responsibility (CSR) or environment social governance (ESG) strategy
• Other priorities: Senior leaders often have concerns or priorities that are not formally documented (e.g. culture). Consult with key individuals in various functions to discover these concerns or listen closely to what you hear organizational leaders regularly talking about.

Identify the DEI implications of strategic goals and priorities. For example:

Strategic Goal		DEI Implications
Serve a large customer base by providing personalized solutions.		Improve customer awareness competencies to recognize the diversity of the customer base.
Expand to global markets over the next three to five years.		Encourage diversity in hiring by offering greater incentives for referrals of diverse candidates. Assess and address any biases in the selection process.
Enhance business performance and organizational reputation.		Create a campaign to become more involved in the community and develop diverse talent pipelines.

“Creating a culture of diversity, equity, and inclusion is not only the right thing to do, it's also the smart thing to do. It drives innovation, enhances decision-making, and improves performance. By embracing diversity and fostering a sense of belonging, we can build a better world for all.” (Klaus Schwab, World Economic Forum (WEF))