Sustaining your EDI Budget: A Business Imperative

In today's increasingly complex, competitive and globalised business environment, the logic for equity, diversity, and inclusion (EDI) programming is more sensible than ever.

However, macro-environment pressures, such as the "war on woke," are causing many organisations to reconsider their stance on supporting certain diverse communities or, at best, how publicly they promote their EDI initiatives.

Many EDI programmes have recently been criticised for focusing on moral imperatives rather than demonstrating clear business benefits. This blog aims to provide a framework for sustaining investments in EDI budgets, highlighting the strategic advantages of an inclusion-first approach and the importance of skills-based hiring in unlocking these.

Building a Defensible Business Case for EDI

In a recent (2024) blog from Boston Consulting Group (BCG), their Chief Diversity Officer Nadjia Yousif said:

“This isn’t about taking sides but rather making the most of the opportunities to enhance business and societal value. DEI raises standards for everyone by improving innovation, performance, and the workplace experience across the board."

'Doing the right thing' is a great starting point but has a shelf life. Tangible improvements, and not just relying on external data, are essential to securing long-term investment. Our work has always been about driving better business outcomes, but more bums on seats are not really the returns on effort leaders want to see—but what are?

I'm a huge believer in the Trojan horse with EDI, i.e. make the case about something really sensible and use it as a lever to unlock greater opportunity creation for diverse groups. Here are key considerations I use when building Trojan horse business cases with clients:

1. Link EDI to CURRENT data: Numerous studies have demonstrated the positive correlation between diversity and business performance. Diverse teams bring a variety of perspectives, leading to more innovative solutions and better decision-making. However, please stop relying on that McKinsey report to make this case - the data wasn't great, and we need to do better. This BCG report is from this year and has relevant use cases and data.

2. Focus on cognitive diversity: Cognitive diversity refers to the different ways people think, problem-solve, and see things. Every leader wants a higher-performing team, especially as budgets shrink, and cognitive diversity is how we unlock it. When organisations harness cognitive diversity, they can tackle problems more creatively and adapt quickly to changing market conditions. This type of diversity is not mutually exclusive with demographic diversity and must be intentionally measured to unlock its value.

3. Skills-based hiring: But how do we enable cognitive diversity in our teams? Skills-based hiring! Organisations that widen the gate for diverse talent by focusing on skills-based hiring do not lower the bar - but many programs that focus on demographics first do. Skills-based approaches shift the emphasis from traditional experiences and qualifications to the skills required to complete a role successfully. Gartner found that 70%+ people don't have the right skills for their jobs, so focusing on them will improve performance, experience and engagement and significantly reduce churn and bias.

4. Demographic diversity drives culture: While cognitive diversity drives performance, demographic diversity plays a crucial role in shaping organisational culture. A workforce that reflects a broad range of backgrounds, ethnicities, genders, and experiences contributes to a more inclusive and innovative culture. This, in turn, attracts top talent from various demographics, enhancing the company's reputation and competitiveness.

5. Distinguish between drivers and outcomes: For EDI programmes to be sustainable and effective, it is vital to distinguish between drivers and outcomes. Cognitive diversity should be seen as a driver of business performance, while demographic diversity is often an outcome of inclusive practices and policies. Organisations must focus on creating an environment that fosters diversity of thought and perspectives, which will naturally lead to greater demographic diversity over time.

Practical Steps for Implementing an Inclusion-First Strategy

1. Conduct an EDI audit: We've built a free, open-source EDI diagnostic called Clu'd Up to assess the current state of diversity and inclusion within your organisation (because social equity should not be commoditised). Clu'd Up helps you identify legal risks and improvement areas and set measurable goals to track progress against our BASIIC maturity model.

2. Invest in the RIGHT learning and development: Provide training programmes that focus on outcomes for hiring managers, like our "How to Build High Performing Teams" training, not theories like unconscious bias, inclusive leadership, and the benefits of diversity. These both have the opportunity to create a more inclusive culture and equip leaders with the skills to manage diverse teams effectively, but one comes from a place where they will actually engage and apply, and the other, we know all too well, is seen as an annual box to tick.

3. Revise recruitment practices: Implementing skills-based hiring practices does take focused commitment, but tools like Clu can make navigating that journey significantly less expensive and more effective.

4. Promote an inclusive culture: Encourage open dialogue and create platforms for employees to share their experiences and ideas. Recognise and celebrate people's outcomes and value-add to the business, not just their demographics and personal stories, through events, initiatives, and policies that support all employees.

5. Measure and communicate success: Please start measuring your work! Measure the progress of your EDI initiatives (promotions, new hires by demographic) and layer that data against business performance, employee satisfaction and strategy. Communicate how this data intersects with stakeholders to demonstrate the tangible benefits of a diverse and inclusive workplace.

Investing in EDI is still the right thing to do and an excellent driver of culture and belonging, but keeping your business case detractor-proof is increasingly important. So please don't forget it.

Adapting language to reflect the macro environment helps your organisation know you understand their pressures and that you can help them navigate them through your work. This is your trojan horse. And so far, it's worked for us in every new investment/budget case we've presented this year.

Let me know how you get on.

J

#SkillsBasedHiring #DiversityAndInclusion #EquityDiversityAndInclusion #EDI #InclusiveHiring