In the wake of George Floyd’s murder and the rise to prominence of the Black Lives Matter Movement, chief diversity and inclusion officers (CDIOs) were in high demand. Companies made these C-suite hires to demonstrate a commitment to improving diversity within their organisations. In some ways it was also a recognition that, until then, inclusion had not been high up on the corporate agenda.
CDIOs saw the largest growth in hires in US companies, according to data from LinkedIn, increasing by 168.9% between 2019 and 2022 – more than any other C-suite title. But recruitment for this role is already on the wane. Disney, Warner Bros and Netflix are three of the more high-profile businesses to have parted ways with their diversity and inclusion leaders, despite some of the roles being created last year.
But a Gallup study of Fortune 500 company HR leaders suggests that most companies did not appoint a CDIO or dedicated senior DEI leader in the first instance. Indeed, only 39% of companies reported having an executive dedicated to DEI, while 45% reported that DEI is one of many areas of responsibility led by the chief HR officer (CHRO). It therefore seems unlikely that many of these companies are now jettisoning their dedicated DEI leaders, for the simple reason that most of them never appointed one to begin with.
Along with the supposed demise of the DEI leader, there is a general perception that DEI budgets are shrinking, as a tougher economic climate focuses business minds on other matters. Only 38% of businesses surveyed by Xpert HR had allocated funds for diversity, equality and inclusion initiatives in September last year.
Gallup’s study suggests quite the opposite is happening. In our March 2023 survey, 59% of CHROs said they planned to increase their DEI budget in the next 12 months. This is down from 84% in 2022 but more than half still intend to increase spending on DEI in the coming year. Growth in spending may be slowing, but more than half of companies still intend to increase investment in DEI initiatives.
Making the DEI business case
A more plausible explanation for the decline in power and influence of DEI leaders is that the abrupt focus on DEI was a reaction to a moral and ethical issue rather than a business requirement. In a recent session with senior DEI executives with some of the world’s largest companies, I shared a question suggested by one of their peers: “How do you make the business case for DEI at your company?”
Some were affronted by this question, with one saying they would quit if their company ever asked them to justify DEI investments. This reaction was surprising since most would agree on the importance of substantiating investments in training, talent acquisition or total rewards programmes.
The moral and business cases for DEI are both important, but in addition to persuading everyone that improving DEI is the right thing to do, it is crucial to show how it can contribute to better business outcomes. For example, demonstrating the impact of DEI initiatives on employee engagement, talent retention, collaboration, agility and productivity will help DEI leaders secure the buy-in and active support of business decision-makers, which in turn ensures the initiative’s long-term success and sustainability.
While the news is not all bad for DEI leaders, there is ample room for improvement. Most CDIOs believe in the mission and purpose of their job and that their role has a positive impact on their mental health. They also strongly believe that their work is more essential than ever, but most are not persuaded that their organisations are making progress on diversity equity or inclusion.
Less than half (46%) of CDIOs strongly agreed that their organisation had made changes in the past 12 months which improved workplace DEI. And while they remain committed to their role, and its mission and purpose, DEI leaders are the least engaged of the nine HR functions surveyed for Gallup’s CHRO Roundtable.
How to improve the engagement of DEI leaders
To be effective and ensure that DEI initiatives gain traction and drive desired change throughout the business, diversity leaders need to be engaged. To achieve this, businesses must address the three key issues which they raise: they feel that they do not receive the resources, materials and equipment they need to do their job effectively; their opinions do not seem to count; and they do not feel recognised for the work they do.
By addressing these factors head-on, increasing resources, empowering their decision-making and recognising their accomplishments, organisations can significantly improve the engagement of their DEI leaders. Engaged leaders are effective leaders. Organisations need to fix this if they are serious about improving workplace DEI.
Jeremie Brecheisen is managing director of The Gallup CHRO Roundtable and managing partner of Gallup’s EMEA division