It’s been quite a year, and trying to budget for the next one can seem akin to staring into a crystal ball and anxiously waiting for something to appear. Ultimately, while this next year may seem even more uncertain than most, that doesn’t mean you should back off of critical investments such as those in diversity, equity, and inclusion (DEI). While many companies rush to slash their DEI budgets at the first sign of financial uncertainty, this is in actuality a deeply counterproductive decision. Budgeting for diversity and inclusion drives critical initiatives that feed directly into companies’ bottom lines. By immediately jumping to cut that funding, companies show their employees in no uncertain terms where their priorities lie.
There are myriad reasons not to cut your DEI budget leading into 2021, but how do you frugally plan for inclusion initiatives during a year that may or may not be remote, may or may not include substantial policy shifts, and may or may not see your company doing well? There are certainly a lot of factors to consider. While budgeting for things you’ve never done before can be difficult, we’ve got your back with some best practice advice for budgeting for diversity and inclusion and building a robust DEI program in the coming year that drives measurable impact (you can also check out our newer post HERE for more details).
Why you shouldn’t cut your DEI budget as a way to save money
Unfortunately, despite spending $8 billion per year on DEI initiatives, many executives still believe that DEI is a ‘nice to have’ rather than a ‘need to have’. Part of this misconception may stem from the fact that the standard slate of DEI initiatives implemented by most companies is largely ineffective and targeted at box-checking rather than concrete business outcomes. With this line of thinking and little to show for the efforts they have made, it’s unsurprising that DEI programs would seem to be an unnecessary expense. In reality though, that couldn’t be further from the truth.
Organizations that are more diverse and inclusive have been proven to outperform their peers across a number of metrics. For instance, companies with more women in C-suite level positions deliver 34% greater returns to shareholders. Harvard Business Review also found that organizations with higher than average diversity saw 19% greater innovation revenues. McKinsey reports that companies in the top quarter for racial/ethnic diversity are 35% more likely to surpass their peers. Lastly, companies with two-dimensional diversity are 45% more likely to have captured a larger portion of the market and 70% more likely to have moved into a new market in the past year. Clearly there is money to be made by investing in diversity and inclusion, but as with many things, it has to be done correctly in order to be effective.
How to ensure your DEI investments drive impact
The first step towards budgeting effectively for diversity and inclusion is to start treating DEI like any other business imperative. You wouldn’t short your marketing budget and still expect to receive the same results, so why does that expectation exist for DEI? Similarly, what gets measured gets managed. You wouldn’t put your sales people out into the field with no sales targets to just see how they do, so it’s similarly imperative that you put structures around your DEI program including measurable metrics and goals. Don’t assume that since you ran a half-day training, more diverse employees will just start flocking to your organization. You have to put in the work in order to reap the benefits.
It’s not just about counting the number of BIPOC employees at your organization, though. Companies have been tracking the number of underrepresented employees in their ranks for decades at this point; simply counting doesn’t lead to improvement without accompanying focuses on inclusion, promotion, etc. You have to aim higher. Use studies and statistics to inform your goal-setting and budgeting. Increased DEI leads to higher employee engagement, which drives productivity and other measurable outcomes, so you can design quantitative objectives accordingly.
Consider DEI’s impact on your entire company, from the vendors you engage to the philanthropies you support. Set concrete targets for what you want to achieve, then budget out how to get there, just as you would in any other department. Don’t fall prey to the belief that DEI is an amorphous, ‘fluffy’ concept that can’t be quantified beyond basic employee counts. Use employee surveys and other data to track the success of your program and ensure you’re getting your money’s worth. If you’re not, change your tactics.
Making progress on DEI is difficult, but far from impossible. It simply requires strategic focus and effort, just like any other business imperative. If you’re considering how to best use your DEI dollars, consider an integrated solution that supports employee resource groups, provides best practice toolkits and trainings, and integrates surveys and people analytics. Workrowd offers all this and more, so if we can be of help, don’t hesitate to reach out at email@example.com. However you choose to proceed, just don’t back off of DEI at this critical time.