By Colin Heyman, Lead Associate of the Equality, Diversity and Inclusion Network

For those of us who are committed to improving equality, diversity, and inclusion (EDI) practice in our organisations there is often an issue as to how we persuade those colleagues less committed than ourselves.

Of course, there are a variety of reasons for improving EDI practice in our organisations. It may be because EDI is part of the ethos of the organisation; that it is not just stated as a value but actively pursued by both the organisation and the teams and individuals within it.

Alternatively, for many social landlords, EDI is pursued to better meet the needs of the diverse people who live in the housing that social landlords provide. Increasingly, though, EDI practitioners are being asked for a business case, or are putting this forward themselves, believing it is the best way to influence colleagues and get their support for EDI programmes and initiatives.

But is there a convincing business case? And should this be what we rely on to persuade our organisations to focus on EDI? There are a number of reasons commonly given to support the business case.

Internally, some of the benefits of good EDI practice are that it can lead to a diverse and inclusive workforce, with different viewpoints leading to more creativity and innovation; if people feel they can be themselves and contribute all that they can, staff productivity and
retention are improved, as well as a reputation for diversity and inclusiveness increasing the pool of talented people that will apply for vacancies.

Externally, having a workforce that matches tenants and residents can help to provide appropriate services and build relationships with a diverse range of people. These arguments have persuaded many private companies to focus on diversity, believing in both the internal advantages mentioned above and wanting the ability to meet the needs of (and so sell to) an increasingly diverse market.

The following are two examples of papers that look at the business case: “Diversity and Inclusion at Work: Facing up to the business case” (CIPD, 2018); and “Diversity wins: How inclusion matters” (Mckinsey, 2020).

They have two very different approaches. The Mckinsey report is more research based and looks at the financial results of companies that have more diversity, particularly focusing on gender and race. They have been following these companies since 2014 so can show
progress over the last few years.

Their latest analysis, from May 2020, “reaffirms the strong business case for both gender diversity and ethnic and cultural diversity in corporate leadership — and shows that this business case continues to strengthen. The most diverse companies are now more likely than ever to outperform less diverse peers on profitability.”

They found, for instance, that:

  • Companies in the top quartile for gender diversity on executive teams are 21% more likely to outperform their competitors on profitability
  • Companies in the top quartile for ethnic/cultural diversity on executive teams are 33% more likely to have industry-leading profitability
  • Companies in the bottom quartile for gender/ethnic diversity are 29% less likely to achieve above average profitability.

They comment that “Diversity matters because we increasingly live in a global world that has become deeply interconnected. It should come as no surprise that more diverse companies and institutions are achieving better performance.”

The CIPD paper, on the other hand, is more of a review of past research on the subject, and is more cautious: “There are many factors that contribute to the relationship between diversity in workplaces and organisational outcomes, such as financial performance, innovation and
team performance, and we found mixed results for the outcomes of diversity, meaning the ‘business case’ is not clear.”

However, the report goes on to say: “This should not deter us from promoting diversity and championing inclusive practices. Inclusive and diverse environments are likely to have a multitude of beneficial effects not captured in traditional research, for both individuals, their employers and wider society. Any business case for diversity should hold these outcomes in balance and recognise the benefits at not only an organisational level but from an individual and societal perspective.”

To sum up, there is some evidence that diversity improves business performance, and I do believe it is worth knowing evidence like this to support our efforts to improve diversity practice and persuade some of our colleagues, particularly sceptical ones who might not ‘buy’ other arguments.

However, I would like to raise some issues about this whole approach. Firstly, should organisations, particularly social landlords, need a business case to be persuaded? As the CIPD paper says: “We need to challenge the traditional notion of the ‘business case’ for diversity that focuses only on business, rather than human, outcomes; there should not need to be a bottom-line business case in order to treat individuals with dignity and respect at work.

Business leaders and people professionals have the opportunity to champion the case for diversity, moving from narrow outcomes such as financial returns, and highlight the numerous benefits that diversity and inclusion can bring – not least that it is simply the right thing to do.”

Secondly, is the sort of evidence gathered by traditional business cases suitable to capture the effects of improvements in EDI practice? As the CIPD report says, there are many other benefits to improved EDI practice. Some of them are very difficult to quantify. How, for example, do you put a value on a positive experience of a tenant or of an employee who has experienced racism in previous neighbourhoods/ employment that has made them feel an outsider and now feels that they have found a home?

If there are these issues, should we abandon the business case as one of our arguments and go for the moral or greater customer satisfaction arguments instead? On the contrary, I think the business case argument for EDI has been invaluable over several decades as one tool to encourage organisation in the right direction. But it is one tool.

The question I asked at the beginning was about how we persuade colleagues less committed than ourselves to come on board with EDI. Basically, I think flexibility is key – the ability to adapt how you influence people according to the situation, the setting, the people you are with. As such, it is important to have a range of tools in our toolbox.

Yes, the business case is one very useful tool we can deploy, but it will not be suitable for every situation, or every person.