There’s no doubt about it — an economic downturn is on the horizon. It’s estimated that one-third of the global economy will contract in 2022 and/or 2023, and surviving the recession is the question on every leader’s mind. The common reaction is to cut back on any expenditure deemed non-essential, usually beginning with things like the travel and expense budget or the office Christmas party but often ultimately ending with layoffs. However, in their enthusiasm to slash budgets, organizations often unwittingly jettison the people and programs that could be instrumental in orchestrating a turnaround for the firm.
Diversity, equity, and inclusion (DE&I) is one of those areas that often vanish from the agenda once times get tough. Business leaders tend to see it as “nice to have” or a luxury rather than the strategic necessity it is. In fact, troubled organizations committed to diversity at all levels can benefit from the differences in experience, culture and perspective their people bring. True diversity can become the fuel for future innovation and agility in the face of economic adversity.
Diverse Executive Teams Bring Home the Bacon
Diversity in the C-suite has long been a challenge for organizations. However, those that commit to it regularly find themselves outperforming their peers. According to 2019 data from McKinsey & Co., companies in the top 25% for gender diversity on executive teams were 25% more likely to have above average profitability than those in the bottom 25% for gender diversity. In the same study, ethnically diverse executive teams were 36% more likely to outperform their industry than organizations with the least diverse leadership teams. Finally, as if we needed any more convincing, the study found organizations that lagged in diversity were 40% more likely to underperform their industries. Suffice it to say, diversity — especially at the top — is extremely important for weathering economic storms and setting your organization up to beat the competition when the skies clear.
If Innovation Is What You Want, Diversity Is What You Need
New ideas, products and efficiencies are always welcome, but we’re willing to wager they are especially welcome in the face of an economic downturn. A cogent DE&I strategy will naturally promote different ways of thinking and doing because of the people it brings into your organization and leadership team.
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DE&I-Focused Organizations Are More Attractive to Candidates
Most of the people you want to hire care about DE&I at work, and that isn’t about to change. Millennials and Gen Z alike want to work for organizations that are genuinely committed to these values. Focusing on DE&I is an excellent way to burnish your employment brand among all audiences.
Present Diverse Slates of Candidates
Don’t wait for permission to diversify your candidate pipeline. Knowing the benefits that diversity brings, it would be professional malpractice for us in the recruiting/staffing industry to fail to source candidates from a variety of backgrounds and ethnicities.
Evaluate the Entire Candidate Experience from a DE&I Perspective
Even when the will is there to make diversity a strategic priority in your hiring, processes and institutional inertia can easily work against you. Evaluate each stage of the candidate experience to see if it is conducive to attracting a more diverse slate of candidates. For example, is implicit bias in your job descriptions unintentionally discouraging certain types of candidates from applying? Are your hiring panels devoid of diversity?
Staffing and recruiting leaders cannot completely transform the organizations they serve on their own. Much of the work must be done internally to reshape the company culture, behavioral norms and processes into something guided by DE&I principles. However, the better we are at attracting and hiring diverse talent at all levels, the easier the internal transformation will become.
The return on investment of DE&I efforts and hiring initiatives becomes even more impactful in times of economic uncertainty. Putting these efforts on the back burner can negatively impact the morale of your employees, your culture and the overall future of your brand. The power of educating business leaders on this impact often rests in the hands of staffing firms or personnel. Use it to set your organizations or clients up for long-term resilience.