A just-released business insights article from MNP says that having a valuable and thoughtful Equity, Diversity, and Inclusion (EDI) strategy is vital to businesses, “and the risks that come with getting it wrong have never been higher.”

According to Mary Larson, MNP’s Leader, Consulting – Organizational Renewal, to the so-called “business case” supporting increased diversity has been around for decades, but Equity, Diversity, and Inclusion (EDI) as a force and movement was launched into the spotlight. “The tipping point seems to have been reached, and EDI is now as necessary as wearing a seatbelt.”

“While it’s clear that EDI is a meaningful and vital practice,” she says, “a June 2022 Harris Poll found that only 40 percent of Canadian companies have a concrete EDI strategy, with nine percent saying that they plan to implement one soon. That leaves half of Canadian businesses without a substantive plan to address inequities and exclusionary practices.”

While many organizations are taking important steps to enhance their EDI performance, organizations – with or without an EDI strategy – may want to consider two types of potential risk.

The first dimension of risk, Larsen says, “is grounded in unkept promises or failure to measure progress. As awareness of equity has grown, there has been a flood of well-intentioned strategies and commitments to EDI. Many of those commitments were very public – and some were largely performative.”

Unfortunately, she adds, “performative gestures profess outward support for a cause but fail to follow up with meaningful actions. Showing support for marginalized people in ways that are not authentic or purposeful can perpetuate damage already being done to individuals and organizations.”

Creating goals and objectives that are either never delivered on or were impossible to complete are at the center of the controversy. The accusation is that shareholders were negatively affected – that company value was lost – by a failure to meet equity objectives.

The second dimension of EDI-related risk is largely related to missed opportunities. According to Larson, “if you are one of the many organizations that does not have an EDI strategy, the risk can be measured by lost people and lost business.”

She notes that “many younger, values-based employees seek to work for companies that are making meaningful commitments to equity and inclusion. They want to see strategies that include transparent sharing of demographic workforce data and an openness to admitting that there is more to be done. Inclusive workplaces leave no one behind and employees who trust their company are always going to be justifiably committed to the goals of that organization. The risk of a toxic workplace, where leaders are not educated to be culturally fluent, can be tracked just by following the news. Employees have more access to communication channels and social media, making it easy for a brand to be destroyed in a matter of days.”

Larsen believes that continuing to win contracts, attract new employees or preserve financial stability will increasingly depend on a serious commitment to EDI. “The risk of not having an EDI strategy is much greater than admitting your organization has work to do in the equity space.”

She adds that organizations that reflect the diversity of their customers and the communities they serve reap multiple advantages, not the least of which is that their employees can come to work comfortable being their authentic selves.

“We also know that the financial performance of an organization is increasingly tied to understanding their customers and expectations,” she concludes, “which is made easier if the makeup of the employee base reflects the communities it serves. EDI is the right thing to do. But we know now that clients, potential business partners, and regulators are going to continue to develop equity requirements. The importance of EDI is not going away, and Canadian organizations can only play catch-up for so long.”

For a whole lot more, have a look at Where risk and EDI meet: Validation and mitigation | MNP.