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In the Market: How to harness the benefits of corporate diversity

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Summary

Companies have been making progress in efforts to diversify their ranks in recent years, but many still struggle to retain and nurture the people they hire. There is mounting evidence that companies with high diversity, equity, and inclusion (DEI) scores perform better financially. Companies have been adding more diverse talent to their boards in an effort to be more socially responsible, but progress has been slow and some data suggests it has decelerated. A recent research paper argues that companies need to focus on DEI as a whole, not just diversity, in order to reap the financial and social benefits. Investors have been pressuring companies to do more to promote diversity, equity, and inclusion, but the pressure has eased recently.

Q&As

What is the difference between diversity and inclusion?
Diversity is all about counting people; inclusion is about making people count.

What evidence is there that companies that score high on DEI metrics also perform better financially?
There is mounting evidence that companies that score high on DEI metrics also perform better financially.

What are some of the components of DEI?
The components of DEI are diversity, equity and inclusion.

What are some of the questions investors are asking to understand how a company approaches equity and inclusion?
Investors are asking for examples of suggestions by employees that were implemented or concrete steps taken to encourage inclusion.

What evidence is there that companies have been slow in making progress in diversifying their ranks?
A Heidrick & Struggles report on the boards of Fortune 500 companies shows appointments of women and ethnic minorities decreased in 2022 compared with the previous year.

AI Comments

👍 This article does an excellent job of highlighting the importance of diversity, equity, and inclusion initiatives for companies and how they can help to improve financial performance.

👎 This article fails to mention any concrete steps that companies can take to actually implement DEI initiatives, leaving readers without any practical advice.

AI Discussion

Me: It's about how companies need to focus on diversity, equity, and inclusion (DEI) for corporate success. It also talks about the lack of progress in this area and the financial risks to companies that don't focus on DEI.

Friend: That's really interesting. What are the implications of this article?

Me: Well, the article suggests that companies need to focus on equity and inclusion in order to truly reap the benefits of having a diverse organization. It also suggests that companies who score high on DEI metrics are likely to perform better financially. Companies who don't prioritize DEI risk facing financial repercussions, such as the Goldman Sachs gender discrimination case. Additionally, investors are now more aware of the importance of DEI, so companies risk losing their support if they don't address DEI issues.

Action items

Research the current diversity and inclusion initiatives of the company you work for or are interested in.
Reach out to senior executives and board members to learn more about their DEI strategies and how they are working to create an equitable and inclusive workplace.
Develop a plan to implement DEI initiatives in your own organization, such as creating affinity groups, conducting diversity and inclusion training, and implementing policies that promote equity and inclusion.

Technical terms

ESG Investors: ESG investors are those who invest in companies that meet certain environmental, social, and governance criteria.
Diversity & Inclusion: Diversity and inclusion refer to the practice of creating a workplace environment that is inclusive of all people, regardless of race, gender, age, religion, or other characteristics.
Social Impact Boards: Social impact boards are boards of directors that focus on the social and environmental impact of a company's operations.
DEI: DEI stands for diversity, equity, and inclusion. It is a framework for creating a workplace environment that is inclusive of all people, regardless of race, gender, age, religion, or other characteristics.
#MeToo Movement: The #MeToo movement is a global movement against sexual harassment and assault.
George Floyd: George Floyd was an African American man who was killed by a white police officer in Minneapolis, Minnesota in 2020.
Russell 3000: The Russell 3000 is a stock market index that tracks the performance of the 3,000 largest publicly traded companies in the United States.
Heidrick & Struggles: Heidrick & Struggles is a global executive search firm.
Ariel Investments: Ariel Investments is an asset management firm.
Russell Reynolds Associates: Russell Reynolds Associates is a global executive search firm.
Thomson Reuters Trust Principles: The Thomson Reuters Trust Principles are a set of principles that guide the company's journalism and business practices.