It’s (past) time to get strategic about DEI

By Jan Shelly Brown, Diana Ellsworth, Alex Katen-Narvell, and Dana Maor

Companies have committed to being more diverse, inclusive, and equitable, but many struggle to make significant progress in these areas. Here’s how they can meet DEI ambitions—now and in the longer term.

Many organizations have long been engaged in efforts to make their workforces and communities more diverse, equitable, and inclusive. Following the murder of George Floyd in 2020, companies ramped up those efforts, and the world saw an unprecedented explosion of corporate diversity, equity, and inclusion (DEI) commitments.

Since then, however, the pace of commitments has slowed, and business leaders, employees, and other stakeholders have expressed frustration with the lack of significant progress that well-intentioned leaders are making on their DEI pledges. For instance, there is still a lack of gender parity when it comes to workplace advancement. McKinsey’s 2022 Women in the Workplace research, conducted with LeanIn.Org, showed that for every 100 men who are promoted from entry-level to manager positions, only 87 women are promoted, and only 82 women of color are promoted. The same body of research also revealed that women leaders, particularly women of color, leave companies at a much higher rate than White men.

What accounts for the shortfall in progress?

Our work with hundreds of companies seeking to launch or transform DEI strategies points to several common failure modes that organizations and leaders tend to fall into—particularly regarding initiatives aimed at improving DEI internally.5 Some launch DEI initiatives without establishing a clear baseline: Where has the company been, where is it going, what resources does it need to create DEI impact, and how will it know that its DEI strategy has succeeded? Some companies take an incremental approach to change, which can end up wasting teams’ and individuals’ already scarce time and energy. Others are inconsistent about measuring outcomes from their DEI initiatives, often missing opportunities to build on what is working or to change course when initiatives aren’t faring well.

By contrast, the companies that have begun to fulfill their internal DEI commitments take a systematic approach to establishing their DEI strategies. They set a bold but achievable DEI aspiration linked to the company’s overall mission and strategy. They use quantitative and qualitative analytics to establish a baseline and determine what DEI interventions are most needed. They develop a plan for which DEI-related initiatives will be rolled out and when, based on the company’s overarching strategic objectives. These organizations mobilize the resources and capability building that’s required to deliver on DEI initiatives. And they establish routines for monitoring progress over time; in this way, leaders can hold people accountable for desired outcomes while scaling and sustaining momentum on DEI initiatives that are working.

In our experience, these five steps, taken together, are critical for setting and achieving a robust internal DEI strategy.

Five steps are critical for setting and achieving successful DEI strategies.

1. Aspire. Align on the vision.
2. Assess. Build the fact base.
3. Architect. Develop the plan.
4. Act. Mobilize capabilities and resources.
5. Advance. Measure progress to scale and sustain momentum.

By no means do they constitute a simple recipe for success, nor can they ensure that change will happen overnight. Getting these steps right will require collaboration among leaders across business units and functions, as well as frequent communication with employees, board members, and other important stakeholders.

But the leaders and companies that adopt a systematic approach to DEI strategy development will be better able to create near-term improvements in employees’ everyday experiences at work while making steady progress on longer-term DEI objectives.

Step 1: Set a bold but achievable DEI aspiration

While DEI continues to be a controversial, often-politicized topic, there is increasing evidence that when organizations are diverse, inclusive, and equitable, everyone benefits. One study, for instance, showed that companies in the top quartile for gender diversity on their executive teams were more likely than less-diverse peers to have above-average profitability.6

But even when individuals and teams agree on the importance of DEI efforts, they may struggle to balance DEI-related activities with other day-to-day priorities. What they need is a bold but achievable DEI aspiration that inspires, offers clear direction, and demonstrates that DEI isn’t an isolated priority. As one pharmaceutical leader told us, “DEI is the right thing to do, but it also enables us to achieve our broader mission to serve more patients and their communities. We should always talk about DEI as it links to our ability to achieve our vision for patient outcomes.”

The DEI aspiration might be a sentence, a list of commitments, a diagram, or a few paragraphs. The format matters less than the message it conveys—that moving the needle on diversity, equity, and inclusion will positively affect the organization’s mission and stakeholders. The DEI aspiration should highlight the outcomes the organization wants to achieve, not just the activities it will take to get there. The pharmaceutical company Bristol-Myers Squibb, for example, set the following DEI aspiration: “Through a culture of inclusion, we create an agile and responsive work environment where the diverse experiences and perspectives of all our employees help to drive innovation and transformative business results.”

The DEI aspiration should also be linked to objectives that are specific, measurable, forward looking (think several years out), and grounded in data. One agricultural company, for instance, sought to create gender parity in the organization by 2030. Leaders conducted a comprehensive analysis of retention and advancement trends and realized that to meet this bold ambition, 80 percent of the company’s new hires over the next few years would need to be women. Given existing and projected demographics in the industry, leaders realized such a goal would be tough to meet, so they revised the aspiration to be more realistic—although still a stretch goal.

A diverse set of stakeholders should be involved in creating and pressure testing the DEI aspiration. One healthcare company solicited input from business and functional leaders and employee resource groups about its DEI aspiration. The feedback from these stakeholders helped to shape the language of the statement. Their input also ended up influencing how the company implemented the DEI initiatives that followed, as these conversations unearthed important nuances in the rollout and several potential pitfalls.

Step 2: Build a quantitative and qualitative DEI baseline

Many companies launch DEI initiatives without a clear view of the problems they are trying to solve, the interventions that might work best, or how they will measure success. One consumer-packaged-goods company, for instance, celebrated the fact that 85 percent of its employees said they felt “a strong sense of belonging” at the organization. But when leaders were asked about perceptions and needs among specific groups of employees—for instance, Black women, neurodiverse employees, and veterans—the leaders admitted, “We have no way of knowing.”

To gain more clarity on where the organization stands and where it’s going with its DEI-related objectives, leaders must take time to establish a quantitative and qualitative DEI baseline.

Quantitative analysis

Companies can use internal people data to understand how diverse their pipelines are. They can then benchmark those results against industry data, as well as local talent-market data, to identify the biggest areas of difference.7 Does the representation of employees within a specific demographic meaningfully drop off from one level to the next? Such an analysis should capture talent inflows and outflows—for instance, historical trends in hiring, retention, and advancement for each demographic group (exhibit).

Indhira Arrington, chief DEI officer at private equity firm Ares Management, suggests keeping things simple: “For me, it’s a + b – c: recruiting plus promotions minus departures. Cut that by a diversity dimension and by job title, and you can clearly see at any point what your representation looks like. It’s a nice way to start mapping out which people you need to spend time with and which processes to evaluate to understand how we got to where we are.”

Qualitative insights

Through focus groups, interviews, and free-text responses on anonymous surveys, organizations can surface additional insights that can complement their quantitative analyses. If there is enough psychological safety in an organization, employees’ animated stories and open sharing can bring the quantitative data to life for senior leaders. At one investment bank, for instance, leaders conducted a series of focus groups and interviews with Black, Hispanic, and Latino employees to better understand how to meet the needs of these demographic groups. The company had made progress on gender representation, but through these discussions, it learned that Black, Hispanic, and Latino employees needed different support—specifically, more explicit allyship, stronger accountability, and more equitable performance management.

Step 3: Set a plan for how and when DEI initiatives will be rolled out

Once they have set a clear aspiration (with associated objectives) and built a comprehensive baseline, organizations and leaders will be better equipped to architect a strategic plan for DEI. Having such a plan in place is critical—yet, in their haste to show impact, many organizations act first and assess later. A 2022 survey of HR and DEI practitioners, for instance, found that less than half of respondents had a strategic plan for DEI in place.

The planning starts with leaders building a list of initiatives that will support the bold DEI aspiration and that will address any challenges raised during the baseline analysis. There is no one-size-fits-all approach to developing this list. Leaders can take inspiration from others,10 but ultimately the list must be grounded in the company’s unique goals and starting point.

In our experience, it is best to target a few large, mutually reinforcing DEI initiatives rather than pursue many smaller, stand-alone initiatives that will compete for resources and leaders’ attention. Leaders in larger, more global organizations should also think about designing their DEI initiatives so that they can be tailored for different cultures and for local business and social contexts; such initiatives may resonate differently for employees in different parts of the world. Leaders should consider this and other factors when drawing up their DEI road map (see sidebar, “Charting a course for DEI initiatives”).

Leaders at the gaming company Activision Blizzard (AB) did just this, identifying the initiatives required to fill critical talent gaps and boost diversity at the company (and in the industry). There can be up to 50,000 open positions globally in the gaming industry, yet women still make up only about one-quarter of the industry workforce11 and Black employees just 5 percent.

Leaders at AB used advanced analytics and employee interviews to identify the most critical roles, skills, and experiences necessary to address their recruiting needs. They found 14 skills commonly cited in engineering role specifications that weren’t broadly predictive of success. These data have significant implications for the gaming industry: companies that use these criteria could erroneously screen out otherwise qualified candidates or even deter those candidates from applying altogether. The company also looked at the findings through a different lens: What does matter but most limits the company’s potential labor market? Leaders at AB saw that while game development experience was critical to success, it constrained the talent pool by 99 percent, excluding nearly four million potential workers who had all the other technical expertise needed to succeed at AB.

As a result, the team implemented an approach to hiring that emphasized both skills and experience. AB established Level Up U, a three-month engineering program designed to recruit and develop a more diverse set of employees. The composition of the inaugural class was 45 percent women, 40 percent underrepresented ethnic groups, and 14 percent existing employees who were reskilled through the program.13 According to leaders at AB, the program has contributed to a 25 percent year-on-year increase in development head count, and the company plans to continue scaling up Level Up U for targeted roles across other parts of the organization.

As they architect and execute their DEI plans, leaders may identify existing initiatives that should be stopped, either because they have been ineffective or no longer match the company’s reframed DEI priorities. Leaders at one not-for-profit education organization, for instance, paused an antiracist training initiative after employees finally shared that the trainings weren’t changing behaviors or mindsets. The organization had hoped that if board members and employees attended the trainings and gained more knowledge about the systemic challenges affecting their communities, they would be better prepared to design programs and systems to serve under-resourced students. But it turned out that the organization was wasting limited resources on interventions that weren’t making an impact. No one had raised concerns about the trainings previously because they didn’t want to be perceived as objecting to the organization’s DEI efforts. Once employees spoke up, however, leaders listened. They engaged a different training partner that could facilitate the small-group discussions and community engagement that employees had requested.

Step 4: Mobilize the capabilities and resources required to deliver on DEI initiatives

To make meaningful progress on DEI initiatives, companies need to support them with the appropriate capabilities and resources.

Capabilities

In our experience, organizations need a mix of DEI experts, business leaders, and change champions who are passionate about improving diversity, equity, and inclusion in their workplaces. Organizations often overindex on only one of these three groups. They expect leaders without DEI expertise to manage DEI initiatives on top of their full-time jobs. Or they bring in DEI experts who don’t have sufficient business context. In both cases, DEI initiatives end up stalling.

The DEI council at one manufacturing company, for example, was struggling to sustain its momentum after several years of programming designed to improve diversity, equity, and inclusion at the company. The problem? The council included plenty of business leaders who were passionate about DEI, but it lacked anyone with experience in successfully designing and implementing a DEI strategy. Additionally, the executives on the council were doing this DEI work on top of their other responsibilities, with limited capacity, so they failed to make much progress between monthly meetings.

Another company avoided this dynamic by bringing onto its DEI council several people who understood both DEI strategy and industry context. Council members were expected to provide feedback, share DEI success stories, and champion DEI initiatives within their respective business units. And the company redesigned the roles of those people responsible for delivering DEI initiatives, so they had more time for DEI work. The company also made these individuals more accountable by linking their work on DEI initiatives to their performance reviews.

Employees often spend countless hours on DEI initiatives only to be told during performance discussions that their efforts are great as a “passion project” but that they need to prioritize core business activities. This is particularly true for women, who often take on a greater share of DEI-related work without requisite rewards and recognition.14 Instead, these employees should be recognized for their leadership on DEI initiatives through the organization’s formal performance management processes and through informal rewards and public accolades.

Resources

Too often, employees and DEI leaders are tasked with delivering widespread improvements in diversity, equity, and inclusion without an adequate team or budget. The resource gap is likely unintentional; senior leaders often don’t realize the amount of investment required to help employees change their behaviors. A survey of HR and DEI practitioners, for instance, found that only 34 percent believed their organizations had sufficient resources to execute DEI initiatives.15 Again, quantitative and qualitative analyses can help leaders to understand the degree of changes they are expecting across the organization and, therefore, the resources that may be required for a successful DEI transformation.

A regional power company eager to build a more inclusive culture planned to do so through a three-part series of diversity training workshops, each lasting 60 minutes. Some data analysis and candid conversations among DEI and HR leaders revealed the limited scope of this approach.16 The company instead launched a capability-building experience with several hundred managers that included interactive workshops, small-group discussions, pre- and post-assessments, and small experiments the managers could try with their teams. The program required many more resources to implement, but it was integrated into a larger culture change program where it was seen less as “DEI training” and more as leadership development.

Through this revised framing, the program attracted a broader group of leaders, all of whom were prioritizing behavior changes that would help them to become more inclusive leaders. The program was piloted with 100 leaders, and before the pilot was over, the company began rolling it out to 300 more employees after finding that 100 percent of participants recommended it to others, and 84 percent reported already using the skills they had learned in their current role.

Step 5: Measure and monitor progress and hold people accountable for DEI outcomes

As with any other component of an organization’s strategy, progress on DEI initiatives must be tracked with clear metrics, and leaders should be held accountable for results. To facilitate accountability, some companies use DEI scorecards and set milestones for completing specific DEI goals. A European consumer brand, for instance, created a dashboard for its CEO and senior managers to track representation, hiring, promotion, attrition, and inclusion, which helped leaders stay more engaged in the work. Some organizations monitor both leading indicators (for instance, an increase in applications from underrepresented demographics) and lagging indicators (for example, an increase in diversity representation across different levels of an organization). Other organizations incorporate inclusive behaviors into their leadership models or performance management criteria.

For example, leaders at Nike set specific, measurable DEI goals for 2025 and connected them to the company’s executive compensation. In its 2021 impact report, Nike president and CEO John Donahoe called the targets “a call to action—with clear goals, strategies, and accountabilities.”

Transparency can help bolster accountability: DEI and business leaders should share progress on their bold DEI aspirations often—at board meetings, in town halls, at industry association meetings, and so on—to encourage further engagement and commitment. Detailed HR data should, of course, be held in confidence; not everyone needs to know everything. But sharing ambitious objectives, progress made, and success stories can help to educate and inspire employees.

Step by step: Achieving progress on DEI initiatives

When organizations consider their DEI strategies systematically and take the five critical steps we have outlined, they can make meaningful progress against DEI objectives. Consider the evolution at one large hospitality company.

Step 1: Aspire

Leaders at the company stated their aspiration to “go big” on DEI. They committed to building a more diverse, inclusive, and equitable organization for employees, guests, and other community stakeholders. They set ambitious but achievable objectives that were linked to each element in their DEI plan. For instance, one commitment was to have women hold half of the positions at each management level within five years, a significant jump from their current leadership representation. Other commitments included having 50 percent of their leadership roles held by people of color, becoming a leader for disability inclusion, and hiring more veterans through a successful reskilling program.

Step 2: Assess

Leaders conducted both qualitative and quantitative assessments of the company’s talent pipeline to gauge overall representation at each level and to determine which factors were having the biggest effect on the company’s ability to develop diverse talent—for instance, external hiring and attrition at early tenures—and used this analysis as a dashboard to monitor progress.

Step 3: Architect

Based on these data, leaders at the organization drew a road map to meet their five-year objectives. The road map included a mix of enterprise-wide initiatives (for example, strengthening its analytics around diversity and standing up equity councils to increase accountability and mobilize business leaders) as well as a series of smaller pilot programs that business units could select from to best address their local challenges (among them, sessions on capability building for inclusive leadership, sponsorship, investment in employee resource groups [ERGs], and allyship for men).

Step 4: Act

The mix of initiatives proved successful. Within eight months, the hospitality company realized a greater than 5 percent improvement in the number of women across leadership levels. Additionally, more than 95 percent of the top 300 leaders reported having new tools and skills to support them in addressing unconscious bias. Three years later, the organization was on track to meet its representation goals, and leaders updated the goals so the targets were more of a stretch. Additionally, the organization was named a “Best Place to Work for Disability Inclusion.”

Step 5: Advance

To sustain this momentum, the organization used DEI dashboards to track progress against leading and lagging metrics and linked their DEI outcomes to leadership incentives. Successful pilots launched in the first year from the “menu” of initiatives were rolled out in subsequent years to other relevant parts of the business (for example, an inclusive-leadership program was brought to more people managers through a train-the-trainer approach). The equity councils and change-management plans established in the first year helped sustain attention on DEI initiatives as competing priorities arose.

Meaningfully improving diversity, equity, and inclusion in an organization requires time; it can take companies several years to see widespread, significant progress. It also requires collaboration. Leaders must ensure that employees from a range of identities and organizational levels have opportunities to provide candid feedback—whether through ERGs, focus groups, one-on-one discussions, or employee town halls. While not all feedback will necessarily be incorporated, it is vital that employees feel—and are—a part of the process.

Above all, meaningful progress requires dedication; the DEI strategy should be continually refined as pilot projects deliver results, lessons are learned, leaders and employees develop new skills and awareness, and the business’s overarching strategy evolves. All of these are critical for achieving longer-term DEI aspirations.

About the author(s)

Jan Shelly Brown is a partner in McKinsey’s New Jersey office, Diana Ellsworth is a partner in the Atlanta office, Alex Katen-Narvell is an associate partner in the New York office, and Dana Maor is a senior partner in the Tel Aviv office.

The authors wish to thank Shannon Cheng, Drew Goldstein, Robin Lore, Lucy Pérez, Pheonix Pittman, Holly Price, Lindsay Purcell, and Monne Williams for their contributions to this article.