Business Leadership Today

5 Key Reasons DEI Is Important in Leadership


Ciara Ungar, Contributor

With so much emphasis being placed on DEI in organizations, it can be difficult for leaders to know where to start and what DEI looks like for their organization.

While each organization may have its own reasons for investing in DEI initiatives, there are several common benefits that I often see for DEI in leadership, specifically those that affect employees at all levels of the organization. 

The five most impactful reasons DEI is important in leadership are ethical imperatives, performance and engagement, improved decision-making, attracting and keeping top talent, and creating a positive impact on society. 

In this article, we will examine the crucial role of five benefits in creating and strengthening ethical values in a workplace. We will also explore how these benefits drive innovation and creativity, and how they can have a positive impact on customers, communities, and industries as a whole.

The New Imperative: DEI In Leadership

In a nutshell, DEI in leadership builds on fundamentals, recognizing that new capabilities are required to thrive in a diverse world. As organizations face more pressure to align with changing markets and take a stand on social issues, DEI in leadership teams is not just a nice thing to have—it’s a requirement.

An organization’s commitment to inclusive cultures is linked to the mindset, heartset, and soulset of the leaders of that organization, which directly shape the work they do, the purpose that is cultivated, and the accountability created for how people are treated in the organization and community. 

Processes, policies, and norms grow organically out of leadership teams, which reflect the diverse perspectives and lived experiences of those leaders, including both observable and internally held biases, approaches, and perceptions of the world we live in.

Whether in their personal or professional lives, people of different backgrounds face different obstacles, expectations, and attitudes that must be acknowledged to be engaged in their work, open to new ideas, and intentional in their activities.

These are the key ingredients for productivity and growth.

How well an organization creates an environment that fosters inclusion determines the daily employee experience and output that drives productivity and growth, and it begins with DEI in leadership.

Since the daily activities of an organization are directly connected to employee satisfaction, decision-making, and stakeholder approval, DEI in leadership has become the new imperative. It elevates diverse perspectives and has a direct impact on profitability. 

When employees at all levels feel safe, valued, and included at work, quality output is likely to be high, and growth is less likely to plateau. 

Challenges to DEI In Leadership

According to recent research from the Pew Research Center, the majority of workers say focusing on DEI at work is a good thing, yet only 33 percent report their workplace has a staff member who promotes DEI, and about 54 percent say their company pays enough attention to increasing DEI. This unfortunate disconnect is widespread despite an increase in attention and initiatives taking hold of mainstream dialogue.

So the question is, why?

Lackluster DEI in leadership and the workforce at large has roots in complex systems and infrastructure that go beyond the scope of this article because it dates back decades and is tied to mindsets and systems beyond just a single organization. There are, however, several observable challenges that impede the improvement of DEI in leadership, which are common among many organizations. 

Here are just a few of the many challenges companies encounter when pursuing DEI in leadership positions, specifically.

  • Existing organizational structures and practices may unintentionally disadvantage certain groups. For example, traditional recruitment channels may favor privileged applicants or internal promotion processes may lack transparency and accountability.
  • Traditional power structures and homogenous leadership teams may resist changes that promote diversity and inclusion. This is reflective of social change theory and can lead to pushback, sabotage, and resentment toward DEI efforts.
  • Focusing solely on immediate financial gains can make it difficult to justify the long-term investment required for successful DEI implementation.
  • Even when companies hire diverse leaders, they may lack access to mentorship, networking opportunities, and support structures designed for their specific needs and experiences, which can hinder their success and retention.

Unconscious bias underpins many of these challenges. Even well-intentioned leaders can hold unconscious biases, leading to unintentional and unfair disadvantages for certain groups. These biases can be deeply ingrained and difficult to recognize and address. 

This can be particularly challenging, as many leaders simultaneously hold a fear of making mistakes. Complicated discussions about race, gender, and other sensitive topics can be fraught with the potential for missteps. Companies may avoid these conversations altogether out of fear of causing offense or making the situation worse. 

In a way, paralysis often sets in for some companies and manifests itself as a lack of commitment and accountability. 

While companies may express support for DEI, true commitment requires substantial resources, a willingness to have difficult conversations, and a consistent ongoing effort. Inadequate investment in emotionally safe dialogue, training, mentorship programs, and diversity recruitment pipelines can hinder progress toward improvement goals.

This brings me to the last challenge I often see, which is that there is often not a clear sense of what the end goal is for DEI in leadership. Without clear goals, metrics, and consequences for failing to meet improvement targets, companies may not be adequately motivated to prioritize DEI in leadership. Additionally, measuring progress can be complex and nuanced, making it difficult to hold leadership accountable.

Addressing these challenges requires a multi-pronged approach. It requires building awareness and understanding, revisiting policies and goals, and investing in accountability.

5 Key Reasons DEI Is Important

While challenging, achieving diversity in leadership positions is essential for several reasons. Companies committed to overcoming the challenges and investing in meaningful DEI in leadership can reap significant benefits in the long run. 

I’m going to focus here on the most tangible benefits of DEI in leadership that I often see have the greatest impact on business growth.

1. Ethical Imperative

A culture of DEI starts with leadership and its ethical imperative to value our individual differences to create a recipe for organizational excellence that is based on the employee experience.

According to McKinsey, “the representation of ethnic minorities on UK and U.S. executive teams stood at only 13 percent in 2019.” Since leadership sets the tone for expectations, inclusiveness, and core values in an organization, this effectively translates to key decisions being made with minimal representation of those being affected, which not only affects business outcomes but also highlights an ethical imperative.

Promoting DEI ensures that everyone has equal opportunities to thrive and contribute, creating a more just and equitable environment. Leaders who champion DEI play a crucial role in creating a more just and equitable society, let alone the internal workings of the company. 

By promoting diversity and inclusion within their organizations, leaders are more equipped to recognize and challenge systemic biases and pave the way for a fairer world for everyone. 

We know the value of respect and belonging. As humans, this is a common denominator we all share. DEI in leadership fosters a more welcoming and supportive culture where individuals from all backgrounds feel represented, which can lead to feeling more valued, respected, and heard.

2. Performance and Engagement

DEI in leadership plays a vital role in driving employee engagement and boosting performance. This is why DEI goes beyond the ethical imperative in order to drive sustained success in business.

Demonstrating diversity, equity, and inclusion in leadership helps a workforce feel valued, which is essential for employee engagement and performance.

When employees feel valued, respected, heard, and included, they are more engaged, motivated, and productive, leading to better overall business performance because it boosts morale, which in turn drives greater and deeper engagement with the work. On a deeper level, a diverse and inclusive environment fosters a sense of belonging and psychological safety, leading to higher motivation and commitment to the task or job at hand.

DEI in leadership also leads to enhanced creativity and innovation. Teams with diverse backgrounds and perspectives bring different experiences and ways of thinking to the table. This can lead to a wider range of ideas, more creative solutions, and better problem-solving approaches.

When diverse teams bring a wider range of perspectives and a wealth of different experiences and approaches, it leads to a more creative and innovative environment. This is because when everyone feels valued and heard, they are more likely to share their ideas and take risks, fostering a culture of collaboration and ingenuity and leading to more creative and robust solutions.

3. Improved Decision-Making

Diversity of thought is essential for leadership discussions because it leads to more robust discussions, challenges to assumptions, and, ultimately, more informed and innovative decisions. 

Imagine brainstorming a marketing campaign. A team with diverse cultural backgrounds will likely consider a wider range of perspectives and reach a more effective solution than a homogenous group. This is because it stretches our understanding of the world around us.

In practice, DEI in leadership teams challenges pre-existing biases and assumptions, leading to more thoughtful and comprehensive decision-making. 

According to a Harvard Business Review study in partnership with the University of Chicago, nearly one in ten employees from different groups and demographics report perceiving bias at work. This not only correlates with more frequent reports of emotional distress and disengagement but also highlights a more deeply embedded issue for leadership teams.

The issue of unconscious bias means that more often than not, we’re making the wrong decisions. Unconscious beliefs that we form from our cultural environment and personal experiences cause our brains to create shortcuts when rational and logical thinking is required. These shortcuts, more often than not, limit our ability to be open to new ways of thinking.

What the human being is best at doing is interpreting all new information so that their prior conclusions remain intact.” — Warren Buffett

Simply put, by considering different viewpoints, leaders can make decisions that better serve the needs of all stakeholders in the organization from the top down. In other words, we improve decision-making by stretching our understanding of the world around us.

4. Attract Top Talent—and Keep Them!

DEI in leadership is an essential component to attracting good talent and ensuring an inclusive experience in the day-to-day experience that retains them—a competitive advantage for any business in its market.

In today’s competitive job market, top talent prioritizes workplaces that value and champion DEI. One of the ways DEI in leadership helps to attract this good talent is by creating visibility and representation. 

When people see themselves reflected in leadership positions, it sends a powerful message that they are valued and have opportunities for advancement. This is especially important for underrepresented groups, who may have historically faced barriers to leadership roles. 

By embracing DEI in leadership, companies can tap into a wider talent pool that may have been overlooked in the past. This includes people from different backgrounds, experiences, and skill sets. Further, it can translate into a more positive candidate experience throughout the recruitment process by helping candidates feel welcome and respected.

This leads to a second way DEI in leadership helps to attract good talent: retaining top talent from diverse backgrounds by fostering a sense of belonging and providing opportunities for everyone of all backgrounds to thrive. 

A strong commitment to DEI in leadership demonstrates a company is not only diverse but also is actively creating a culture of inclusion and belonging. 

As I’ve discussed above, when employees feel included, they’re more engaged, motivated, and productive, which leads to better overall performance and satisfaction. And, happy talent attracts good talent.

5. Positive Impact on Society

Research shared by Just Capital and The Harris Poll in 2021 shows that 79% of people agree companies should play a role in promoting equity in the workplace and in society more broadly. Further research also shows two-thirds of respondents believe companies have more work to do. 

This means we have a ways to go!

These statistics indicate there is an opportunity to impact society (and value in doing so), starting with leadership. DEI in leadership sends a powerful message and encourages others to follow suit. This is not only true of the internal organizational impact, but the external industry impact on society at large. 

Leaders who embody DEI principles through their own behavior inspire others and demonstrate the importance of these values. This has a reverberation effect on professionals inside and outside of the organization. 

Take for instance a healthcare company. An organization with a strong focus on cultural inclusion attracts skilled professionals from diverse backgrounds, which in turn leads to providing better care to patients.

It’s also true that organizations that prioritize DEI are often seen as more ethical and responsible, which can enhance their brand reputation and attract customers and investors. Consumers increasingly choose companies that align with their values, and a commitment to DEI is a strong signal of a company’s social responsibility. 

Talking About DEI in Leadership Is Not Enough

It’s important to note that simply having a diverse leadership team is not enough. To truly attract and retain good talent, foster an inclusive and psychologically safe environment, and positively impact society, companies need to be intentional about creating a culture of inclusion in leadership where everyone feels valued and respected.

DEI in leadership is an ongoing process that requires continuous effort and improvement. This includes having clear DEI policies, providing training on unconscious bias, and fostering a sense of belonging for all employees.

By making DEI in leadership a priority in 2024, leadership teams can not only attract good talent but also build a stronger, more innovative, and more successful organization. 

One key element to walking the talk of DEI in leadership is actively seeking feedback and input from diverse employees to ensure DEI in leadership initiatives are effective. 

Overall, prioritizing DEI in leadership is not just the right thing to do; it’s also just smart business. It leads to better decision-making, attracts and retains top talent, fosters innovation, and strengthens an organization’s reputation. In today’s diverse and interconnected world, embracing DEI is no longer just optional; it’s essential for thriving in the long run.

Ciara Ungar is a New York City-based Author on Leadership, Certified Business & Leadership Coach & Consultant, an Award-Winning Strategist, and an International Speaker. She is also an Innovation Women Speaker, Instructor with Columbia University Immersion Programs, a Mass Challenge Advisor, a Startup Council, and Forbes Coaches Council member. She has a blended academic background with degrees and certifications in Communication, Psychology, Integrated Strategy, Entrepreneurship & Business Strategy, and Cultural Diversity from Purdue University, Georgetown University, and Wharton Business School. She applies her robust 16 years of professional expertise working with Fortune500 companies, high potential startups, top global agencies, and Angel/VC Investors to entrepreneurship, leadership development, business strategy, and professional growth. A disciple of “Start With Why,” her purpose is to guide others through transformative thinking as they build businesses, teams, and personal purpose that inspires change.

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