Sustainable Success
Over the past two years, business leaders have seen increasing demands for diversity and inclusion from their stakeholders. While the well-known business benefits of a diverse workplace should be enough to spur executives to take action, the risks of not acting could also be a motivating factor. Ignoring calls for improved diversity, equity, and inclusion (DEI) has become a threat to business that can leave organizations vulnerable to a variety of legal and financial risks.
“Nearly every organization is grappling right now with how to make progress on diversity and inclusion, equity, and belonging,” says Julia Oltmanns, Director of Workplace Diversity, Equity and Inclusion Services for Zurich Resilience Solutions, which addresses the rapidly changing risk landscape. “Diversity and inclusion have become expectations in all facets of our lives, and DEI has become an increasingly important driver of an organization’s success.”
Julia Oltmanns
Director of Workplace Diversity, Equity and
Inclusion Services for Zurich Resilience Solutions
A new global standard to help companies measure DEI progress
Even as business leaders have invested more time and resources in DEI initiatives, they haven’t always been able to accurately gauge the effects of their efforts, which can make it difficult to convey their success, specifically to stakeholders. To help businesses strategically assess DEI in their organization, Zurich Resilience Solutions developed its Workplace Diversity, Equity and Inclusion Service, one of the first programs in the insurance industry that treats a business’s approach to DEI from a risk management perspective. Launched in January 2022, the service features a multitiered approach aimed at ensuring holistic analysis and long-term success.
Zurich’s Workplace Diversity, Equity and Inclusion Service was developed in collaboration with Inclusion Score, a diversity and inclusion (D&I) service management organization. Inclusion Score advised on the new global diversity and inclusion standard issued by the International Organization for Standardization (ISO), an independent nongovernmental organization that develops standards to ensure the quality, safety, and efficiency of products, services, and systems. This global standard for D&I was used as the foundation for the Zurich Resilience Solutions approach.
“The ISO standard goes far beyond the vague definitions of diversity and inclusion that most organizations used in the past. Before this, there wasn’t a consistent, globally recognized standard that you could measure DEI against or use for audits,” says Oltmanns.
Diversity and inclusion have become expectations in all facets of our lives, and DEI has become an increasingly important driver of an organization’s success.”
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Measuring DEI progress
The Zurich program takes a three-tiered approach that helps companies integrate DEI across their organization, while demonstrating progress: assessment and reporting, consulting, and services and training. The assessment process looks at the whole company to see where the business is succeeding and where it is falling short. Then Zurich consultants provide a custom approach that will deliver multifaceted solutions across the organization. Finally, it provides services and training that will help the business prioritize DEI and make it part of the company culture.
In addition to a custom approach, Zurich also uses risk engineers to help companies integrate their solutions. This includes support on the creation of employee resource groups, complaint reporting mechanisms and investigation resources, training solutions, and selection of suppliers and vendors.
“Zurich is providing tailored solutions to businesses that can actually be implemented, become part of the organization’s policies and processes, and be measured to help ensure sustained progress,” says Oltmanns.
Mitigating DEI risk
According to Oltmanns, DEI programs are no longer a “nice to have” for businesses. Today, companies that fail to put DEI commitments into practice are facing increasing risks of employment litigation, shareholder lawsuits, regulatory penalties, customer scrutiny, and employee discontent.
A growing number of shareholder derivative lawsuits around diversity and inclusion demonstrate that shareholders are holding boards of directors accountable. Customers are asking for annual DEI data from their suppliers and vendors,” says Oltmanns. “The bottom line is that the financial impact of neglecting DEI considerations could come in the form of lawsuits, regulatory fines and penalties, shareholder actions, and/or a loss of customers.”
The Equal Employment Opportunity Commission data from 2020 reported $439 million in fines from discrimination charges and lawsuits filed against employers. But companies that make meaningful investments in DEI won’t just avoid fines, they’ll be employing profitable and beneficial business practices.
“Inclusive practices in an organization have been shown to promote a higher level of employee engagement and retention,” says Oltmanns. Employee turnover costs companies more than $1 trillion per year, according to a Gallup study. Meanwhile, McKinsey reports that companies with racial and ethnic diversity on their executive teams are 36% more likely to outperform competitors in their industries. Still, making real progress in the DEI space will require a genuine commitment to understanding the needs of employees from underrepresented groups, and fostering a culture that supports them.
“I am optimistic we are now at a turning point,” Oltmanns says. “Many organizations have committed to do the hard work necessary to improve.”
Companies with racial and ethnic diversity on their executive teams are
more likely to outperform competitors in their industries.
SOURCE: McKinsey & Company
36%
Stakeholders want to see how organizations deliver on commitments to diversity, equity and inclusion—
and now a new standard and service can help.
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