What Long-Term Investors Can Learn from the Netflix Walkout

Netflix’s recent controversial special “The Closer” calls into question the organization’s DEI mission and highlights the importance of inclusion in long-term performance.

On October 5th, Netflix released “The Closer” by comedian Dave Chappelle. Dave Chapelle openly called himself transphobic throughout, quipping that “and I pushed her off violently, [be]cause I’m transphobic.”

The special incited employees to blast Netflix on social media and host a virtual (well-publicized) walk-out, with support from celebrities like Angelica Ross and Dan Levy. Netflix suspended one employee and fired another, resulting in prominent coverage from outlets like Bloomberg and the NY Post.

For many employees and customers, Netflix’s support for “The Closer” calls into question the validity and sincerity of the companies’ DEI commitments. This is a problem. A Cone Communications study found that 73% of consumers will stop purchasing from brands that don’t share their view on social justice, and 76% of millennials conduct follow-up research to see if a business’s DEI promise is authentic.

At the same time, 72% of employees would leave their company for a more inclusive one. Given record churn levels, US companies and investors are learning that DEI integration into business strategy is essential for long-term performance.


How Does DEI Shape Company Performance?

At Diversio, we used artificial intelligence to analyze employee reviews and rank public companies for DEI performance. We found that the most inclusive companies outperform less inclusive by a significant margin in 9 out of 11 industries, including Information Technology. When employees feel safe and supported, they are more productive and engaged. Employees are then more likely to remain at the company and help attract top talent. They are more loyal to their company and less likely to engage in labor disruptions, like a walk-out.

This seemingly “soft” factor translates into hard numbers. In the IT sector, we found that companies ranked in the top quintile for inclusion improved their share price by 23% from June 2020 to September 2021, compared to 8% for the least inclusive companies.[1]

The takeaway: When looking at two companies with similar profiles and financial performance, the more inclusive company is more likely to outperform long-term. A more inclusive organization will also be more resilient to social and economic disruptions, like the pandemic or mass turnover. All else being equal, the more inclusive a company is, the lower-risk investment.


How Can Investors Determine DEI Performance of Potential Investments?

Diversity data is essential to evaluate a potential investment. At Diversio, we use our advanced analytics tool to score companies across three metrics: diversity of senior management and board directors, inclusion as reported by employee reviews, and the company’s commitment to do better in the future.

When looking at diversity, it’s essential to look beyond the Board and beyond gender. We find the correlation between Executive diversity and organizational diversity is stronger than the Board and the organizations because executives have a much more significant impact on day-to-day operations and culture.

When looking at inclusion, we look at employee feedback across six buckets: culture, fair management, career development, flexible work options, a safe work environment, and recruiting and hiring. Within these buckets, we look at the frequency of employee complaints about things like harassment, recourse, inclusive leadership, pay equity, and adequate resourcing. Examining these topics gives a picture of the overall inclusion of the company and its pain points.

When looking at commitment, we look at four broad categories: policy and governance, recruiting, employee engagement and organizational transparency, and disaggregated data. It is essential to review these policies in detail to determine whether they are solid and authentic. For example, when it comes to data collection and analysis, we ask questions like whether the company is doing the bare minimum to satisfy regulatory requirements or if it collects (and ultimately acts on) information about multiple kinds of diversity at all levels of its staff.


Moving Toward More Inclusive Investments

The Netflix walkout is just one example of employee demands for inclusion and equity. Investors can and should request data on workforce composition, employee experience, DEI policies, and programs to understand an investment’s future performance and risk. This information should give a clearer picture of which companies are likely to outperform and which investments might require a second look.

About Our Research
Diversio is the people intelligence platform that measures, tracks, and improves DEI. Using AI technology and human expertise, Diversio diagnoses pain points, benchmarks against peers, and creates action plans. Our AI analyzes data from investor portfolios, private organizations, and public companies, including the World Bank, Danone, and Microsoft. Diversio’s tool analyzes 1,200 academically verified strategic solutions based on an organization’s data to select the best to improve DEI.

[1] Performance analysis over the last 12 months of the FTSE100 index and the top 5 and bottom 5 stocks based on the Diversio D&I score ranking. It is a short time period, but it indicates an outperformance of the companies with a high score and an underperformance of the companies with a low score vs the overall index. Source: Yahoo Finance per June 30th, 2021. The data is based on net returns.

Male Coaches in Women’s Sports: The Crisis of Abuse

A once little-known doctor has now become infamous to many who hear his name. In 2016, Larry Nasser, the former US Gymnastics Women’s National Team doctor, had hundreds of former gymnasts come forward and credibly accuse him of sexual assault. When the allegations were first reported, former President of US Gymnastics, Stephen Penny, swept them under the rug. The now-convicted doctor and institution are not the only ones in women’s sports that have abused their position in power and failed to protect the athletes.

A Recurring Theme

In June 2021, Syracuse Women’s Basketball Head Coach, Quentin Hillsman was accused of abuse from former players and staff members. Syracuse is a top 5 rated team in women’s basketball, but according to The Athletic, a total of 11 players had announced they were leaving the program. Amongst these players was the team’s leading scorer, Kiara Lewis and ACC Rookie of the Year, Kamilla Cardoso. A statement from the New York Post indicated that players had previously reported Hillsman’s abuse to the school, but nothing was done. “One player listed out all her complaints and allegations in an online questionnaire provided to her by a Syracuse administrator. No one ever followed up with her.”

More recently, a similar situation happened to two former National Women’s Soccer League professional players. Paul Riley, former North Carolina Courage Head Coach, was accused of sexual and verbal abuse. The NWSL was made aware of this and still decided to hire him, even after he had been fired from the Portland Thorns for the same allegations. According to ESPN, “Four different coaches, all men, have been fired in just the past four months for off-field reasons, including alleged sexual misconduct, verbal abuse, toxic work environments and racist remarks. Even worse, in almost every case, the coach’s problematic behavior had been known before his hiring — there were patterns, not one-offs — but those teams hired them anyway.”

In a statement made in the New York Times, players are concerned about how the NWSL and professional teams are handling workplace harassment, especially since many allegations were reported and investigated by the NWSL. Still, only when players went public with their stories did the league decide to fire these coaches.

Image from Chicago Sun-Times
Rick Butler, former Head Coach of Illinois Sports Performance Volleyball Club & USA Women’s Volleyball Team, was fired for sexual abuse & rape allegations.
Image from The Mercury News
Andrew King, Former USA and Pacific Club swim coach, was fired after being arrested for sexual abuse.


Image from DCist Daily
Richie Burke, former Head Coach of the Washington Spirit women’s soccer team, was fired for abuse and racist comments towards players.
Image from KXAN
John Rembao, previous assistant track & field coach at Standford, Arizona, and Texas (also worked for team USA), former head coach at Los Gatos High School, accused of sexual assault – resigned for reasons unrelated to these allegations, according to him.

Why Does This Keep Happening?

Why are institutions willing to turn a blind eye to abuse allegations made against male coaches? This continuing pattern of neglect is accepted because corporations choose to put players in danger of mental, physical and sexual abuse rather than dealing with any risks to the institution’s name or profits. They’re more concerned with winning titles and championships than dealing with the consequences of firing and hiring coaches.

The German Olympic and Paralympic Committee conducted a study in 2020 to research sexual abuse in the sports industry. Of 1,529 elite athletes, 54.2% of athletes had experienced some form of sexual abuse during their lifetime. 48% of the victims were abused in and out of their sport.

According to a 2011 report researched by Celia Brackenridge, a professor at Brunel University, out of 78 cases of swimmers in the UK, 49% of sexual abusers were authoritative figures (coaches, trainers, club officials, etc.). All were male. The report also stated that 25% had experienced or knew someone who experienced sexual harassment or abuse in their sport out of a sample of Danish athletes and coaches.

Many of these institutions are now implementing new policies to better ensure the safety of each athlete, but the players want more than empty promises; they want action and tangible evidence that the clubs they play for are not going to tolerate any abuse, bias, or discrimination for any reason.

These courageous athletes who stand up to their abusers and the institutions that failed to protect them are paving the way for a better future; not just for athletes, but for society as a whole. Their voices, along with movements like #MeToo, Times Up and Black Lives Matter, not only continue to reveal the horrors of discrimination and abuse, but also bring communities together in unity to seek justice.

DEI in Sports Roundtable Event

To shine more light on this, and other Diversity, Equity, and Inclusion issues in professional sports, we’ve put together a roundtable event with sports industry professionals and athletes on November 12th. The event is free and fully online, so sign up now to join the conversation.

Register for the event

And to lear more about what you can do to end workplace harassment and discrimination, visit https://timesupnow.org.

The Great Resignation

“The Great Resignation” refers to the recent movement of employees leaving their current jobs for more money, greater flexibility and an overall better work experience. With this shift, businesses feel the pressure to attract and retain talent more than ever, and the competition between firms is at an all-time high as potential employees demand more than just the primary benefits traditionally offered.

How This Affects Your Business

During COVID 19, many businesses switched to either fully remote or implemented a hybrid schedule. Employees experienced the ease of working from home and enjoyed a more flexible schedule that was previously unattainable. Now that businesses are returning back to normal, employees are reevaluating their current positions. According to NPR, “As pandemic life recedes in the U.S., people are leaving their jobs in search of more money, more flexibility and more happiness. Many are rethinking what work means to them, how they are valued, and how they spend their time.”

People are demanding a more inclusive and flexible working environment. The practices, cultures, and benefits companies previously offered are no longer acceptable to this post-pandemic audience. “New data shows that 27% of venture capital, corporate venture capital and private equity firms lost a partner or key recruit in 2021, according to a recent J.Thelander-PitchBook survey of more than 760 respondents,” stated in Pitchbook.

What Can You Do?

As the Great Resignation wave continues to increase, employers should be reminded to implement a plan to provide a more diverse, equitable, and inclusive workplace. Simply vocalizing about diversity and inclusion is no longer enough. Employers must deliver a quantifiable solution to improve DEI.

Here are some tips to attract and retain talent:

  • Create and nourish an inclusive culture
  • Develop a flexible schedule for employees
  • Commit to reducing bias in the workplace
  • Provide opportunities for growth & career development

How Diversio Can Help Your Company

Our mission is to provide organizations with the right tools to improve DEI in the workplace. By using AI and data analytics to track, measure, and improve DEI, we can ensure companies take the correct steps to provide a more inclusive work environment. Our Workforce Dashboard gives you powerful insight into the state of DEI in your company, allowing you to quantify experiences, uncover biases and identify solutions.

To learn more on how you can make your workplace more inclusive, visit our website www.diversio.com