The Opportunity Cost of Not Spending on D&I

by: Diversio

Spending on diversity and inclusion (D&I) has recently become a new pillar for companies across the world. Many have realized the impact of D&I practices on employee satisfaction, motivation, and overall firm-wide performance. However, some companies have yet to transform with the times around them.


According to a robust McKinsey study [1], organizations in the United States alone spend about $8 billion per year on D&I training with little to show for their efforts. The diversity training programs that many companies have implemented fail to a) change attitudes amongst leaders and b) cultivate sustainable change.

These initiatives are unable to tackle the implicit biases that exist in workplaces, specifically those affecting racial minorities and women. The design of these solutions is motivated by re-shaping metrics and not by the key determinant for future success: re-shaping mindsets.


There are many sound methods for effective spending on D&I. As an organization, Diversio has a database of recommendations that are proven to effectively reduce biases in the workplace, positively influence diversity and inclusion attitudes, and enable performance.

The underlying principle is data-driven change. Through continuous evaluation of results and feedback from those most vulnerable to biases, an organization can make waves and set a strong precedent for the future.


The associated benefits of spending on D&I cannot be overstated. The following three are just a few of the several advantages.

Bottom line: In 2018, a McKinsey study found that companies in the top quartile for gender diversity on executive teams were 21% more likely to have above-average profitability than teams in the lowest quartile.

Talent acquisition and retention: A company that prioritizes D&I is in a stronger position to recruit from a wider talent pool. In fact, 67% of job seekers around the world state that a diverse workforce is a critical factor in their decision to accept a job offer.

New perspectives in problem-solving: A company’s workforce that possesses diverse viewpoints and experiences is better positioned to solve complex problem-solving in sustainable, creative, and efficient ways. McKinsey coins this as “diversity of thought”; a measurable advantage for organizations that is increasing over time.


Now, the crux of the argument.

You might read the benefits above and think that your company is already meeting those standards and thus, you don’t need to invest any more into D&I. While the benefits are part of the opportunity cost of not investing, more issues can have deep impacts on your company’s standing. This applies to a financial and cultural outlook within your organization.

Employee satisfaction: or, a lack thereof. Employees are imperative stakeholders in your company’s portfolio. They have a substantial impact on the productivity of your firm and to a greater extent, your reputation.

[7] In 2015, the New York Times broke a story that Google had paid millions of dollars in exit packages to male executives accused of harassment and stayed completely silent. This resulted in a 1,500-person walkout — mostly women — in offices across the planet.

Employee impact is often not given enough attention. By failing to recognize D&I best practices, firms can agitate their workforce, especially one that is significantly more self-aware as the world around us transforms.

Moreover, there is increased turnover when employees don’t feel safe, valued, or appreciated. In today’s competitive job environment, if an individual realizes a glass ceiling or a limit to their potential, they do not hesitate to hand in their notice and move on. Often, they can connect the dots between limits to potential and a lack of devotion to D&I.

Reputation damage: This feeds off of the Google example above, but in today’s socio-political climate, individuals are not shy. If they encounter a discriminatory environment, or even an environment that does not take proactive steps towards anti-discriminatory practices, they will not suffer in silence. They will make their voices heard and ensure that others are aware of what the organization is doing internally.

Stakeholder attention: Many industries are now being forced by partners and shareholders to place a greater emphasis on D&I. For example, in the Venture Capital industry, limited partners are voicing their concerns about a lack of investments into ventures spearheaded by diverse individuals. Their due diligence is emphasizing the importance of D&I and this is now causing venture capital firms to re-think their investment strategies.

Had the industry realized the benefits of D&I sooner, this delay would not have occurred. D&I-based practices and policies are the future and all companies hopefully will realize its inevitability. Don’t be part of the laggards.


A possible recommendation is establishing a policy that requires mandatory training for senior leadership which focuses on establishing a transparent culture and robust 360° feedback. This will enable leaders to foster creativity within their employees and apply objective standards to measure success amongst the entire workforce. For employees, it will demonstrate an organization’s commitment towards embracing diversity and cultivating an inclusive environment.


The key takeaway from this is simple. The importance of diversity and inclusion is inevitable and will only continue to grow. Your organization should be part of the change and ensure that they do not fall behind because the opportunity cost of doing so is too expensive to bear.

To learn more about how you can make your workplace more inclusive, visit our website:

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The Opportunity Cost of Not Spending on D&I

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