Dear Workplace Diversity and Inclusion Leaders:
Today’s intense, and at times unforgiving, financial climate requires diversity leaders to be exceptionally grounded in their business and financial acumen. The budgetary pressures across the enterprise mean diversity and inclusion budgets must withstand greater scrutiny as business and financial leaders weigh dilemma-laden investment tradeoffs.
To help diversity leaders have the most powerful, business-grounded conversations around the return on investment (ROI) of diversity, we wrestled with this issue at our recent Best Practice Session, hosted by Freddie Mac.
Our keynote speaker Gudrun Granholm, CEO of Box One, Inc. and former CFO at Hanna Andersson and financial leader at the Smithsonian and The Washington Post, shared the essentials of a solid and effective business case and business plan and busted several myths about what ROI is and isn’t.
In selecting Gudrun to give the keynote address, we deliberately invited a Chief Financial Officer without deep experience in diversity—the typical profile of the CFOs evaluating our annual proposals. As part of her presentation, Gudrun gave us her CFO analysis of half-a-dozen articles on the ROI of diversity found in various, well-established publications and from a strict financial framework perspective was able to poke multiple holes through the various arguments.
This is worrisome.
We, as diversity practitioners, need to get very well grounded in what is going on in the CFO’s world view so that we can not only present our budgets or investment plans in a way that speaks to the CFO mind, but also best counter the push back, the skepticism that will come from the CFO and other business leaders in a process where only a third of all investment requests are approved.
It’s easy to say, “They just don’t get it,” when a budget is cut or an investment plan is not proposed. And sure enough, there might be an element of that, but as Gudrun shared with us, for many CFOs it’s not about whether they agree with the diversity cause. For them, it’s a strict financial evaluation exercise. Will the ideas that you’re requesting money for truly bring greater value to the organization in a measurable way?
We can take pride in the fact that our cause is just and right, and in fact, it’s what moves, propels and motivates many of us and our allies. But just and right are not enough in business. Our work also has to be economically valuable in ways that the business can understand and support.
One of the most essential ways to do this is to show in a compelling way how diversity and inclusion can help the business grow the top line of greater revenues, and manage the bottom line of cost management.
Take this seriously. In order to do so, I encourage you to do three things:
1. Learn more by reading.
Here are a couple of publications recommended by Gudrun (available by clicking the PDF icons at the top of the page):
- "The CFO’s Guide to Winning Your Business Case"
- "Aligning with the Corporate Strategy"
Additional insight is available in the following DiversityBestPractices.com articles:
- "Making the Business Case for Diversity and Inclusion"
- "Beyond Talent: Dissecting the True Business Case for Diversity"
And for even more information, read the Sustainable Diversity chapter in my book, The Inclusion Paradox (available by clicking the PDF icon at the top of the page).
2. Take your CFO or other financial leader out for coffee or lunch and find out what’s important to him or her.
3. Re-evaluate your diversity business plan or budget for 2012. Look at it not from a just and right perspective but from an economic perspective. What would you change in order to make your argument to your financial leader that much more effective and powerful?
Let me be clear. Diversity and inclusion will always be the right thing to do. But in an environment of extreme cost management and hyper-competitiveness, diversity programs will not survive unless we’re able to hardwire the diversity and inclusion imperative to business growth and profit.
We have work to do.
Adelante (onward) in the work!