Evolve to Solve Workplace Inclusion

The landscape of workplace inclusion and diversity (I&D) is shifting once again. In January, the Trump administration issued a series of executive orders (EOs) targeting diversity, equity, and inclusion (DEI) initiatives, sending ripples beyond the federal government and into the private sector — including federal contractors.

With heightened scrutiny and legal uncertainty, many companies are reassessing their I&D strategies. Some have scaled back publicly, while others are questioning the long-term viability of these efforts. But here’s the paradox: On the one hand, there’s a seeming groundswell of anti-I&D sentiment. On the other hand, the C-suite leaders I talk with aren’t walking away. They remain committed to inclusive and diverse workplaces — what they need now is clarity on how to move forward.

A recent survey of CEOs and other C-suite leaders reflects this tension. In the survey conducted in early February by the global law firm Littler, more than half of respondents (55%) said they are now more concerned about increased litigation and regulatory action related to their I&D policies. At the same time, 47% plan to maintain or increase their I&D commitments in 2025.

This resolve is matched by shareholders. So far this year, anti-I&D proposals have attracted less than 2% of shareholder support, according to data from The Conference Board. To begin 2025, shareholders at three high-profile companies rejected anti-I&D proposals.

That doesn’t mean change isn’t necessary. At SHRM, we’ve seen how workforces can be both highly diverse and highly divided, signaling the need to move forward in a new and more relevant way. The first step in doing so is to examine what’s worked — and what hasn’t.

I&D Today Isn’t Working Like We Hoped

We need to face an uncomfortable truth: Too many I&D programs lack strategic alignment and measurable success.

Spending on I&D programs totaled $9.4 billion in 2022 alone, with the worldwide spend projected to reach $24.4 billion by 2030. So why is measuring the return on investment (ROI) so difficult? Surely, progress has been achieved, but many companies also suffered from “check-the-box” activities with no link to business goals. Others saw these programs become a sprawling bureaucracy that lacked direction or accountability.

Worse still, we’ve failed to win over many of the intended beneficiaries — our workforces. A SHRM survey found that 53% of workers link DEI to business polarization, and 69% said the results of corporate diversity programs are mixed at best.

In short, we’ve forgotten the strategic intention of this important work. Too often, I&D and related programs have been disconnected from business objectives, focused more on symbolic gestures than on creating organizational capabilities that drive innovation and results. Without proper measurement and assessment, these efforts become a “nice-to-have” — easy to ignore and easy to cut at the first sign of trouble.

From Reckoning to Rebirth

The reckoning is here. Despite the very real challenges ahead, there’s a silver lining: a chance to evolve I&D and align it with business strategy and metrics that matter.

Far from “I&D is dead,” this moment can be a rebirth as HR leaders and CEOs at future-ready businesses work together to evolve I&D.

Why am I optimistic about this future? Because I’ve spent my career navigating these issues, with all their ups and downs. I’ve counseled dozens of CEOs at large companies through tough conversations about inclusion’s role in business performance — conversations that, when grounded in data and strategy, lead to real impact. 

As president of SHRM CEO Action for Inclusion & Diversity, I have the opportunity and privilege to bring together like-minded CEOs to drive meaningful and sustainable change across workplaces. And what I hear from them is clear: I&D isn’t going away, but it must evolve.

If we want to build workplaces where every person can thrive, we need to embed inclusion by using the right data, better understanding CEOs’ thinking on these issues, and aligning I&D to the core business strategy. The playbook is changing, and it’s time we rewrite it for lasting impact.

Inclusion’s Benefits, by the Numbers

Let’s be clear: Inclusion can be a powerful force for good that creates better outcomes for workers, companies, and society. Inclusion is proven to advance workplace equity, accessibility, and belonging. Leading with inclusion leverages our diversity as our strength, continuing to foster competitive, sustainable, and thriving organizations.

I&D is more than just a strong rhetorical argument, it’s a differentiator between your business surviving versus your business thriving. Decades of data have revealed how inclusive workplaces deliver tangible, transformative results in areas such as:

TEAM PERFORMANCE. Great teams achieve more together than apart. That’s even more true when they operate in an inclusive and diverse environment. Korn Ferry found that diverse teams make better decisions 87% of the time, especially when those teams are backed by inclusive leadership. Not only are these teams more creative, but they also deliver on those insights, averaging 19% higher revenue from innovation. Similarly, research cited by Deloitte said inclusive teams are more likely to spot risks — and avoid them.

RECRUITMENT AND RETENTION. Finding the right employees will only become more difficult as Baby Boomers retire and the working-age population tops out. Inclusion is your secret weapon in the war for talent. An EY survey found that 63% of workers would choose a company that prioritizes I&D, with even higher percentages among Generation Z and Millennial workers.

Inclusion can also prevent voluntary turnover: When employees describe their workplace as “inclusive,” they’re twice as likely to stay put and three times more likely to describe a feelingof belonging. This effect can be seen in countless sectors. For instance, when supply chain companies operated effective I&D programs, only 10% of employees expressed a desire to quit, according to a SHRM-led survey. That figure rose to 42% in supply chain companies with ineffective I&D programs.

EMPLOYEE ENGAGEMENT. Inclusion can generate measurable increases in employee engagement, with Kincentric finding that engagement levels were eight times higher in inclusive environments. Meanwhile, Boston Consulting Group found that when employees believed that senior leaders value I&D, their happiness increased by 31% and their motivation increased by nearly 25%.

When you build a culture of inclusion and improve employee engagement, you’re also contributing to performance outcomes. Gallup has identified 11 measurable benefits of high engagement, including sales productivity, profitability, and product quality.

The bottom line: Inclusion isn’t charity or a fad. It’s a business imperative that can fundamentally transform how organizations compete, innovate, and succeed.

What C-Suite Leaders Are Saying About I&D

The events of 2020, led by the reaction to George Floyd’s murder, pushed companies to make grand commitments related to diversity and social justice. They hired diversity-focused executives, made public pledges, set aggressive internal goals, and donated billions of dollars to racial-justice causes. But few companies connected these efforts to their strategy, culture, and operations.

Despite these setbacks, C-suite leaders continue to understand the potential of I&D. They know that inclusive and diverse workplaces help employees thrive while delivering more value to stakeholders. But they also know that something needs to change.

In my conversations with C-suite leaders — and particularly CEOs — it’s clear they want a new approach. They’re looking for data-driven, evidence-based ways to embed I&D principles in business practices that can transform their organizations while minimizing risk.

HR leaders are crucial to this effort. You need to understand not just the nuts and bolts of effective I&D programs, but also how CEOs view the challenges and opportunities.

Here are a few key themes from the conversations I’ve had with senior executives.

Leading Companies Are Evolving I&D, Not Abandoning It

Some companies were never all that committed to inclusive and diverse workplaces. At best, they were laggards during the #MeToo era and through the pandemic. The pendulum keeps swinging; it’s time for inclusion to stop being reactive and instead be a core part of being a great company.

Companies with a longtime commitment to inclusion have realized a level of tangible business impact. But they need help devising a new approach to I&D.

In the past, they might have focused primarily on representation targets, but now they’re looking for approaches that drive business performance. They might be saying less publicly, but that doesn’t necessarily mean they’re doing less.

The shift is strategic, not just semantic. Instead of checking boxes, companies and their CEOs want to build I&D into the operating model, just as they do for things such as capital expenditures, research and development, and mergers and acquisitions. They want to see hard data that signal success or failure, not vanity metrics that only document participation. Leading organizations are increasingly asking fundamental questions, including:

• How does inclusion enhance our competitive position?
• Which capabilities will future-proof our talent pipeline?
• How can we measure inclusion’s impact on business outcomes?

These are just a few questions HR leaders need to answer as you work with your CEOs to evaluate and evolve I&D initiatives.

C-Suite Alignment Is Essential to Win Over Employees

Most workers want to feel like they belong, can be their authentic selves, and have opportunities to learn and grow on their own merits. SHRM’s research backs this up: 68% of U.S. workers want their employer to make diversity a greater strategic imperative by focusing on the key systems that create an inclusive employee experience. I know HR leaders want this, too, as I’ve heard from many in recent months. But historically, companies haven’t been this comprehensive. They often delegate I&D to a single executive  or department. These efforts wind up siloed, short on resources, and disconnected from the hearts and minds of business leaders.

To solve this, the C-suite must be aligned on why inclusion matters to their business, what success looks like, and where the organization currently stands on its inclusion journey. Creating this alignment requires everyone’s buy-in.

This buy-in is especially essential in the C-suite. Senior leaders lose credibility when their words don’t match their actions. Research from Spencer Stuart found that when senior leaders were sincere about inclusion, 70% of employees reported working in an inclusive environment. But when those efforts were viewed as insincere, only 3% of employees regarded the culture as inclusive.

The most effective leadership teams establish clear roles and responsibilities across functions, including in the CHRO-CEO relationship. At the highest level, your structure might look something like this (see box, page 34):

• CEOs set the vision and hold the executive team accountable.
• CHROs design systems and processes that enable inclusion.
• CFOs greenlight resources and quantify the financial impact.
• Business unit leaders implement and model inclusive behaviors.

As you’ll see later, shared accountability creates the conditions for sustainable change, preventing inclusion from being siloed or treated as irrelevant to business strategy.