A Business Case for DEI in the Workplace

An AI-generated image of people, Friday, June 13, 2025. (Adobe Firefly)

DEI is not just the right thing to do. It is also good for business.

This is the second in a series of newsletters that explore diversity, equity, and inclusion (DEI) within companies in the United States.

In the last newsletter, I established a working definition of DEI, examined the current levels of support for DEI, and highlighted the findings from several studies conducted by researchers from the University of Wisconsin-Madison that focused on how pluralistic ignorance can influence support for diversity and inclusion. If you haven’t already, I encourage you to read it. It has a lot of useful information that will add context to this week’s discussion.

As I pointed out in the last newsletter, some well-known companies have scaled back or eliminated their DEI programs. In my opinion, this was a mistake, as many people still support workplace DEI.

Furthermore, DEI is good for business.

This statement is true for many reasons.

This week’s newsletter provides a brief overview of several ways that organizations benefit when they are recognized for supporting DEI.

With this in mind, let’s get started.

How Embracing DEI Impacts the Bottom Line

As I mentioned in the last newsletter, DEI programs gained in popularity in 2020. Many were implemented to help level the playing field for all employees in response to the increased focus on systemic racism following the murder of George Floyd and the activism of the supporters of the Black Lives Matter movement.

Numerous studies published over the years have shown that DEI programs can have a positive impact on a company’s financial performance. This most likely played a role in the decision-making process when companies adopted DEI initiatives.

Using ChatGPT, Perplexity, and Google, I found several articles that highlight how businesses benefit from workplace DEI.

A few years ago, an article on the McKinsey & Company website stated, “The American consumer is undeniably becoming more inclusive. Responding to our survey in October 2021, two out of three Americans told us their social values now shape their shopping choices. And 45 percent—likely representing well over a hundred million shoppers—believe retailers should actively support Black-owned businesses and brands. This 45 percent represents the inclusive consumer.” (Note: The article on the McKinsey & Company website was published on February 8, 2022.)

It is important to note that the McKinsey & Company survey was conducted in 2021, near the height of DEI’s popularity.

I found more recent data for comparison. An article written by Dave Albert, chief insights officer at Collage Group, that was published on the Quirk’s Media website, discusses research that was conducted by Collage Group earlier this year. (Note: The article on the Quirk’s Media website was published on February 11, 2025. The research was conducted in January and February 2025.)

Although there appears to have been a slight decrease in the percentage over the past few years, a company’s values are still important to many American consumers. According to Albert, “Today, consumers expect brands to align with their values. Nearly half (49%) of all consumers agree with the statement, ‘I am more likely to consider purchasing a brand that supports causes I care about.’ This sentiment is even stronger among Black (56%), Hispanic (57%) and LGBTQ+ (71%) consumers.”

“When it comes to DEI specifically, the numbers are even more striking,” Albert continues. “A majority of Black (55%), Hispanic (54%) and LGBTQ+ (73%) consumers are more likely to consider purchasing a brand that supports diversity and inclusion, compared to just 36% of white consumers. Trust is a significant factor with 46% of Black and 55% of LGBTQ+ consumers saying they don’t trust brands that engage in social issues if they lack internal diversity. Four out of 10 Black consumers and over one-third (54%) of LGBTQ+ consumers report actively looking up a brand’s DEI practices before purchasing.”

According to an article on the Kantar website, diversity and inclusion are also important to international consumers. At the time the survey was conducted, Kantar’s Brand Inclusion Index 2024 found that 75 percent of international consumers stated that a brand’s reputation regarding diversity and inclusion had an impact on their purchase decisions. This research was based on a survey of over 23,000 people residing in 18 countries. (Note: The article on the Kantar website was published on July 15, 2024. It is unclear when the actual research was conducted.)

According to Valeria Piaggio, global head of diversity, equity, and inclusion at Kantar, “Millennials and Gen Z prioritize diversity and inclusion even more than other groups, and as these populations grow in size and buying power these issues will carry more weight. Brands will be rewarded if they stand by their values – especially in the face of vocal communities which stoke the culture wars by pitting minority groups against one another.”

Furthermore, according to a post on the Deloitte Digital website, “57% of consumers are more loyal to brands that commit to addressing social inequities in their actions.” (Note: The post on the Deloitte Digital website was published on August 14, 2022. It is unclear whether this percentage is based on international consumers or limited to consumers in the United States. It is also unclear when the actual research was conducted.)

Likewise, an article on the Meta website states, “Some 59% of consumers polled said they are more loyal to brands that stand for diversity and inclusion in online advertising, and 59% also said they prefer to buy from brands that stand for diversity and inclusion in online advertising.” (Note: The post summarizing the research was published on March 8, 2021. Facebook and Ipsos conducted the survey of 1,200 adults who use Facebook regularly and reside in Brazil, the United Kingdom, and the United States in October 2020.)

In an article on the Convenience Store News website, Danielle Romano wrote about recent research that was conducted by Catalyst and the NYU School of Law’s Meltzer Center for Diversity, Inclusion, and Belonging. Romano writes, “C-suite leaders say DEI programs are positively correlated with improved financial performance (77%) and stronger customer loyalty (81%).” (Note: The article on the Convenience Store News website was published on June 20, 2025. According to the report summarizing the research, it was based on a survey of 2,500 employees in the United States (1,000 C-suite executives, 250 legal leaders, and 1,250 employees) who work in medium and large organizations. It was conducted in January and February 2025. The methodology noted, “To ensure that responses were based on real-life experience with DEI programs and not just general impressions, only respondents who indicated that their company had DEI programs qualified to complete the survey.”)

It is also interesting to note that, according to an article on the Axios website, several of the companies that have so far resisted making changes to their DEI programs have seen increases in their reputation scores. (Note: The Axios article was published on May 29, 2025.)

Furthermore, as a post on LinkedIn mentions, DEI programs also help with employee recruitment. (Note: It is unclear when the post on LinkedIn was published.)

Additional Things to Consider

It is important to note that a company might not see an immediate impact from its DEI initiatives. In a Forbes article, Carolina Milanesi points out that research from TechTarget’s Enterprise Strategy Group (ESG) and sponsored by Amazon Web Services suggests that companies that have made a long-term commitment to DEI see the best results. (Note: The Forbes article was published on April 20, 2023. It is unclear when the actual research was conducted.)

As Milanesi writes, “The study also shows, as you would expect, that the maturity level of DEI programs matters, as organizations with the most mature programs experience the highest returns on their investment.”

That said, a recent Forbes article written by Pamela N. Danzinger points out that research has shown that some DEI programs can backfire and negatively affect the company. (Note: The Forbes article was published on January 8, 2025.)

However, I would argue that this might be a problem with how the DEI initiatives were created and implemented, not a reflection of DEI in general.

It is also important to consider that there are two sides to the debate. As Nathaniel Meyersohn points out in a CNN article, some companies, including Target, have received backlash from conservative activists when they implement DEI, and backlash from consumers who support DEI when the company scales back or eliminates it. (Note: The CNN article was published on May 28, 2025.)

However, as I pointed out in the last newsletter, there is more support for DEI than there is opposition to it. That said, it is important to understand where your customers stand on this issue.

As I have tried to demonstrate in this newsletter, when implemented correctly, DEI is good for business. However, while it is helpful for internal decision-makers to understand the financial benefits of DEI, research has shown that using the business case to explain why your company adopted DEI might not be effective when communicating with the public.

A Forbes article written by Kim Elsesser explains that research conducted by Dr. Oriane Georgeac and Dr. Aneeta Rattan examined how underrepresented job seekers responded to different justifications for workplace diversity. These included the business case, a fairness justification, or no justification. The researchers examined how these messages influenced the job seekers’ anticipated sense of belonging and whether they would want to work for the company. They found that making a business case for diversity can hurt recruitment efforts. (Note: The Forbes article was published on June 20, 2022. An article describing the actual research was published in the digital version of the Journal of Personality and Social Psychology in 2022. It is unclear when the research was conducted.)

When explaining how participants in the study responded to the business case, Elsesser writes, “Compared to the other two groups, those that read the business case for diversity reported that they were less likely to feel belonging to the company, more concerned they would be stereotyped, and more worried that the company would view them as interchangeable with other members of their group. As a result, the underrepresented groups were less likely to say they wanted to join the company which used the business case.”

Therefore, while diversity is good for business, their research found that publicly justifying it based on the business case is probably not the best idea. Instead, they suggest that companies express support for diversity without providing a reason for doing so.

According to Dr. Rattan, “You don’t justify why you have a corporate value around trust or integrity, so why do you feel the need to justify diversity? Why do you think people will question why you value underrepresented groups?”

It should be noted that their research focused on diversity, not DEI. As I mentioned in the last newsletter, this might influence the way people respond to the study.

Given recent government efforts to eliminate DEI, it is also possible that there could be legal reasons that would require public disclosure of why the company embraces DEI programs, or, in the case of their study, a company’s diversity efforts. Companies should always seek guidance from their legal counsel to ensure full compliance with all legal and regulatory requirements. (As a reminder, I am not a lawyer.)

Topics for Future Discussion

As I usually mention, I didn’t include everything I uncovered during my research for this week’s newsletter. If you have time, I encourage you to read the publications that I cited.

In this newsletter, I noted that whether or not a company embraces DEI can influence its recruitment efforts. This is a topic that I plan to cover in more detail in a future newsletter.

DEI involves many elements, including a company’s internal initiatives that shape how the business operates. These efforts can involve employees, vendors, and the products a company chooses to sell. That said, DEI should also be reflected in a brand’s marketing, which includes ensuring accurate and authentic representation of all people in its target audience. This is another topic I plan to cover in a future newsletter.

Finally, it is important to remember that public opinion about DEI is constantly evolving. For that reason, the most recent data is probably the most useful as long as it was collected by a reputable and unbiased research team.

With this in mind, I believe it would be valuable to see what the results would be if the study conducted by Dr. Georgeac and Dr. Rattan were repeated today. My guess is that potential recruits might now be more accepting of companies that make the business case, given the current level of backlash from anti-DEI activists. However, I do not have the data to support this hypothesis.

Because of this, I believe it is still best to use the business case to persuade internal stakeholders, but publicly support DEI without offering justification.

Final Thoughts

Once again, this week’s newsletter covered several important topics.

A majority of the newsletter focused on research that supports the idea that DEI programs can help enhance an organization’s reputation, influence the purchase decisions of a significant number of consumers, and help increase brand loyalty.

I also highlighted some of the things business leaders should consider, including arguments that anti-DEI activists might use. I did this not only because it is important to understand all perspectives before making a decision, but also to provide readers with a response to those arguments.

Additionally, I pointed out that the business case can help internal stakeholders understand the value of diversity. However, it might not be in an organization’s best interest to use the business case to explain why it is investing in its diversity efforts when communicating with the general public. Instead, Dr. Georgeac and Dr. Rattan suggest that organizations express authentic support for diversity without further explanation.

Furthermore, I emphasized that DEI takes time and that organizations that consistently invest in it tend to gain the most value from their DEI efforts. I believe this might be because long-term commitment often signals a genuine belief in the importance of DEI. In other words, DEI is not just a one-time initiative used to support a marketing campaign.

That said, when properly implemented, DEI can help improve an organization’s financial performance in many ways. I plan to continue to make this case in the next few newsletters.

Thank you for reading this week’s newsletter. I hope you continue to join me on this journey.

See you next time.

Best regards,

Chad Thiele, M.S.

Quote of the Week

“We will all profit from a more diverse, inclusive society, understanding, accommodating, even celebrating our differences, while pulling together for the common good.” ~ Ruth Bader Ginsburg

Note: I used AI to help refine this newsletter. I wrote the first draft and then improved it using ChatGPT and Grammarly.