Diversity and inclusion ROI: what’s behind the sharper focus?

Businesses are starting to measure diversity, equity and inclusion more by its effects rather than by ticking quota boxes

Why there is a sharper focus on the ROI of DEI.jpg

Last month, a Financial Times opinion piece, based on US businesses, predicted that diversity, equity and inclusion programmes will become less about targets (such as % of women or members of minority communities in senior roles) and more about measuring overall impact of programmes on staff retention or engagement.

Employers in the UK need to be aware of the US context. There are restrictions on affirmative action in the US since the 2023 Students for Fair Admissions case reinterpreted the Supreme Court’s decision in Grutter v Bollinger. US programme designers now need to take care not to be seen to be promoting specific groups, since this could be seen as bias.

But even with that in mind, the FT’s Global Business Columnist and Associate Editor, Rana Foroohar, predicted that employers will not necessarily scale back programmes but measure differently. An effective programme works on different levels: promoting under-represented groups while boosting retention, loyalty and even productivity overall. For example, new research from Harvard Business School Professor Joseph B. Fuller makes a clear link between programmes for caregivers and improved staff retention.

In Bright Horizons’ client employee survey of 2023, two-thirds of respondents said a workplace nursery made them more able to pursue or accept a higher position with their employer – which would support any targets for better representation of parents. Meanwhile, 89% were more likely to stay with their employer and 83% were more likely to recommend their employer to others. Meanwhile, 91% also agreed it had a positive impact on productivity and makes it easier to do their job.

So a sharpening stance on demonstrating ROI is actually a welcome opportunity to highlight those programmes – offering practical support – which are most critical to the workforce of today and the future.

Wellbeing – beyond mindfulness

On 11 January. HR Magazine reported evidence from the University of Oxford suggesting that individual wellbeing programmes alone are not as effective as wider organisational measures. New Scientist ran a similar piece called ‘Workplace wellbeing initiatives don't boost employee mental health’.

It has long been argued that we need to tackle stress at (organisational) source rather than simply offering mindfulness classes to cope with it. The Mindful Business Charter is a great example of the ways employers are pulling together to manage pressures through better scheduling, delegation and meeting planning rather than only teaching ways of handling pressure.

In a contrasting article to the HR Magazine piece published the same day, Employee Benefits suggested that some hybrid workers, missing work due to anxiety when coming into the workplace, say they’d be helped by more art in offices and mental health programmes.

Ideally helping workers find balance and wellbeing works top down and bottom up. Employers need to reduce pressures at source. Mindfulness classes for individuals are also evidence-based. It is impossible to imagine employers could remove all the sources of stress for workers.

A trend towards returning to the office

Despite the forth coming day one right to request flexible working, flexibility could be returning to favouring time flex over location flex. There’s a growing trend for employers to encourage employees back to central workplaces. The media have been awash with reports of strengthening return to office policies since last Autumn as well as predictions that hybrid will continue to play a role. There’s a new trend to go with this: coffee-badging – swiping in, so as to be seen, staying for a coffee then retreating to get some head-down work done at home.

Korn Ferry’s The Week in Leadership examined a new study by the University of Pittsburgh suggesting “return to office mandates don’t necessarily change a firm’s profitability”. But the authors point to wide evidence that being together in a central workplace is the most effective way to onboard new individuals or teams, kick off a project, and strengthen team cohesion.

In a similar vein, the Financial Conduct Authority successfully defended an employment tribunal claim by a senior manager who complained her request to work fully from home had been declined. The tribunal found the FCA had followed due process, using one of the eight business reasons permitted to turn down a flexible working application, and that it was reasonable to say that being fully remote could have a “negative effect on quality”, through not attending in-person training, not being present to coach direct reports in person and similar activities.

The need for childcare continues

The extension to funded childcare places in England is coming closer, with 15 hours of funded early education and care to be offered to most working parents of two-year-olds in term time from April and 15 hours for babies from nine months old in September (alongside the present allowance for three-to-four year olds). In September 2025, the intention is to fund 30 hours of early education in term time for eligible working parents of children from nine months to five years.

Inews linked the challenges of finding affordable, accessible, high quality childcare with the pressing need to recruit and retain nursing staff in the UK’s hospitals. With the recent Academy for Medical Sciences findings that the health of children under five is declining, the role of quality early education settings in supporting good nutrition could be added to the list of the ways childcare can support the nation. Employers continue to explore the role they can play in supporting staff access to childcare, whether through an employer-sponsored nursery onsite such as those at the University Hospitals of Morecambe Bay NHS Foundation Trust or a partnership with a nearby nursery.