NEW YORK – August 11, 2021 – As America’s largest companies increasingly embrace a new leadership role in advancing racial equity, they face a confounding question: What really works? Despite decades of research, many executives are still unsure what actions are most effective at increasing diverse representation, improving feelings of inclusion and making progress on other DEI goals. To address this gap, Bain & Company and Grads of Life partnered to develop a much-needed blueprint for executives— a short list of the strongest evidence-based DEI actions and a diagnostic for companies to track their progress along the way.

“Since the murder of George Floyd in 2020, we’ve heard an unparalleled call to action for employers to take the lead on advancing racial equity in America,” said Julie Coffman, Bain & Company’s chief diversity officer and leader of its global DEI consulting practice. “Companies are the ones with the jobs. They have the power to close the racial wealth gap, but many executives feel overwhelmed by this audacious goal and don’t know where to start. Our new study breaks it down into clear, evidenced-based actions they can invest in today.”

This study is based on a thorough review of more than 100 research sources, primarily academic literature, and informed by both organizations’ deep experiences supporting many of the world’s most influential companies on their own DEI journeys.

“Amid the pandemic and uprisings for racial justice, companies have now started to view equity not just as a social issue but as a business imperative to attract and retain top talent,” said Elyse Rosenblum, managing director and founder of Grads of Life. “Our new report gives executives an easy roadmap to compete in an increasingly competitive labor market where worker talent is demanding that their employers prioritize diversity, equity and inclusion.” 

The study’s authors point to 10 actions proven to further outcomes for diverse talent, including improved rates of recruitment and hiring, increased levels of representation in an organization, increased feelings of engagement and belonging, and increased rates of retention and internal promotion.

Despite the clear evidence that these tactics work, only 50% have been widely adopted to date, leaving significant opportunity for companies wondering where to start or how to advance their existing progress. The five proven actions that are not yet mainstream include:

1. Express C-suite commitment and formalize accountably. As they do with any element of a company’s culture, leaders set the tone on DEI. They have the power and responsibility to institute the right systems to ensure accountability. When a CEO sets the strategy and frequently communicates DEI progress, a company is 6.3 times more likely to have a diverse leadership team—and to be an industry leader.

2. Adopt a skills-first approach to talent acquisition. Traditional talent acquisition practices can be exclusionary by nature. Adopting a skills-first approach is a clear way to start mitigating this issue. Employers report that nongraduates with experience perform nearly or equally as well as college graduates on critical dimensions such as productivity, time to promotion or amount of oversight required.

3. Diversify talent pipelines through work-based experience. Registered apprenticeships offer robust “learn and earn” opportunities, allowing people to access high-paying jobs without incurring student debt. In most cases, apprenticeships do not require applicants to have four-year degrees or even previous experience. What’s more, 91% of apprentices find full-time employment upon completing their apprenticeship.

4. Provide family-sustaining wages and benefits. Living wages and benefits are fundamental to racial equity, given that Black and Latinx workers disproportionately occupy hourly frontline roles in service industries, which tend to pay minimum wage with limited benefits. To enable the strongest outcomes for their employees, executives can conduct pay equity analysis and report on results transparently, design retirement plans with features like automatic deposit to help workers save for the future, and provide scheduling predictability and flexibility for hourly workers.

5. Communicate skills-based career pathways. For all employees, the opportunity to advance and earn higher wages is a key factor in satisfaction and an indicator of job quality. Clear career paths are particularly important for diverse and underrepresented workers, who disproportionately feel more isolated and uncertain at work compared with their white peers. When an organization documents its career paths and the skills needed to advance, making the information transparent to all, there is less room for racial or gender bias to inform promotion decisions.

The remaining actions are already quite common, yet companies need to be aware of important nuances in order to implement them effectively.

6. Offer voluntary DEI training for all. Research shows that voluntary DEI training improves racial and ethnic representation within companies, leading to 9% to 13% increases in Black men, Hispanic men, and Asian American men and women in management after five years. This is in contrast to mandatory training, which has been proven to backfire—compulsory programs can have harmful effects on the retention and advancement of underrepresented groups.

7. Listen to and learn from experiences of employees. A sense of belonging and engagement is part of the foundation of a good job for anyone—and the ultimate goal of every DEI effort. When employees are engaged and feel heard and respected, they contribute more meaningfully at work. Bain has found that companies with highly engaged workers grow revenue 2.5 times faster than companies with low worker engagement levels.

8. Invest resources in cross-training and upskilling. Investing in upskilling low-wage workers can dramatically expand economic opportunity for the people who need it most. It also helps solve an increasingly urgent business challenge: According to the World Economic Forum, companies estimate that by 2024, nearly 40% of workers will need up to six months of upskilling.

9. Create mentoring and sponsorship programs. On average, mentoring programs boost the representation of Black, Hispanic, and Asian-American women, and Hispanic and Asian-American men, by 9% to 24%. What’s more, one study shows that people of color who advance the furthest in their careers share a single attribute: a network of mentors and sponsors who have advocated for them along the way.

10. Build a diverse supply chain. Companies that diversify their supplier bases tap into the economy’s full potential and enjoy stronger business outcomes: Those in the top quartile of spending on diverse suppliers save an additional 0.7 percentage points in total procurement expenditures. Diverse procurement can also help companies strengthen their ability to serve as well as their connections with critical growing customer bases.

The report’s authors found that a combination of several, or all, of these actions is more powerful than any one action on its own. While many of these actions alone can drive improvements, when taken together, the actions are mutually reinforcing.

In conjunction with this report, Bain & Company and Grads of Life have released the DEI Opportunity Identifier, a self-assessment tool that allows companies to assess themselves against all the DEI actions described here as well as many others.

Editor's Note: To arrange an interview, contact Katie Ware at katie.ware@bain.com or +1 646 562 8107, or Heba Hasan at hhasan@yearup.org or +1 631-332-2146.