Protests and social activism following the 2020 deaths of George Floyd, Breonna Taylor, Ahmaud Aubery and other Black Americans have increased social focus on racial equity. Today, the issues of diversity, equity and inclusion (DEI) are top of mind for many organizations throughout the United States.
Among the risks that organizations face by not focusing on DEI are failing to attract and retain talent, losing customers, and missing out on emerging opportunities and areas for innovation. More importantly, customers, employees and other stakeholders can suffer real, sometimes life-changing harm when companies fail in this area.
Alongside these specific risks, organizations also face risks to reputation, which can surface in a variety of ways. High-profile situations like employees assume that lingering customers of a different ethnicity are a threat, or employees mocking multicultural last names can lead to the kind of frenzied social media events that create a major reputational setback. Even seemingly accidental forms of exclusion, like selecting an unintentionally offensive image for a magazine cover or developing a biased algorithm that prevents a specific group from accessing technology can lead to outrage and reputational harm.
According to a Deloitte Risk Advisory, “A specific event can impact how stakeholders such as customers, regulators or investors perceive an organization. If stakeholders subsequently choose to change their behaviors it may ultimately impact on, for example, an organization’s sales, license to operate or market value.”
To mitigate the massive reputation risks associated with these events, organizations must make a meaningful commitment to advancing DEI. This starts with a better understanding of how DEI and reputation are related.