CEO Accountability for DEI Excellence: A Transformative Imperative

Why Should the Chief Diversity Officer Build a DEI Strategy,
If Most CEOs Lack a DEI Strategy or Priority?

DEI falls outside the top 10 priorities for CEOs, according to McKinsey & Company’s CEO Excellence Survey, where disruptive technology, economic downturn, and geopolitical issues took precedence. (March 2023)

Everyone makes the business case that diverse leadership teams drive bottom-line financial gains, and CEOs are ultimately responsible for corporate revenue growth. In that case, they should own the entire DEI process.

A Paradigm Shift, Make CEO Accountability for DEI Results Mandatory, for all CEOs!

The CEO’s vision for inclusive growth becomes paramount as the global marketplace becomes increasingly diverse. Therefore, investors should hold CEOs accountable for DEI outcomes. The CEO should take on the functional role of the DEI leader, as they have the authority and influence to drive change across the organization. From talent acquisition and development to market expansion and revenue growth, the CEO should own DEI as a strategic imperative. 

There is an ongoing debate regarding the ideal reporting structure for Chief Diversity Officers (CDOs). While some argue that CDOs should report directly to the CEO rather than to HR, this shift alone will not be enough to drive significant DEI outcomes. Rather than getting lost in a hierarchy shuffle, we propose a nuanced approach. CDOs can best serve as strategic consultants to the organization, guiding DEI efforts and fostering inclusive cultures. The key lies in the CEO’s active involvement and ownership of DEI progress.

By assuming the role of the CDO, CEOs signal the organizational commitment to DEI and prioritize its integration into the business strategy. Just as CEOs drive business progress, they must champion inclusion and diversity in the workplace, owning the responsibility for driving meaningful change. Empowering CDOs as internal consultants and elevating the CEO’s role in DEI creates a potent partnership that can genuinely transform organizations into inclusive and equitable environments.

CEOs must demonstrate their commitment to fostering inclusive cultures and tapping into new markets by taking charge of DEI. Investors must actively prioritize and drive DEI as an integral part of expanding company growth, recognizing that diverse perspectives and inclusive practices are vital to long-term success. By encouraging CEOs to embrace the responsibility of DEI and holding them accountable for tangible progress, investors can play a crucial role in fostering inclusive and sustainable organizations. This shift also ensures that the burden of the DEI role is not solely placed on people of color and women, but rather, it becomes a shared responsibility for leadership at the highest level.

• According to the Summit Leadership Partners 2021 CEO study surveying 200 CEOs, 95% of participants said DEI is a focus for their companies over the next one to two years. But, two out of five CEOs said they do not have a DEI strategy. Even among those with a plan, 25% said they have not moved forward with objectives.
• McKinsey & Company’s latest CEO Excellence Survey saw the global consulting firm speak to 200 of the ‘best’ CEOs of the past 15 years. Disruptive technology, economic downturn and geopolitical issues are the three most important trends CEOs are acting on this year, according to the findings of a survey carried out by McKinsey & Company. (March 2023)
• CEOs must consider the bottom-line business impact of DEI efforts. According to a McKinsey & Company report, gender-diverse executive teams are 21% more likely to experience above-average profitability, and ethnically diverse executive teams are 36% more likely to experience above-average profitability. 
• Companies in the top quartile for gender and ethnic diversity are 12% more likely to outperform. Additional research shows that organizations with solid DEI practices see improved financial and customer success, are more likely to adapt to change effectively, and are more likely to engage and retain the workforce.
• The Failure of the DEI Industrial Complex, a poignant article in HBR outlines all that ails the DEI process.

In a landscape where two out of five CEOs lack a DEI strategy or plan, the pressing question arises: What is the daily impact of DEI leaders? If CEOs fail to prioritize diversity, why persist with the Chief Diversity Officer role as the driving force behind DEI initiatives?

Articles: DEI Leaders Exit the Functional Role

• Netflix’s First Head of Inclusion Vernā Myers to Step Down After Five Years, Wade Davis Promoted
• Disney’s Chief Diversity Officer Latondra Newton Exits
• Hamstrung by ‘golden handcuffs’: Diversity roles disappear 3 years after George Floyd’s murder inspired them
• Diversity Leader Burnout – Podcast and Article

A Paradigm Shift, Why CEOs Should Take the Helm

As organizations eliminate the role of the DEI leader, and high powered DEI leaders walk away from their role, this is the time to move the role to the CEO’s desk. 

To create genuinely inclusive organizations, the ownership of the diversity, equity, and inclusion (DEI) function must be collaborative. CEOs, alongside CHROs, Talent Development leaders, and Business Unit Presidents or COOs, should collectively drive and own the DEI function. By working together, these key stakeholders can leverage their expertise, authority, and influence to shape DEI strategies aligning with the organization’s overall goals and values. 

The CEO sets the tone from the top, demonstrating a commitment to DEI as a strategic imperative and holding others accountable for progress. The CHRO brings HR expertise, ensuring that DEI is integrated into talent management processes and championing inclusive workplace policies. Talent Development leaders play a crucial role in designing and implementing DEI training programs, fostering leadership development, and promoting a culture of continuous learning. 

Business Unit Presidents or COOs contribute by embedding DEI into their specific business units, aligning marketing strategies with diverse customer bases, and expanding market reach. Collaborative ownership ensures that DEI is woven into the fabric of the organization, creating a shared responsibility and fostering a culture of inclusion throughout all levels and functions.

This paradigm shift will rankle most DEI leaders, but it’s about time you take a different look at your role. There is clear evidence that DEI contributes to the organization’s bottom line. If your CEO has yet to engage with you or learn what you are doing to affect their bottom line daily, you are ineffective in your role and not valued. The role of a DEI leader is not to run interference or delve into the talent space – your role is business strategy, not the tactical leader. 

The Interdisciplinary DEI Team:

Make CEOs, CHROs, Talent Development, and Business Unit Leaders Own The DEI Function

To truly ensure the integration of diversity, equity, and inclusion (DEI) efforts into the fabric of an organization, the responsibilities of integration must shift to the Chief Human Resources Officer (CHRO). The CHRO possesses the authority, influence, and strategic position within the organization to drive systemic change. By placing the DEI function within the CHRO function rather than under the purview of the CHRO, it becomes a core component of the HR function rather than a standalone role. This shift signals the importance of DEI in the overall business strategy and ensures alignment with talent management, employee development, and organizational culture. 

The CHRO Role in DEI Outcomes

The CHRO, as a critical member of the executive team, should not only advocate for diversity and inclusion as integral components of the company’s vision and values, but they should also enable the implementation of effective policies and practices throughout the employee lifecycle. With the CHRO at the helm, organizations can foster a holistic and sustainable approach to DEI, demonstrating a genuine commitment to creating an inclusive and equitable workplace for all.

Moreover, considering the historical challenges and resistance faced by DEI initiatives, CHROS must fully embrace and own the DEI day-to-day functional role. While some CHROs may have previously blocked or impeded the progress of DEI as gatekeepers of change, they must now recognize the imperative to lead the charge. Holding CHROs accountable for the advancement of DEI should be a core part of their evaluation and performance metrics. CEOs can ensure that DEI efforts receive the necessary attention and resources by tying DEI progress to the overall business goals and making it a critical factor in evaluating CHRO effectiveness.

This level of accountability fosters a culture of commitment and urgency, driving the CHRO to actively champion DEI, collaborate with other leaders, and implement strategies that create tangible and lasting change. With this heightened responsibility, CHROs can be pivotal in advancing DEI within organizations, leading to a more inclusive and successful business landscape for everyone.

There is a shared responsibility for DEI outcomes at the CHRO and Talent Development leadership levels. Indeed, acknowledging the shared responsibility between CHROs and heads of Talent Development for diversity, equity, and inclusion (DEI) is crucial. DEI cannot be treated as a mere add-on to their roles; it must be viewed as a core accountability function within Talent Development and the broader CHRO responsibilities. Organizations can foster a comprehensive and integrated approach to DEI by recognizing this shared responsibility. The CHRO, with its strategic oversight of HR functions, can align DEI initiatives with talent acquisition, development, and retention strategies.

Meanwhile, the head of Talent Development can lead in designing and implementing training programs, leadership development initiatives, and performance evaluations that prioritize and measure progress in DEI. This collaborative partnership ensures that DEI is embedded throughout the talent lifecycle, from recruitment to career progression. By establishing clear accountability and shared ownership, CHROs and heads of Talent Development can effectively drive meaningful change and create inclusive cultures that attract, develop, and retain diverse talent. Neither functional areas get to relegate DEI to a single person.

Bold CEO oversight will ensure that CHRO and TD leaders understand they are accountable for DEI, and the role cannot be relegated to anyone else. If these leaders need to understand the functions of DEI, then this new accountability is an opportunity to learn. 

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Operations Leaders Own the Function of Driving DEI Business Progress

Expanding accountability for DEI outcomes should extend to business unit leaders within organizations. Business unit presidents and leaders play a critical role in driving the organization’s growth trajectory and understanding the cultural landscape of the market. By making DEI an imperative for business unit leaders, organizations can ensure that diversity and inclusion is integrated into every business unit’s functional roles. 

Business unit leaders must be held responsible for DEI outcomes in marketing strategies, customer engagement, and market expansion efforts. CEOs must hold business unit leaders accountable for expanding market share by embracing DEI and ensuring that marketing efforts are inclusive and resonate with diverse customer bases. CEOs can collectively drive toward inclusive growth and market reach by setting clear expectations and metrics for DEI progress within business units. Holding business unit leaders accountable for DEI reinforces the notion that diversity and inclusion are essential drivers of business success and ensures that these leaders actively contribute to creating an inclusive and equitable organization at all levels.

Do We Still Need the Subject Matter Expert (SME) DEI Leader? 

Yes, the role of a Subject Matter Expert (SME) DEI Leader continues to be essential in organizations. Rather than being directly responsible for the day-to-day implementation of DEI initiatives, the SME DEI Leader should function as a strategic internal consultant to the organization. This role entails acting as a consultant and strategic business partner, collaborating with the executive leadership team to define the DEI strategy and providing guidance on data analysis and implementation guidelines.

As a consultant, the SME DEI Leader leverages their expertise to drive outcomes while ensuring compliance, engagement, and inclusivity throughout the organization. By relinquishing the accountability for implementation to others, the SME DEI Leader can focus on providing guidance, support, and expertise to business units, enabling them to implement DEI initiatives effectively and be held accountable for the results. In this capacity, the SME DEI Leader is critical in aligning the organization’s strategic objectives with its DEI efforts, driving meaningful change, and fostering a more inclusive work environment.

In conclusion, a paradigm shift is necessary. Rather than relying on a dedicated DEI leader or creating separate DEI departments, we must move towards a model where the CEO assumes the day-to-day functions of DEI within the organization. By placing this responsibility directly in the hands of the CEO, we ensure that DEI outcomes becomes an integral part of the organizational strategy and vision.

CEOs hold the ultimate authority and influence to drive change, and by taking ownership of DEI, they signal its significance and prioritize its implementation at every level of the organization. However, this shift also requires CEOs to hold CHROs, Talent Development, and Business Unit leaders accountable for the day-to-day implementation of DEI and inclusion. This collaboration ensures that the functional aspects of DEI are effectively carried out, and progress is measured. By fostering a shared responsibility and accountability culture, organizations can create a truly inclusive environment where DEI is not just an add-on but an intrinsic part of the organizational DNA. 

The time has come for CEOs to take the lead, setting the tone and expectation for DEI outcomes while empowering their HR and business leaders to drive meaningful change in the pursuit of a more equitable and inclusive future.

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