previously published at Property & Casualty 360
Courage contagion seems to be the most relevant phrase to use when reviewing the trend that we see from employees at complex organizations that have a history of diversity & inclusion (D&I) complaints. The usual scenario goes: one employee speaks out about the disregard for their life experience’s influence on their work performance, and other employees start to rethink how they’ve been valued. Over the past 20 years of corporate change management, we’ve seen this trend start to snowball into new types of internal corporate policy and financial risks.
It was well documented that in 2020 insurance companies started to dig into their client’s corporate D&I practices. The regulatory landscape is also changing as large states like California mandates diversity on corporate boards, and even the NASDAQ seeks to mandate board diversity for listed companies.
In the modern world inclusion is a tangible risk of intangible assets. That means that over the past 45 years S&P 500 companies with intangible assets have grown from 17% in 1975 to 90% in 2020. Plainly, companies in-aggregate claim that 90% of what makes them valuable is intangible. That’s a people premium. Per our new reality, it is time for a more rigorous evaluation of intangible risks to our bottom line.
The corporate diversity market has been one of reactionary spending, based on what we usually consider corporate crisis management. The day after George Floyd was murdered we were overwhelmed with calls from mid-sized companies in the greater New York across the healthcare, manufacturing, advertising and technology sectors to inquire about consulting. They couldn’t clearly explain what their company’s problem was, other than, “emails of frustration”.
The vague research in the D&I market suggests that diversity is an $8 Billion spend by American corporations annually. And as NYU Professor and author Pamela Newkirk elaborates, Diversity, Inc. is the “The Failed Promise of a Billion-Dollar Business”. We haven’t benefited much from the spend, and we’re not just thinking about diversity quotas, but the…