Leadership

DEI increases companies’ “change power”

DEI correlates with purpose, choreography, and development, researchers say.
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Today’s organizations must react nimbly in the face of change, and many are doing so by changing their own processes and structures. The pace of organizational change has accelerated rapidly over the past several years: Gartner research has found that employees, on average, went through 10 planned enterprise changes in 2022, up from just 2 in 2016.

To measure companies’ ability to adapt to these changes, researchers David Michels and Kevin Murphy created a metric known as “change power” in 2021. It gauges how well companies perform on nine factors related to change, including connection, capacity, scaling, and flexibility.

Recently, Michels, Murphy, and co-author Karthik Venkataraman published research in the Harvard Business Review showing that companies with high change power tended to share one surprising element: strong performance in diversity, equity, and inclusion.

“Doing DEI well correlates with better change power, which in turn is linked not only to company performance but also leadership and employee engagement,” the authors wrote. “These are all characteristics every executive would like to improve.”

Companies with the highest DEI scores on Glassdoor, the authors found, had 80% higher change power scores than those with weaker DEI performance. DEI was also positively correlated with all nine change power factors—notably purpose, or sense of belonging (75% correlation); choreography, or the ability to “take the right steps in the right order” (70% correlation); and development, or training and growing talent (63% correlation).

These findings are in line with other research that shows a positive link between DEI and innovation. Having more diverse perspectives on a team, studies show, leads to more creative problem-solving.

That, in turn, likely leads to better change management. Or, as Adobe’s chief people officer Gloria Chen told Michels, Murphy, and Venkataraman, “Diversity helps us to question our assumptions and open our minds. When you are continuously open to new ideas you are more adept at change. It becomes like a well-developed muscle.”

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.