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Ilana Rolef-Heberling
Senior Manager, Head of Brand Transformation, Communications & DEI, Sustainability Services at PwC Germany
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Why diversity, equity and inclusion are important success factors for companies
With three million employees, retail is one of the largest employers in Germany. But how diverse are its employees in terms of age, gender, sexual orientation and social background? And do wholesalers and retailers succeed in not only promoting diversity, but also making strategic use of it?
We examined this subject together with Google Germany and the German Retail Federation (HDE). We then summarised the results in a study and developed recommendations for action.
For the majority of small and medium-sized enterprises (SMEs), diversity, equity and inclusion (DEI) is not yet an issue for consideration. Only a quarter are familiar with the concept. But big companies also have a lot of catching up to do in terms of diversity: most companies are still in the early stages and are only just beginning to engage more intensively with the subject. However, DEI is becoming an increasingly important future topic for German retail.
“Our analysis shows that it makes sense for companies of all sizes to engage intensively with diversity, equity and inclusion and to push the topic forward. This is because innovation and progress will result in companies that engage with it appropriately and strategically.”
The study at a glance
DEI is barely discernible in SMEs
For most SMEs in retail, DEI is not yet a concept under consideration. Only a quarter had heard of the concept of DEI before taking part in the survey. It is therefore not surprising that only 24 percent have engaged with it in their company. Nevertheless, 37 percent consider diversity to be an important issue for their organisation.
That could soon increase: 55 percent of SMEs believe that DEI is a topic that will become more relevant in the medium term. In the future, the gap between small and large companies will close – it will be an important future topic for both smaller and larger companies.
Why DEI is important
Innovation and business success: diverse teams and an inclusive corporate culture create the best conditions for innovation. Companies that are more diverse than average achieve higher profits from innovations.
Wellbeing and belonging: corporate culture is a central factor for employee wellbeing and influences their performance, attitude to work and productivity.
War for talent and generational change: attracting and retaining talent over the long term is currently a major challenge for HR departments. Employees from the younger generation in particular attach great importance to the attitude and activities of a company with regard to DEI, and they check whether the company values match their own values.
Many large companies are also just getting started
Even large companies still have a lot to do when it comes to DEI: the majority of large retail companies are only at the beginning of their journey and have either not yet integrated any DEI measures into their strategy at all, or have integrated only a few measures.
What many companies have lacked so far: a strategic approach and the development of structures and processes within a shared culture of responsibility. DEI establishes and promotes such a culture as a lever for sustainable corporate success. However, the topic is present and is becoming an increasingly important future topic for German retail.
How the companies perform in the maturity model
The classification of the large companies surveyed in the PwC maturity model shows that the majority are still at the beginning of their development. A third of them have reached the first level of maturity, meaning that the DEI principles are not yet anchored in the company in many places. The largest group is at maturity level 2. These companies often have one or more DEI initiatives that are intended to bring failings to light and initiate possible changes.
Only one in five companies already see DEI as a focus area. At this stage of maturity, certain processes are being revised and measures are being implemented to reflect DEI principles in the company. Only one of the companies questioned achieved maturity level 4 in the survey. Here, DEIs are anchored as a strategic cornerstone in all areas.
The four maturity levels
- First steps on the way to DEI: the first starting points for DEI have been established in the company.
- DEI is an initiative: management has formulated a DEI vision, focusing on just one or a few aspects, such as gender. Some KPIs are being tracked and DEI issues are being communicated externally.
- DEI is a focus area: senior management has translated its vision into DEI goals, which are also being communicated internally. HR processes are being checked and adapted to meet the organisation’s DEI principles. External communication focuses on goals, progress and success.
- DEI is part of company strategy: DEI is part of the organisation-wide strategy and is considered in every part of the value chain. DEI visions and goals are embedded in company culture and behaviour. Multi-dimensional issues are being addressed at the same time, and external communication has been expanded with annual reporting to include what is happening internally.
Recommendations for action: how to promote diversity, equity and inclusion in your company
- Raise awareness of the topic within the company
- Make senior management responsible
- Measure goals holistically
- Promote personal engagement
Raise awareness of the topic within the company
The first step towards more DEI is to realise that proper promotion of these issues is a basic requirement for greater company success, better solutions and decisions, and increased innovation. Acknowledge that there are systemic injustices that jeopardise your company’s sustainable success. This is why it is all the more important to consciously deal with the topic and identify structural and cultural hurdles, and thus enable change.
Make senior management responsible
Make sure you have clearly defined roles and responsibilities for all aspects of DEI in your company. This creates visibility and honest commitment. Executives play a decisive role when it comes to the success of DEI measures. In addition to senior management commitment, responsibility for the issues needs to be clearly defined at the most senior level of management. This is the only way to ensure that measures are strategically combined, supervised and monitored.
Measure goals holistically
Don’t treat DEI as a topic exclusively for HR – it needs to be a strategic priority for the business as a whole. In doing so, it is important to control your structural and cultural measures using meaningful and measurable performance indicators, which ideally represent the entire organisation. |
Promote personal engagement
As in any complex change process, the success of DEI measures ultimately depends on whether the organisation and employees embody and epitomise the issue. Make sure that DEI is anchored as a value in your company, and create visibility with continuous communication. Give your employees the opportunity and the space to get involved personally.
“Anyone who deals with DEI and wants to strengthen the responsibility for it in the company needs courage, perseverance and a long-term strategy. We support our customers in anchoring the processes holistically in the corporate structures and defining business goals.”
Methodology
PwC Germany carried out the study together with Google Germany and the German Retail Federation (HDE). This involved surveying both small and medium-sized companies (SMEs, up to 250 employees) and large companies from the retail sector between May and September 2021.
A total of 334 companies took part in the SME survey. For a more detailed assessment of the status of DEI in retail, 52 larger companies with more than 250 employees were asked to fill out a longer questionnaire. This comprehensive questionnaire was used to classify the companies according to the PwC maturity model.
The study not only provides a stocktake of DEI in retail, but also specific examples and recommendations for effective action.
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