How To Identify The Direct, Tangible Benefits Of Inclusion

There is a framework in sales that considers the potential benefits of an offering based on two dimensions: tangible vs. intangible and direct vs. indirect (TIDI). When making purchasing decisions, customers tend to estimate the value of the offering based primarily on its direct, tangible benefits. But in some cases, significant value can come from benefits that are indirect, intangible, or both.

The TIDI framework helps identify the potential value of an offering beyond its direct monetary value. This expanded view of value can facilitate the sales process and help clients make a more informed purchasing decision.

The TIDI framework can be leveraged to better understand the potential benefits of DEI initiatives from the point of view of an organization. This approach shows that it is more fruitful to focus on the level of inclusion of an organization, rather than on target diversity levels, which can be difficult to justify and can create backlash.

A TIDI example from health insurance sales

Consider the following example. A health insurance company was struggling with selling to corporations because their prospects often asked to customize the proposals, e.g., asking for a different blend of PPO and HMO plans in the bundle. The sales people were not able to estimate the price changes for the requested customization during the sales meeting. Instead, they had to go back to their actuarial team for a new estimate before following up with the prospect. This led to delays, increasing the cost of sales and the probability of losing the sales opportunity. In some cases, overzealous salespeople would close a sale based on the requested modifications without getting actuarial approval, which created financial risk and frustrated the actuarial teams.

To address this problem, the insurance company hired a predictive analytics firm to develop a tool that was calibrated by the actuarial team to accept a range of customizations, allowing the salespeople to try out various offering configurations during sales meetings. This led to clear benefits in all four quadrants of the TIDI framework:

• The direct/tangible benefit was a shortening of the sales cycle, which reduced the cost of sales and increased the probability of closing the sales.
• An indirect/tangible benefit was the unexpected increase in renewals, which was driven by the customers’ ability to explore changes and find better configurations as part of the renewal process.
• A direct/intangible benefit was the increased satisfaction of salespeople due to the greater autonomy and ability to respond to prospect questions.
• An indirect/intangible benefit was that the relationship between the sales and actuarial teams improved dramatically.

Although some of these benefits are described as intangible, it is sometimes possible to estimate their financial impact. For example, satisfaction is known to impact turnover, and salespeople have notoriously high turnover rates, which can be very costly. A similar argument applies to the improved working relationship between actuaries and salespeople.

This example shows the value of using the TIDI framework to explore the full range and impact of benefits, which can help both sellers and buyers.

How the TIDI framework can apply to DEI

The TIDI framework can be applied to DEI, to help define and identify the benefits of initiatives from the viewpoint of an organization. In particular, we can compare two different approaches to promoting DEI: the traditional approach, which focuses on diversity, and a more recent approach that focuses on the value of inclusion.

Traditional DEI approaches focus on changes in representation levels as the primary objective. To support the “business case” for DEI, proponents tend to cite correlations between some diversity metrics and a range of financial KPIs, as well as other benefits that allegedly will derive from greater diversity, such as improving recruitment and retention, expanding markets by reaching new segments, fostering greater innovation, creating a superior company culture, and improving external reputation.

The traditional approach to DEI can be mapped to the TIDI framework as follows:

• The direct/tangible benefit is to achieve greater diversity.
• Indirect/tangible benefits include improved recruitment and retention, expanding to new markets, and likely greater financial performance based on observed correlations.
• Direct/intangible benefits include greater employee engagement, sense of belonging, and satisfaction.
• Indirect/intangible benefits include greater innovation, superior company culture, and improved external reputation.

This mapping helps to understand why the traditional approach is not very compelling to the target customers, namely, corporate leaders.

The first problem is that the direct/tangible benefit is not directly aligned with the interest of executives, whose ultimate responsibility is the financial success of the organization.

Second, the evidence for the indirect/tangible benefits is not very strong. Few companies have actually been able to show the promised improvements, and the methodology of some of the studies showing correlations has been challenged. But even if the studies were completely correct, correlation does not guarantee that diversity itself causes the changes in financial performance. Moreover, an observed correlation across hundreds of companies gives a leader no guidance on what to do, nor does it guarantee that the results will be positive.

Third, unfortunately some of the intangible outcomes have often been negative: white, male employees (who make up the majority of many organizations) have been complaining bitterly about reverse discrimination, even resulting in increased lawsuits; and customers have threatened to boycott brands that support DEI initiatives, causing many of them to publicly eliminate DEI initiatives.

Shifting the focus to inclusion

A more recent, alternative approach focuses on measuring inclusion to drive superior financial results and greater, sustainable diversity, while avoiding the backlash.

The approach recognizes that diversity is a like a balance sheet, in that diversity gives a snapshot of an organization’s human assets, but doesn’t really explain how and why things are as they are. Inclusion is more akin to the cashflow statement, as it tracks workplace employee experiences that increase and decrease the satisfaction (and thus productivity and retention) of employees. The inclusion-based approach also shows that inclusion has a quantifiable impact on financial performance, precisely because it influences productivity levels and retention rates.

By defining it in terms of employee experiences, inclusion can be measured, and doing so can pinpoint what exactly is happening in an organization that impacts employees. The approach can also identify initiatives that lead to happier employees and higher profits.

The inclusion-based approach to DEI can be mapped to the TIDI framework as follows:

• The direct/tangible benefit is to increase profitability by increasing productivity and decreasing hiring costs from unwanted employee churn.
• Indirect/tangible benefits include the ability to estimate the impact and ROI of DEI-related initiatives, a reduced risk (and cost) of discrimination lawsuits from employees and from customers, and improvements in recruiting.
• Direct/intangible benefits include happier employees, in the form of grater satisfaction, engagement, feelings of inclusion and sense of belonging.
• Indirect/intangible benefits include increased diversity (resulting from the increased retention rates, especially for historically underrepresented groups), a more welcoming and inclusive culture, improved reputation with both internal and external stakeholders, and completely avoiding backlash.

It should be evident from this mapping that the measuring inclusion approach is more likely to appeal to leaders than the traditional approach to DEI, because the benefits are more aligned with the leaders’ goals and objectives. The mapping also shows that focusing on inclusion will lead to greater diversity, but treats this as indirect outcome, rather than making it the primary objective. This helps leaders understand how they can support all stakeholders while pursuing their own goals.

The TIDI framework helps make sound decisions

The TIDI framework makes it clear why focusing on inclusion is more fruitful and less controversial than focusing on diversity alone. Without getting mired in conversations about fairness, justice, discrimination and other societal issues, the framework forces us to realize that any offering, no matter how good it is, must address the needs of the intended customers.

This is not to say that everyone should abandon traditional DEI approaches. Rather, it suggests that DEI practitioners would benefit by understanding where their offerings are within the TIDI framework. This will help them to set clearer expectations with their target clients.

By identifying the direct, tangible benefits of inclusion, the TIDI framework helps leaders decide the value and likely impact of any DEI offering or initiative they are contemplating, and how their choices can have a positive impact on all stakeholders.