Five Ways Equity Diversity and Inclusion Is Similar to Investing in the Stock Market

‍

‍

‍

Five Ways Equity Diversity and Inclusion Is Similar to Investing in the Stock Market

"Speculate to accumulate" is an adage used when investing in the stock market. But what if this were to be applied to organizational equity, diversity, and inclusion (ED&I); would it be a big gamble?

I am an organizational psychologist specializing in executive leadership coaching for top talent management and have researched organizational ED&I efforts. So, while I am not a financial advisor, nor am I offering financial advice, I cannot help draw parallels between organizational ED&I narratives and what we observe in the stock market and assets.

The stock market has been turbulent recently; record highs, which pundits try desperately to explain. There are debates on stimulating economic spending and a lot of talk about cryptocurrency: Bitcoin and Dogecoin in particular. Meanwhile, organizations have had their fair share of ebb and flow in implementing well-meaning ED&I initiatives. Could the lessons in stock market investment provide insights into better practices of ED&I in their business? I think so. I offer some food for thought: five ways investing in ED&I for your business is like investing in the stock market.

1. Trying To Time the Market

A lot of time, effect, and due diligence are spent predicting market conditions to get in or out of a trade, a challenging task even for the best floor traders to master. This is why it's not about timing the market, but it's about your time in the market. Trying to time the market means aiming for short-term wins. Instead, focusing time in the market has the potential for long-term wins. Focusing on highs and lows, good days, and bad days (all as isolated events) mean fostering a reactionary mindset. However, having a more proactive mindset means thinking for all the days: past, present, and future. This principle applies to ED&I as well. Successful implementation of ED&I is to treat it as part of a long series of events in your company's inclusion journey. This is foundational to ED&I success, and it helps organizations avoid several common mistakes, one of which is placing hope on a single intervention.

2. Applying Dollar-Cost Averaging

Dollar-cost averaging is an investment strategy used to remove some emotional responses and reduce volatility when investing. There are two things to consider when mitigating emotionality when investing: how much you will invest and how frequently you will invest. This is a simple yet valued strategy that applies to ED&I as well.  What is a particular aspect of ED&I your organization is willing to grow and develop? Focus on that and then decide on a manageable achievable activity that your organization can commit to regularly. For example, a soft way to introduce ED&I into your organization is to start a book club. Yes, a book club. Employees can come together to read and discuss the contents of a book on a monthly or quarterly basis. This is a simple yet effective ED&I initiative (especially when it is done with consistency) that all organizations can do, but many don't do.  

3. Not Doing the Homework

So, your friend gives you a stock tip, and based on their say-so, you put your money on this stock, and, low and behold, it goes up 40%! This friend gives another tip, but unfortunately, it does work out, and you lose money [insert sad trombone sound here]. Going on the friend's say-so without knowing anything about the company (products, services, and latest news) means not deciphering a good tip from a bad one.  It means being unable to reproduce the positive effect derived with the first tip or avoid the negative effect from the second tip.  Therefore, it is crucial to do your homework. This is a significant issue I have observed when it comes to ED&I. It is easy to say that ED&I is good for business, but why is it good for your business?  Determining your company's ED&I needs will then help your organization not to be vulnerable to point 4.

4. Get-Rich-Quick Schemes

Whether on TV or YouTube, we have seen those commercials on how to get rich (quickly) using the stock market. These get-rich-quick schemes offer style over substance appealing to the desired results but not our best interest. An unfortunate quick-fix approach can be offered to organizations to resolve their ED&I issues with unconscious bias training, a keynote speech, or a panel event. The inconvenient truth is that leaders have been given months to address things that took centuries to create, assuming they have the knowledge, skills, and will to make these changes. However, approaching organizational ED&I is not a rush job or a quick fix. To do so would be to run the risk of making things worse. It would be apropos for such quick fixes to have a financial disclaimer "the value of your investment can go down as well as up."

5. Buying Into the Hype

You may have heard about Dogecoin, the cryptocurrency created in 2013 as a joke after an internet meme of a Shiba Inu dog. Earlier this year, Elon Musk's support of Dogecoin (self-appointing himself as "the Doge-father") created a lot of hype. Musk hosted Saturday Night Live a few months ago (his performance as Wario in one SNL sketch was in itself meme-worthy) with the great anticipation the price of Dogecoin would rocket after the show. That did not happen. What's the financial disclaimer again? The New York Times noted that the price of Dogecoin fell by about a quarter-down-$20 billion from the previous day, making its market capitalization under $70 Billion. This must have affected someone, somewhere, badly.

There have been tons of hype around ED&I, especially in 2020, with organizations promising to address ED&I in their business better. Listening circles, diagnostics, and training were promised. But what were the outcomes of all this hype by the end of 2020? Indeed, International Women's Day, Black History Month, Pride are being recognized and celebrated. However, once the hype is gone, marginalized groups and organizations face the effects of that loss. The point is, don't fall for the hype, instead make ED&I meaningful and consistent in your organization.  

I have characterized how ED&I is like the stock market with big wins and losses. The key message here is that organizations need to do their homework and include a regular and defined commitment in their ED&I strategy that doesn't react to hype. I hope these five parallels between investing in the stock market and investing in ED&I give you some food for thought and provide insights into your company's inclusion journey. What define commitments is your business making in its inclusion journey?

Written by Dr. Shelomi Gomes

As principal and founder of HümEIQ Inc., Shelomi Gomes, Ph.D., helps senior executives and management level develop the leadership skills and qualities to put them on the path to success within their organizations. Dr. Gomes counsels top talent to success through executive coaching with an innate ability to build trust with her clients. Through thought-leadership, case studies, and current research, she counsels on talent development, leading a diverse workforce, succession planning, workforce planning, and organizational effectiveness.

Dr. Gomes received her Master's degree and Ph.D. in Industrial and Organizational (IO) Psychology from the Roosevelt University, Chicago. She is a vice-president of Chicago IO Psychologist and a member of the American Psychological Association and the Society for IO Psychology. Dr. Gomes can be contacted at: shelomi@humeiq.com.

‍