Calculating the Cost of Exclusion on Your Business
If the laws, advice, guidance and campaigning has not persuaded business of the need for more diverse & inclusive business practices, then perhaps the argument needs more commercial clarity.
The Cost of Exclusion (also, Cost of Inaction) emphasises the risks of failing to address DEI, while the business case highlights the benefits and opportunities of embracing DEI as a strategic advantage.
It looks at:
Customer groups unintentionally excluded from your TAM
Analyses missed opportunities
Reputational Impact
Risk mitigation
Calculating the cost of social exclusion on your business requires a broader approach that focuses on potential missed opportunities, reputational damage, and indirect impacts on the business.
Here’s how you can guide someone in calculating the cost of exclusion in their business when per-person value is not well-defined:
Identify Key Stakeholders and Impacted Groups: Start by identifying the various stakeholders, customer segments, and groups that might be excluded due to certain business practices or decisions. Consider demographics, interests, needs, and potential negative perceptions.
2. Define Potential Exclusionary Factors: Identify factors within the business that might contribute to exclusion. This could be related to products, services, marketing, communication, accessibility, or company culture.
3. Analyse Missed Opportunities: Consider the potential opportunities that might be missed due to exclusion. This could include:
Market Expansion: Estimate the potential for entering new markets or attracting new customer segments that are currently excluded.
Product/Service Enhancement: Evaluate how modifying products or services to be more inclusive could attract a wider customer base.
Innovation and Creativity: Assess how diverse perspectives could lead to innovative ideas and better problem-solving.
4. Reputational Impact: Consider the potential negative impact on the business’s reputation due to exclusion. This could lead to:
Negative Public Perception: Estimate the potential for backlash or negative sentiment on social media or in the press.
Damage to Brand Image: Assess how exclusionary practices might harm the brand’s overall image and values.
5. Long-Term Effects: Think about the potential long-term effects of exclusion. These could include:
Lack of Customer Loyalty: Consider how exclusion might lead to decreased customer loyalty and decreased repeat business.
Employee Morale: Evaluate how exclusionary practices could affect employee morale, which could impact productivity and creativity.
6. Competitive Disadvantage: Analyse how exclusion might put the business at a competitive disadvantage compared to more inclusive competitors.
7. Quantify Reputational Costs: Estimate potential costs associated with reputational damage, negative media coverage, and the effort required to address PR crises.
8. Scenario Analysis: Perform scenario analyses to understand different potential outcomes based on different levels of inclusion and exclusion.
9. Consult Experts and Diverse Perspectives: Seek input from experts, consultants, and individuals with diverse backgrounds to identify potential exclusionary factors that might be overlooked.
10. Overall Business Impact: Summarise the potential negative impacts across different areas of the business, including customer acquisition, retention, innovation, and employee satisfaction.
11. Decision-Making: Based on the analysis, encourage the business to consider a more inclusive approach that aligns with their values and long-term success. Emphasise the broader benefits of inclusivity beyond just per-person calculations.
12. Communication Strategies: If the per-person value is not clear, focus on communicating the broader benefits of inclusivity to stakeholders, customers, and employees. Highlight how an inclusive approach can lead to positive societal impact, improved business reputation, and enhanced market positioning.
The cost of exclusion is not solely monetary; it encompasses a range of intangible factors that can have a significant impact on the business’s overall success and sustainability. An inclusive approach fosters positive relationships with customers and employees, strengthens the brand’s image, and contributes to a more inclusive and equitable society.
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(ide)ate has been designed to make the “intangible”, tangible.
If you’d like to explore various factors that stand in the way of creating a truly inclusive, innovative & loveable business, get in touch via our website here.
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