LinkedIn data reveals a steady growth in diversity, equity, and inclusion (DEI) jobs across EMEA companies over the past five years, with nearly half of the companies in the S&P 500 Index now employing a CDO.
This surge in DEI-focused positions isn’t just a trend – it’s a response to a critical business imperative. Companies that proactively drive diversity and inclusion have proven to be more competitive than their peers. Conversely, the risks associated with negative incidents involving equity and integrity issues are substantial, with companies experiencing an average 7% decline in market capitalization following such news.
In this high-stakes environment, what makes a CDO truly effective? This is the anatomy of a stellar CDO, characterized by six essential competencies that drive organizational change.
While not the sole requirement, HR expertise provides a solid foundation for a CDO. It brings a deep understanding of talent acquisition and management, learning and development strategies, and HR policies. The real superpower of a CDO with HR expertise lies in their ability to weave compelling narratives from people data, transforming raw statistics into stories that resonate with both leadership and employees.
At the core of every great CDO is a profound grasp of DEI principles, benchmarks, and best practices. This goes hand-in-hand with an empathetic understanding of minority needs and experiences. However, it’s important to note that while this knowledge is crucial, it’s just one piece of the puzzle. As one CDO pointed out, “Appointing individuals with purely academic or activist backgrounds can lead to challenges in the corporate sphere, particularly when it comes to aligning their expertise with business imperatives.”
A business background isn’t just beneficial for a CDO—it’s transformative. It’s the secret ingredient that turns DEI from lofty ideals into tangible business action. A CDO with business savvy can align DEI initiatives with business strategy and priorities, effectively reducing operational risks and driving performance. It’s the “turbo boost” for the change management trajectory, as reported by a seasoned CDO.
This unique blend of business acumen and DEI commitment lends an authenticity that resonates throughout the organization. It allows the CDO to tailor the DEI message across diverse cultures, ensuring relevance and impact in different business units and geographical locations.
Understanding the legal and financial landscape is a formidable advantage for a CDO. This competency goes beyond mere compliance—it’s about leveraging legal and financial knowledge to drive meaningful change. A CDO fluent in relevant legal and compliance requirements, and regulatory dialogue can navigate complex terrain with confidence.
This expertise shines when executing pivotal programs like the Code of Conduct review, which demands a multifaceted approach to weave in every strand of DEI. It’s equally valuable when integrating DEI metrics into vendor assessments or sparking societal change through business initiatives.
A CDO’s communication skills can make or break their impact. The most effective CDOs craft compelling visions that resonate deeply within the organization, translating complex ideas into relatable messages that ignite momentum for change at all levels.
Whether the narrative pivots on compliance, the moral high ground of fairness, or the strategic imperative of talent attraction and employer branding, the CDO’s superpower lies in their ability to weave narratives that span all dimensions. They must be equally adept at addressing the board, rallying employees, or engaging external stakeholders.
Cultural transformation doesn’t happen by accident—it requires methodical planning and execution – ‘getting things done’. A CDO with proven project management capability can orchestrate complex, multi-faceted programs that drive real change.
It starts with benchmarking against competitors to understand the landscape, then turns inward to identify internal business needs and then craft tailored DEI narratives. Whether implementing top-down cultural shifts or subtle organizational nudges, effective project management ensures that initiatives are well-planned, executed efficiently, and measured transparently and effectively.
These six competencies don’t exist in isolation – they form a powerful synergy that defines an exceptional CDO. A singular focus on business acumen could narrow the lens, favoring profit-driven initiatives at the expense of broader impact. A legal/financial lens might overemphasize compliance, missing the heart of HR processes and the essence of cultural evolution. An HR-centric view risks siloed efforts and diminished business clout. Overzealous communication could drown out the delicate balance of facts and narratives. And project management, devoid of DEI depth, is akin to building a castle on sand—impressive, yet unstable. While it’s rare for one individual to excel in all areas, the most effective CDOs recognize their strengths and weaknesses. They build diverse teams that complement their skills, leveraging collective expertise to drive comprehensive DEI strategies.
It's the daily decisions of managers that sculpt equity and fairness.
The CDO’s journey is unique to each company, influenced by its maturity, size, sector, and ethos. Key factors for success include a direct reporting line to the CEO or HR executive board member, with a strategic link to top leadership, ensuring the CDO has the attention of decision-makers. Autonomy and delegated authority are crucial to enable the CDO to make decisions and drive change effectively.
However, it’s important to remember that while the CDO is a catalyst and influencer, true DEI success lies in ownership by the operational business. It’s the daily decisions of managers that sculpt equity and fairness. The most effective CDOs recognize this and work tirelessly to embed DEI principles into every aspect of how the company is run, making it a shared responsibility rather than a siloed, functional initiative.
The opportunity is ripe to boost the CDO's influence, cultivating inclusive cultures that span organizations worldwide.
Over the past two decades, the CDO role has undergone a remarkable transformation. Once a figurehead for regulatory compliance, the CDO has ascended to a key business ally and now stands as a vital driver of business strategy. This evolution is fueled by a societal demand for equality and social justice, coupled with the recognition that inclusion offers a powerful competitive edge.
We’re at a pivotal moment. The opportunity is ripe to boost the CDO’s influence, cultivating inclusive cultures that span organizations worldwide. As businesses continue to recognize the value of diversity and inclusion, the role of the CDO will only grow in importance, shaping the future of work and society at large.
By harnessing these six essential competencies, CDOs can drive meaningful change, create inclusive cultures, and propel their organizations toward a more equitable and successful future. As we navigate an increasingly diverse global landscape, the CDO’s role in translating DEI principles into tangible business outcomes has never been more critical. It’s time to turn potential into progress, one competency at a time.
This article is based on the analysis of Forbes’ largest companies, a list ranking the largest companies in the world using four metrics: sales, profits, assets, and market value.
We used AI tools to screen the public profiles of chief diversity officers to create a heatmap of the most recurring skills and related competencies. This was complemented by detailed interviews with some of the chief diversity officers to validate the research outcome.
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