Why Belonging Matters More Than Just Diversity

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CREATIVE WORKFORCES, accelerated business growth, and leaders who have learned how to harness their team’s diversity are all expected outcomes of well-executed diversity, equity, and inclusion (DEI) initiatives. Hiring to develop a more diverse workforce, however, doesn’t mean that these synergies will automatically accrue. Inclusive leaders need to understand that implementing DEI practices is a great starting point but an insufficient place to finish.

Diversity is not an end goal in itself but rather a means to something more significant: creating a culture of belonging where all organizational members feel psychologically safe. When employees feel like they belong, they feel safe enough to bring their unique, authentic selves to the workplace, sharing their true individuality with the team. McKinsey defines psychological safety as “feeling safe to take interpersonal risks, to speak up, to disagree openly, to surface concerns without fear of negative repercussions or pressure to sugarcoat bad news.” These are the exact behaviors that organizations want from their diversity initiatives. But simply working toward diversity does not guarantee a workplace that fosters a sense of belonging or inspires psychological safety.

Why DEI Practices Fail

The strides that decades of diversity practices have made toward creating more diverse and inclusive workplaces should not be devalued. Many of these DEI programs and practices find themselves on shaky ground right now. In some organizations, these programs are being shuttered; in others, they have the full backing of leadership. A potential explanation for this discrepancy — in which some organizations find value in DEI while others do not — lies, ultimately, in persistence.

The “one-eighth rule” explains that most organizations never reap the benefit of the management practices they try to implement because of three specific failure points. First, only half of organizations will make the connection between a particular management practice and its effect on their organization. Second, only half of those remaining organizations will try multiple approaches when implementing the new management practice. And third, even if organizations understand the connection between cause and effect and are willing to try multiple approaches, only half of those companies will follow the practice long enough to see the desired result.

If you multiply all of those halves together, you find that only one-eighth of organizations will see a beneficial practice all the way through until the end (1/2 x 1/2 x 1/2 = 1/8). This rule argues that the organizational landscape is a veritable graveyard of unrealized organizational aspirations. Taken literally, this rule suggests that seven-eighths of all attempts at DEI initiatives fail simply because of a lack of follow-through or vision. Here, we believe that leaders have been aiming at the wrong target.

The First Half: Belonging and Psychological Safety

The notion that only half of organizations make effective connections between implemented management practices and their outcomes explains the frustrations many leaders feel when they implement diversity initiatives but see none of the expected benefits. The connection is not, and never has been, that diversity results in a more productive workplace. In fact, there is some much-ignored research explaining that diversity can decrease performance.

“Diverse organization” has, over time, become a label applied to businesses that appear diverse or ensure that everyone completes their HR-mandated training on DEI practices, norms, and laws, rather indicating that an organization has actually worked toward creating an inclusive culture. This reductionist view of what it means to be a diverse organization has led many of them to assume that hiring for diversity is the beginning and end of the story.

Yes, diversity practices aim to bring together people with unique and varied backgrounds, but belonging — the true goal of DEI — lets those backgrounds come to the fore.

Crew Resource Groups at Vanguard

Investment management firm Vanguard excels at making the connection between the diversity practices it implements and their intended outcomes. One program it developed to ensure that all employees feel safe bringing their authentic identity to the workplace is Crew Resource Groups (CRGs). Vanguard hosts multiple CRGs organized around employee self-identities, including the Black Organization for Leadership and Dialogue, the Hispanic/Latinx Organization for Leadership and Advancement, the Out Professional Engagement Network, and the Women’s Initiative for Leadership Success, among others. However, simply hosting CRGs would be insufficient to enact authentic change.

Vanguard supports CRGs in multiple ways. It immediately introduces the various CRGs to new employees so that they can quickly find and join one or more groups that align with their personal identity. These groups count not only employees but managers and executives among their members. This helps employees gain access to leaders and information about career tracks and promotion opportunities that they might otherwise be unaware of. Leaders at Vanguard, including those who do not fit specific identities, visit the various CRGs to lend their support, giving everyone in the CRG another resource to use as they work their way up the ranks.

Creating CRGs is a great first step but would have been ineffective in making an authentic impact within the organization without additional supports. By creating and supporting these groups, leadership elevates them to a core role within the organization so that Vanguard employees know they are valued and can feel psychologically safe.

The Second Half: Beyond the Single Approach

Creating a sense of belonging in the workplace will never result from a singular effort. Thus, organizations must move beyond single-approach diversity practices. Building a culture of belonging takes more than another mandatory training session. Leaders need to move beyond lip service to embrace and encourage diversity of thought by listening to all of their employees and prioritizing intergroup belonging. They must take center stage.

An Ensemble of Efforts at Equitable

A multifaceted approach to diversity and inclusion is built into the fabric of Equitable, a financial services company. It hosts diversity and inclusion advocacy forums for employees, convenes diversity educational summits to train its financial advisers on how to best serve their diverse body of clients, and carefully analyzes its personnel metrics to ensure diverse representation at all levels. These practices represent a robust set of solutions that Equitable advertises and publicly supports, demonstrating its commitment to its employees.

But what makes Equitable especially worthy of serving as an example here is how its leaders are taking action behind the scenes. In the aftermath of the Ahmaud Arbery and Breonna Taylor tragedies in 2020, and recognizing that Black and marginalized employees’ voices were not being heard, the executive team took action. They created a task force to advance racial equity, hired a chief diversity officer (a role still in place at Equitable, despite federal pressure on businesses to abandon diversity efforts), started and continued to have difficult conversations, and worked toward more equal representation among Black employees. This multifaceted approach also yielded the Black Excellence Program, which focuses on developing Black employees’ skills and professional networks through mentorship.

Any change worth making is worth approaching from multiple angles. If Equitable had stopped its efforts at just training advisers to work with a diverse clientele, the underlying message would not have been “we value diversity” but “we want to expand our business.” But with leaders listening and then taking clear action, especially across multiple fronts, the message has become clear: We value everyone. That messaging allows both employees and the organization to enjoy the benefits of a culture of belonging.

The Third Half: Persist and Stay the Course

Most organizations will fail to sustain the results of their efforts. Even if such initiatives are ultimately successful, any cultural change is difficult and takes time, so organizations and leaders must sustain diversity efforts through consistent actions once they’ve been implemented. Persistence is the antidote to the final hurdle of the one-eighth rule.

Implementing and committing to diversity practices, even when the intended results don’t immediately materialize, represents an opportunity to recognize and potentially reward those leaders who have established a team culture where people feel like they belong. When an organization learns from its teams, that not only advances the power of the organization but also the leaders within it. Engaging these leaders as spokespeople for establishing belonging in the workplace will enable them to keep working hard and maintain their success.

Persistence at Costco

“Do the right thing” is a surprisingly difficult principle to live up to in 2025. Yet retailer Costco not only lives up to this guiding principle but looks to its history to define what “right” means to its leaders, employees, and shareholders. Costco’s decades of financial success while tirelessly promoting a culture of inclusion allow it to defend and support its diversity efforts despite political pressure.

Costco perpetuates that culture of inclusion with a focus on internal hires; its leaders are those who were once junior-level employees and thus “grew up” within the Costco culture. The career trajectory of people like Alison Francis, Costco’s first chief DEI officer, illustrates the company’s commitment to employee growth. Hired when she was only 16 and still too young to run a register, Alison worked her way up through Costco’s ranks over 25 years to reach a high level of authority and influence. When asked about the importance of diversity at Costco, she replied, “Diversity is our sustainability — it’s not an add-on.”

Costco has made suppliers part of its inclusivity efforts since 2005. Its “treasure hunt” model allows employees to seek unique local suppliers for products they can then stock on their own shelves. This focus on inclusivity has brought diverse products to Costco’s members, including Asian-inspired ice cream flavors, Dutch stroopwafel cookies, and gluten-free Mexican-American products that are hard to find elsewhere. Catering to a diverse audience makes Costco an easy choice for consumers, and clearly, its members are happy: 2024 was Costco’s most profitable year ever, with $32 billion in profits stemming from net sales of $250 billion. Despite today’s fierce conflict over DEI, the company’s focus on diversity is inseparable from its success as a business.

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If the one-eighth rule is correct, the three examples above are balanced out by a set of 21 organizations that quit on the way to creating a culture of belonging. The effects of those failures — such as reduced diversity and less inclusivity — are certainly unfortunate. Far worse, however, is that many of the leaders in those organizations gave up because they thought, “Diversity doesn’t work,” or simply threw their hands up and said, “I don’t know what went wrong.” Fortunately, the one-eighth rule can be used as a guide. As our examples show, there is no shortage of successful companies that have found a path forward, but the one-eighth rule means that only 12% of companies are successful when implementing new policies.

We recommend that leaders who are intent on initiating real change and navigating the one-eighth rule shift their goal from the too generic catch-all of “diversity” to creating a culture of belonging. Diversity and what it entails are poorly understood by many, but in our hearts, we all know what it feels like to belong. When leaders commit to fostering a culture of belonging, the connection between management practices and diversity-related outcomes becomes clearer. Similarly, understanding that belonging does not result from one policy or program highlights the need for multiple approaches — and no small measure of persistence.

For those organizations and leaders who already value diversity, their efforts have not been in vain — they are starting with a sound foundation upon which to build. The good news is that creating a culture of belonging is realistic, practical, and something that organizations can begin to implement right now.