How to Plan your 2023 DEI Budget: A Strategic Approach

It’s time for you to plan your 2023 DEI budget. What’s the best way to begin? Start by considering the outsized value that DEI delivers throughout your organization. Your DEI Department may be small, but it makes a significant impact on your company’s ability to achieve its strategic goals.

As the lead DEI practitioner in your organization, you need to be the chief advocate for adequate DEI funding. Whether your company develops its budget from the top down or the bottom up, whether it embraces zero-based, driver-based, predictive budgeting, or some other approach, take the initiative to inform and influence your organization’s budget decision-makers. Make the business case for investing in DEI.

Here are suggestions for planning your 2023 DEI budget in a way that will pay big dividends, not only for your department, but for your organization overall.

Consider the big picture of the budgeting process.

Corporate budgeting is the process of allocating resources in a way that best achieves the objectives of an organization’s strategic business plan. In high-performing companies, budgeting is not an annual administrative exercise executed in the silo of the Finance Department. Instead, the process of building the budget brings the organization together in a powerful, collaborative way, integrating the informed thinking of the leadership team and department heads. This process ensures that resources are allocated in the best way possible to achieve the company’s operational needs and meet its growth goals. Your DEI budget planning process needs to mirror this approach.

The business case for DEI has been made. Focus on success metrics.

It’s easy for people in a number-crunching mindset to think of the DEI budget as simply covering the operating costs of a small department. You have the opportunity to emphasize a more global viewpoint: DEI is a powerful business practice. When DEI flows throughout an organization, it fuels success in multiple ways. DEI positively impacts the bottom line by improving productivity and innovation, increasing revenue, enhancing the brand, and helping to attract and retain valuable employees.

To secure adequate funding for DEI, you need to “connect the dots” for budget decision-makers. Demonstrate how DEI contributes to the achievement of your company’s strategic goals. Also, raise awareness of the potential risks of not investing in DEI, for example, increased employee turnover and negative brand perception.

Ideally, you should use in-house data and statistics to make your case, showing evidence of the historic return on investment from your organization’s own DEI programs and initiatives. To what extent has DEI driven an increase in the diversity of your company’s board, leadership team, and workforce? To what extent has employee turnover dropped? How has DEI helped your company enter new markets, expand customer relationships, and drive innovation? Keep a running file of your DEI results and share it with decision-makers.

For 2023, some organizations may be considering overall cuts to employee training, given the current economy. It’s therefore particularly important for you to position DEI as a proven driver of both business growth and cost-cutting – an essential, ongoing business practice rather than a potentially expendable short-term training program. Even in a recession, investing in DEI is essential.

The proven benefits of DEI include increased productivity and profitability; reduced absenteeism and turnover; improved talent acquisition and retention; increased innovation and innovation-related profit, and the ability to make better business decisions and make them faster. To bolster your business case, draw on statistics from national studies.

Build your budget proposal strategically.

Start by determining the funds you need to operate your DEI department in 2023. Use your prior year budget and actual spending figures as your starting point. How much funding will you need to produce company-wide DEI programs and activities, events, communications, and Employee Resource Groups (ERGs)? Estimate the cost of department staff training and the use of outside consultants and resources.

Think about the critical drivers and Key Performance Indicators (KPIs) for your DEI Department. What is your DEI Department being counted on to deliver in 2023? Where should you focus your efforts to make the biggest contribution to your company’s growth? Consider non-financial drivers and KPIs in addition to financial ones. Develop a few different budget scenarios and evaluate the potential impact of each. These steps will help you choose the best path and allocate your 2023 resources productively.

Next, consider the individual departments that your DEI team serves and/or benefits. To which departments will you provide DEI training, consulting, and other resources in 2023? This list of internal clients will likely include Human Resources, Operations, Marketing (including brand management, advertising, and public relations), Sales, Research & Development, and Corporate Social Responsibility. The infusion of DEI education, training, and counseling your DEI department provides will help each of these departments to be more productive and successful. If budget decision-makers take this return on investment into account, they’re far more likely to ensure that the DEI Department is adequately funded. Some companies may choose to distribute the DEI budget line item across the multiple departments that benefit from DEI training and services.

So … how big of a budget is enough?

Based on our experience with a wide range of clients, we recommend allocating 2-3% of the organization’s operating budget as a guideline, i.e., $20,000 to $30,000 per each $1 million in operating funds. Use this guideline to calculate an overall budget range for the DEI Department at your company. Next, compare the dollar range you have calculated to the total costs you previously estimated – the amount needed to cover your department’s direct operating expenses plus the value of the services that your department will be delivering to other departments. Finally, align the figures you have calculated from both of these methods in order to arrive at your 2023 budget request. This strategic approach will lead to a proposal that’s both realistic and persuasive to your organization’s budget decision-makers. If you have further questions about budgeting, or any other aspect of your organization’s DEI program, we welcome you to contact us at The Diversity Movement.