Explore real-world examples of how exclusion can damage a brand, and learn why inclusion is essential for long-term business success.
In 2018, Papa John’s, one of the largest pizza chains in the U.S., took a major hit. Their former CEO, John Schnatter, used a racial slur on a conference call, sparking outrage across the nation. The consequences were swift and severe –Papa John’s lost millions in revenue, with stores closing and customers turning away from the brand. This isn’t just a story about one company’s fall from grace; it’s a reminder of the very real cost of not being inclusive.
The Hidden Price Tag on Exclusion
When companies fail to prioritize inclusion, they pay more than just the price of bad PR. Inclusion isn’t just a buzzword – it’s about building trust and loyalty and creating a workplace where everyone feels valued. When that trust is broken, the financial fallout can be devastating.
In Papa John’s case, the company’s sales dropped nearly 10% in the months following Schnatter’s comments. They lost partnerships with major sports leagues, and the company’s brand took a massive hit, tarnishing a legacy built over decades. Customers, employees, and stakeholders no longer wanted to associate with a brand they perceived as exclusionary.
This isn’t an isolated case. In 2020, CrossFit’s CEO Greg Glassman made insensitive remarks about the Black Lives Matter movement, resulting in the company losing major sponsorships, partnerships with Reebok, and the support of its own community. CrossFit affiliates around the world severed ties, and within days, Glassman was forced to resign.
Losing Trust: A Slippery Slope
The cost of exclusion isn’t just about immediate financial losses. It’s about losing something far more valuable: trust. When customers, employees, or the public see a company as lacking inclusivity, that trust is hard to regain. People want to feel like they belong, and they expect the brands they support to uphold values of respect and inclusion. When those values are violated, customers often take their loyalty – and their dollars – elsewhere.
Trust is also crucial within organizations. If employees feel like their voices don’t matter, or that leadership doesn’t care about diversity and inclusion, engagement plummets. This can result in higher turnover, lower productivity, and difficulty attracting top talent. The best companies today are those where employees feel seen, heard, and valued – something that directly correlates with higher performance and profitability.
The Ripple Effect on Brand Reputation
One of the most challenging aspects of a reputation crisis is that it ripples out, often affecting relationships that businesses have spent years cultivating. Consider Starbucks. In 2018, the company faced backlash when two Black men were arrested in a Philadelphia store simply for sitting at a table without ordering. The incident triggered protests and calls for boycotts, prompting Starbucks to close 8,000 stores nationwide for racial bias training. While the move helped salvage some of their reputation, the incident highlighted the deep and lasting damage exclusionary practices can cause.
Inclusion isn’t just about being politically correct; it’s about survival. In an increasingly global and diverse world, companies that fail to create inclusive environments are setting themselves up for failure. Whether through loss of business, bad publicity, or legal consequences, the price tag on exclusion can be staggering.
The Opportunity in Inclusion
On the flip side, companies that prioritize inclusion see direct financial benefits. According to research by McKinsey, companies in the top quartile for gender diversity are 25% more likely to outperform their peers. Those with higher ethnic diversity outperform competitors by 36%. These aren’t just feel-good stats; they translate to dollars and cents. Diverse teams bring more creativity, better problem-solving, and a wider understanding of customer needs.
One example of this is Ben & Jerry’s, a company that has consistently championed social causes, including LGBTQ+ rights, racial justice, and climate change. Their commitment to inclusivity hasn’t hurt their bottom line – in fact, it’s helped solidify them as a beloved brand with a loyal customer base. Consumers feel good about supporting a company that aligns with their values, and it shows in Ben & Jerry’s continued growth.
Inclusion as a Business Imperative
The takeaway is clear: inclusion isn’t optional. The cost of not being inclusive can be measured in dollars, lost trust, and damaged reputations. But beyond that, it’s about building a sustainable business that can thrive in today’s world. As consumers and employees become increasingly aware of issues like diversity and inclusion, they’re demanding more from the companies they engage with. For businesses, this is a wake-up call. Inclusion isn’t just the right thing to do – it’s the smart thing to do.
The cost of exclusion is steep, but the rewards of inclusion? They’re limitless. Don’t let exclusion cost your business. Start creating an inclusive culture with our Online Inclusion Calendar to help you stay informed and engaged all year long.