Measuring the Dividends of Diversity

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By Cathy Gallagher-Louisy

Imagine a company launching a new product or service without the ability to measure sales and profitability.

Imagine a public sector or non-profit organization launching a new public service without the ability to track how much it costs or how many people it will serve.

Unthinkable, right?

Yet, surprisingly, most organizations do not apply the same rigour to measuring the impact of diversity and inclusion (D&I) initiatives.

Many organizations today understand the business case for D&I. Our workforces, customers and the public are all becoming increasingly diverse. Organizations that are not addressing these changing demographics stand to experience negative impacts, including:

  • loss of market share amongst different communities;
  • decreased ability to serve the diverse population;
  • loss of access to talent;
  • lower employee engagement and higher turnover rates among underrepresented groups of employees; and
  • a many other potential impacts.

Employers already understand these issues exist and there is growing pressure to address them. Yet, how can organizations ensure they are going beyond understanding the rationale for diversity to actually improving inclusion within their workplaces? Are your diversity efforts making your organization more inclusive?

These questions confound most HR and diversity and inclusion practitioners and very few have the answers. With this in mind, the Canadian Institute of Diversity and Inclusion (CIDI) committed to the research required.

The CIDI is a national non-profit organization, that is quickly becoming a trusted advisor for all issues related to diversity, inclusion, equity and human rights management within Canada’s workplaces.  Our goal is to help employers, business leaders, HR and D&I practitioners effectively address the full picture of diversity within the workplace by providing innovative and proven strategies, research, measurement tools, and educational supports with the goal to help improve the overall inclusivity of the Canadian workforce.

New Research on Canadian Organizations

The new research report, What Gets Measured Gets Done: Measuring the Return on Investment of Diversity and Inclusion, examines diversity measurement practices in Canadian organizations. Our research was comprised of a comprehensive literature and website review, an online survey with responses from 56 Canadian employers, and 19 in-depth research interviews with D&I leaders across the country.

While many are committed to D&I, our research found few organizations conduct even the most basic of measurements.

Diversity & Inclusion is a Strategic Priority in Our Organization (Really?)

Nearly four-fifths (79.6 per cent) of Canadian employers who responded to our survey indicated D&I, equity and human rights are considered a strategic priority within their organizations. However, less than one-fifth (18.8 per cent) reported that they measure the impact, efficacy, or return on investment (ROI) of their diversity initiatives.

This is puzzling. How many other strategic initiatives does your organization NOT measure?

Many organizations invest significant resources in D&I initiatives. Why would so many organizations NOT measure something they consider to be a strategic priority? How can they know whether their efforts are effective and having the intended impact?

Fewer Than Half Collect Basic Demographic Data

Just over half of the survey respondents (52.9 per cent) had conducted an employee census or asked employees to self-identify based on demographic categories. That means nearly half of employers do not track the most basic demographic information about their employees.

Why does this matter? If you don’t understand who is in your organization, how can you develop strategies that respond to their needs?

Gathering employee demographic data is widely considered to be a basic practice and a first step for organizations dedicated to focusing on diversity and improving inclusion.
Measuring demographics in your organization is essential to identifying gaps in representation, and determining inclusion issues and barriers to advancement. Access to this data allows you to set goals, establish appropriate programs and initiatives, and measure results. This ensures that you are building a representative pipeline of the leaders of tomorrow.

Organizations that have done this effectively have yielded great results. They have the ability to compare their workforce to Canadian census data and determine if certain groups are missing from their staff. They can track representation, hiring, promotion and turnover rates to determine if certain groups are experiencing fewer promotions or greater turnover.

Moreover, they can examine employee survey results by demographic break out to determine how different groups are experiencing the workplace.

Collecting demographic data is essential and key to understanding your employees, allowing HR programs and business strategies to respond to the needs of your organization’s unique workforce.

Measurement Provides Greater Visibility with Leadership

Today’s organizational leaders use a balanced scorecard, dashboard or a suite of standard metrics to track the performance of strategic goals and priorities. However, our study found that less than 13 per cent of Canadian organizations have a Diversity Scorecard.

Interestingly, of those that had a Diversity Scorecard, 100 per cent said it has raised the profile of their diversity initiatives among their leadership; similarly, 100 per cent said that it has become part of their organization’s strategic reporting. That’s a fairly compelling argument for having such a scorecard.

It is becoming increasingly difficult for many organizations to justify ongoing expenditures or use of resources. Developing robust metrics to prove the value of D&I initiatives is a cornerstone to their ongoing success.

Standard Measures of Inclusion

Standard metrics among organizations measuring the impact of D&I include:

  • Representation of diverse/under-represented groups by job level;
  • Recruitment, promotion, and turnover statistics by demographic group;
  • Employee engagement scores by demographic group;
  • Diversity-related or inclusiveness questions on employee surveys;
  • Human rights, harassment, or discrimination complaints;
  • Participation in training on diversity, inclusiveness, equity and/or human rights; and
  • Participation in employee resource groups / networking groups.

Going Beyond Standard Metrics

In addition to the standard measures, leading organizations are monitoring inclusion by correlating many data points (e.g., employee survey data, performance management data, mean performance rating by demographic group and employees on flexible work arrangements).

More advanced organizations measure diversity-related metrics in their external and internal pipelines. For example, they track the number of people hired from diversity recruiting efforts, and/or examine the demographics of their succession planning programs to ensure that the next level of promotions better represent the available labour pool.

Very few organizations go a step further to measure leading indicators (as opposed to lagging indicators). Lagging indicators are measurements of what has already happened in an organization, such as turnover, complaints or litigation. Conversely, leading indicators predict what will happen with an employee’s experience and are more important than lagging indicators when measuring D&I work.

Additionally, very few organizations measure D&I impact throughout an employee’s lifecycle. One major public sector organization was one of the few Canadian organizations we examined with extensive metrics at all levels of the organization, and for a range of employee experiences.

CIDC found it was rare for organizations to conduct ROI analyses of their D&I efforts. Only three of the organizations examined had undertaken an ROI analysis of specific programs. However, in The Diversity Scorecard, Dr. E.E. Hubbard suggests that the ROI on D&I initiatives outweighs the ROI on almost any other business initiative. Clearly more organizations could benefit from such analyses.

What Makes a Diversity Scorecard or Measurement Framework Successful?

CIDC’s research indicated that a diversity scorecard is most successful when:

  • The top leader is accountable for the results and holds their leadership teams accountable;
  • The leadership teams regularly read and understand the scorecard;
  • Leadership and managers understand how they can personally impact the results;
  • Leaders are involved in developing the scorecard;
  • The results are relevant to the organization’s strategic goals;
  • The organization is ready for the measures;
  • A wide range of historical data is available on all aspects of the employee experience throughout all levels of the organization;
  • It is brief and easy to read;
  • It is communicated effectively and consistently; and
  • Measures demonstrate efficacy and impact, not just list activities undertaken.

Holding Leaders and Managers Accountable

A few progressive organizations have tied diversity results to their leaders’ annual performance objectives. In some organizations, diversity-related metrics are incorporated into the competencies of partners, senior leaders, or all people managers.

However, the best practice discovered was at a large national employer where everyone in the company has D&I competencies included in their annual performance review. Diversity and integrity were tied to the company’s core values, so the weighting of D&I measures on performance reviews was higher for those at the director level and above.

Key Findings from the Research

Hard metrics are vitally important, but we need both qualitative and quantitative measures to tell the full story of where an organization is on its diversity journey. Measurements must always relate back to the strategies and key objectives of the organization.

It’s not enough for the HR or D&I team to develop a scorecard on their own. Diversity scorecards are most successful when they are developed with and owned by the senior leaders, where there are regular reviews and consistent effective communication of the results—and leaders understand how they can personally affect the results.

Most importantly, if measurement strategies are to be truly useful, they need to go beyond simply providing a list of activities and programs undertaken; they must demonstrate the efficacy of D&I initiatives and show how these impact the organization’s strategic goals.

But We Can’t Afford to Measure

You may feel like your organization doesn’t have enough resources to implement a Diversity Scorecard or a robust measurement strategy. On the contrary: you can’t afford NOT to measure.

As within most organizations these days, chances are you are struggling with tightening budgets. What gets cut? Anything that cannot show value. Measurement is key to showing you are actually making progress toward your goal of creating a more inclusive organization, and that your D&I initiatives are valuable to the organization’s strategic goals.

Dig Deeper With Diversity

To read the full report along with the detailed toolkit to help you implement or improve diversity measures, download the report here.  Visit www.cidi-icdi.ca to learn more about our latest cutting-edge research on Canadian organizations and the many ways we can help you achieve your organizational inclusivity goals.

Tools and Techniques for Implementing Diversity and Inclusion Measurements
Tools and Techniques for Improving Diversity and Inclusion Measurements

Cathy Gallagher-Louisy is director, community partnerships and knowledge services with the Canadian Institute of Diversity and Inclusion. The CIDI helps employers, business leaders, and HR and D&I practitioners effectively address the full picture of diversity within the workplace by providing innovative and proven strategies, research, measurement tools, and educational supports with the goal to help improve the overall inclusivity of the Canadian workforce.

(PeopleTalk: Fall 2013)

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