Diversity is now a business imperative, so much so that almost half of all companies on the S&P 500 index have a chief diversity officer (CDO) or an equivalent, according to a recent Russell Reynolds report. And this is for good reason—the benefits of diversity and inclusion (D&I) extend far beyond improving public perception and avoiding workplace discrimination risks, as evidenced by a Boston Consulting Group (BCG) study’s finding that companies that have more diverse management teams are more innovative and have 19% higher revenue as a result.
Although the majority of organizations state that D&I is a top value or priority, achieving meaningful results is not easy. In spite of incredible media attention, a Visier Insights report found the gender pay gap for workers under age 40 at U.S. companies actually increased in 2017 when compared with 2016. And in 2018, the number of black CEOs on the Fortune 500 reached a 16-year low.
Although many organizations have embraced the role of the CDO, most have a lot of work to do when it comes to collecting and analyzing the data needed to make meaningful changes. A PwC benchmarking survey revealed that “most organizations track employee demographics (e.g., gender), but less than half measure discrepancies in compensation, performance, or promotions based on these attributes.”
With data and analytics, D&I leaders are in a better position to create working environments where employees can reach their full potential and feel valued. In this article, we will look at the unique challenges D&I leaders face in measuring and analyzing diversity data and best practices for effectively incorporating data-driven decision-making into their organization’s diversity agenda.
The Unique Challenges D&I Leaders Face
A 2016 study by sociologists Frank Dobbin and Alexandra Kalev found the three most popular diversity programs—mandatory diversity training, job candidate testing, and grievance systems—actually make firms less diverse. Here are some of the hurdles getting in the way of success.
Disconnection from overall business priorities. Although diversity is a worthy goal in and of itself, to get proper funding to drive meaningful change, D&I leaders must be able to speak the language of business. This means they need to continually demonstrate how people issues relate to areas such as innovation, revenue, and enhanced customer service. Without this connection to the business, D&I leaders won’t gain the level of support needed to deliver on a vision.
Lack of data. Only 35% of CDOs are tracking diversity data, according to Russell Reynolds. When people make decisions based on a gut feeling or heuristics (quick-and-dirty rules of thumb), it is impossible to accurately determine the root causes of problems.
For example, issues like the gender pay gap and a lack of Black or African American people in science, technology, engineering, and math (STEM) roles are symptoms of nuanced problems with no quick fixes and require an evidence-based approach.
Employee backlash. The changes that D&I leaders are championing can be threatening to employees in an intensely personal way. The Dobbin/Kalev study found that mandatory diversity training put managers on the defensive by requiring their attendance. Grievance systems also reduce diversity because they often lead to retaliation.
When all of the above challenges are considered together, it becomes clear that CDOs are faced with a seemingly impossible scenario: Affect organizational change—without the full backing of the business—when people are on the defensive.
How to Avoid Common Data Pitfalls
Merely having data is not enough to deliver meaningful changes that create a more diverse and inclusive workplace. Here are the five common data mistakes CDOs must avoid.
- Bombarding people with numbers. Classic D&I interventions—like mandatory training—fail because they trigger a sense of threat against the self. When the self is threatened, the natural instinct is to protect and hold onto what is familiar. When diversity numbers are presented within the context of hope for the future rather than a criticism of current mind-sets, people are much less likely to be defensive.
- Measuring diversity as a blanket number. Comparing your organization with the industry by tracking Equal Employment Opportunity Commission (EEOC) and other data is a good place to start, but this doesn’t always reveal the root causes of issues hampering progress. A better analysis, for example, would look at how the proportion of females changes across leadership levels so you can zone in on the biggest problems, such as hiring or retention issues.
- Prioritizing reports over insights. Compliance reports filled with general quota numbers aren’t useful for decision-making. To start, these reports are generally only seen by the person generating them and the agency they’re being reported to. When data can be accessed in a way that facilitates exploration (without the need for a data science degree!), it can help organizations understand where to focus their talent efforts to achieve broader goals.
- Forgetting to look at posthire data. How new hires from specific groups fare in the long term reveals important insights about recruitment practices. When all prehire and posthire data systems are connected into one analytics platform, an organization can quickly—and regularly—analyze the performance of diverse employees and keep an eye on promotions they received (as well as when in their tenure they achieved these). These insights can help businesses identify high-quality employees who come from a variety of backgrounds.
- Not delving into the “why” of turnover problems. Retaining diverse talent is just as critical as hiring diverse talent. It’s important to not just measure turnover in certain groups but also uncover the why of the turnover problem. People from certain backgrounds may choose to leave the organization if they don’t feel welcome, but it also could just be a matter of job descriptions not meeting reality.
Therefore, it is important to not only measure new hire retention and long-term retention of diverse employees but also dive into the data to understand why these people are leaving.
Linking D&I Efforts to Business Priorities
D&I analytics are key to showing how initiatives will lead to better business outcomes and uniquely impact the organization. With a people strategy platform that focuses on D&I analysis, unifies data from multiple sources, and enables users—no matter their data-savviness—to always dig deeper into the data, D&I leaders can:
- Compare the organization with the most recent EEOC benchmarks for their industry and geography to show why investments are needed.
- Apply D&I metrics to the dynamic movement of employees (i.e., promotions, internal moves, and retention) so they can predict future trends and pinpoint where interventions are required.
- Clearly communicate organizational changes and diversity insights to the entire team through dynamic, visual storytelling.
- Demonstrate how D&I initiatives have an impact on business performance metrics.
- Understand engagement among diverse employees, and monitor the impact engagement has on turnover and exit patterns.
- Securely share insights with all stakeholders to reinforce progress toward goals and to improve accountability.
From beginning to end, a data-driven approach creates a more diverse and engaged workforce. Couple this with transparency and accountability at all levels—from individual employees right through to the CEO—and it is possible to create a foundation for positive change.
|Ian Cook heads the workforce domain for Visier, which develops cloud-based applications that enable HR professionals to answer workforce strategy questions. Cook has been involved in driving forward the datafication of HR and is a speaker and blogger on the subject.
Prior to Visier, Cook built Canada’s leading source of HR benchmark data. His expertise has also been developed through years of international experience solving strategic HR problems for brands in the Fortune 500 and FTSE 100.