Felicity Menzies
Dai Le
Diversity and Inclusion Training
Inclusive Leadership
Unconscious Bias & Mindful Inclusion
Eliminating Bias in Recruitment & Selection
Advancing Women in Leadership Program
Engaging Men in Gender Equality
Cultural Intelligence and Inclusion
Developing Asia Capability
Cultural Intelligence for Universities and Secondary Teaching
Innovating with Inclusion – Coming Soon
Bite-Sized Diversity & Inclusion Workshops
Group Mentoring for Emerging Female Leaders
Group Mentoring for Emerging Culturally Diverse Leaders
Intercultural Coaching
A World of Difference: Leading in Global Markets with Cultural Intelligence
D&I Best Practice White Papers and Tip Sheets
How We Develop Inclusive Leaders
Inclusion Infographic
Meaningful Metrics For Diversity and Inclusion
October 16, 2018 by Felicity Menzies
The management adage "What gets measured, gets done" is particularly relevant for diversity and inclusion. Because the biases that perpetuate workplace inequality are largely unconscious and automatic, shifting an organisation's talent management paradigm from 'cultural fit' to 'diversity and inclusion' takes more than well-intentioned policies and programs.
Without clear and robust measures to track diversity and inclusion efforts and outcomes, a tendency to revert to habitual and ingrained thinking and behavioural patterns limits the returns from an organisation's investment. Metrics help employers committed to diversity and inclusion stay on track by encouraging the identification and management of bias blindspots—mindsets and practices that promote homogeneity but which are largely hidden.
Diversity and inclusion metrics are used to identify risk areas, prioritise initiatives, set targets and other program goals, assign accountability, and measure the impact of initiatives. Metrics evidencing the financial return on investment in diversity and inclusion programs are used to engage stakeholders, strengthen leadership commitment, secure additional resources, and advocate for further change. Metrics evidencing equality and fairness foster employee trust, satisfaction, and commitment, and strengthen an organisation's employer brand as well as its reputation in the marketplace. Metrics also serve to neutralise the emotion associated with diversity and inclusion. Presenting hard-data financial evidence of costs and benefits fosters a more objective, rational, and productive consideration of diversity challenges and opportunities.
The selection of meaningful diversity and inclusion metrics is an art, rather than a science. Consideration must be given to your business strategy as well as the maturity of your diversity and inclusion program and the specific diversity and inclusion initiatives you are implementing. The overarching consideration when setting meaningful metrics is that they must map progress towards the achievement of your program goals. Because every organisation faces unique diversity and inclusion challenges in the context of its business strategy, no two employers will utilise the same metrics. Nevertheless, it can be helpful for employers who are starting on their diversity and inclusion journey, or for employers who are seeking to strengthen the impact of their programs, to be aware of common metrics used to track diversity and inclusion, and to understand how to set meaningful metrics.
Eight steps to setting meaningful diversity and inclusion metrics:
1. Define which diversity dimensions you will monitor
Organisations will typically measure diversity dimensions for which data is readily available, namely gender. However, diversity extends much further than gender, and an organisation should not limit its metrics to data captured by existing systems. Depending on business goals, leading organisations extend diversity measurement to race, ethnicity, nationality, educational attainment, tertiary institution, professional expertise, tenure, age, disability and health status, sexual orientation, family status, carer and parental status, employment status (full time, part-time, flexible working), immigration status, faith, veteran status, English proficiency, languages spoken, etc.
Examples of business-specific diversity dimensions include:
A government department seeking to deliver policy solutions to improve the lives of members of an ethnically and linguistically diverse community extends its diversity metrics to include individuals from culturally and linguistically diverse (CALD) backgrounds
A media distribution company with aggressive growth targets in Asia extends its diversity metrics to include individuals born or raised in Asia
A start-up seeking to improve retention through the implementation of a flexible work policy extends its diversity metrics to track employment status and tenure
A health insurer seeking to deliver better customer solutions extends its diversity metrics to include health and well-being status
A large financial institution seeking to rebuild trust through its corporate social responsibility efforts extends its diversity metrics to include immigration status
A mining company seeking to improve the retention of women through the implementation of a flexible work policy extends its diversity metrics to track employment and parental status
Diversity metrics must be relevant to the local context and business leaders. Organisations can waste valuable resources by targeting the wrong diversity problems and by implementing the wrong solutions. The unique legal, historical, political, and cultural environments of different nations and regions determine which diversity issues are relevant. Gender inequality is a global concern. However, gender diversity is at different stages of maturity in different parts of the world and across industries and metrics must reflect that. Religion and caste are the main issues in India. Religion and ethnicity are significant in the Middle East and Africa. In China, there is an urban versus rural division as well as a Western-educated dominance in leadership teams. Race is the predominant diversity issue in the United States and South Africa. Language is significant in Canada and Europe. Multiculturalism is a concern of countries with a large proportion of migrants, as in many Western European countries as well as Australia and New Zealand. With homosexuality illegal in some countries, tracking lesbian, gay, bisexual and transgender employees as well as creating inclusive environments for them, is challenging in various parts of the world.
Effective diversity management requires adaptation in metrics to reflect different contexts. At a minimum, adaptation should occur nationally, but regional changes should also be considered, where appropriate. Setting meaningful metrics necessitates a deep understanding of local challenges. This is achieved only through dialogue with local leaders and employees.
2. Review data policies
Defining diversity broadly will likely necessitate the establishment of new data analytics, and companies should consider the legal and ethical requirements regarding the storing of sensitive information. In certain jurisdictions, it is illegal to capture sensitive information without an individual's consent. Organisations manage this through surveys seeking voluntary disclosure of sensitive information. This does not, however, relieve the company of its ethical obligation to ensure that data is not used to discriminate against employees, clients, or suppliers. Companies must review their data policies to ensure information voluntarily disclosed is stored in a manner that obscures identifying information (not reporting on groups of smaller than five employees, ensuring IP addresses are not stored with data, etc.).
3. Select metrics for three different purposes
An organisation's diversity and inclusion metrics should serve three purposes: diagnose risk areas and opportunities, track the progress of initiatives, calculate return on investment.
(i) Metrics for diagnosis
Metrics that help organisations to identity bias blind spots include:
Description: Percentage of employees from monitored groups compared with company, labour market or industry benchmarks.
Strength: Useful for identifying groups that are underrepresented in the organisation usually as a result of conscious or unconscious prejudice, stereotypes, or discrimination across the employee life-cycle.
Weakness: Organisation-wide representation measures can obscure biases related to function, role or department. For example, an employer may achieve gender balance in representation overall, however, closer analysis reveals that men dominate higher-paid technical specialist, revenue-generation, and leadership roles, whereas women occupy lower-paid administrative, support, and individual contributor roles.
Improvement: True diversity is only achieved by segmenting the workforce to ensure it is representative at all levels and all functions. For example, measuring gender diversity for software engineering roles or leadership positions offers greater insight into risk areas and opportunities. Where possible, an analysis should also be performed at the level of intact teams because it is only when work teams are diverse, that an organisation is truly positioned to leverage diversity of thought and background. When rank is not indicative of management responsibility (for example, rank reflects technical expertise as well as management responsibility), organisations may measure the number of people reporting to members of monitored groups because it offers a more accurate measure of leadership representation than representation by rank.
Description: Comparing average tenure for employees from monitored groups to average tenure across the workforce or average tenure of members of the dominant group.
Strength: Useful for identifying groups that may be less satisfied with their workplace and less committed to the organisation as well as groups that are more likely to have their employment terminated.
Weakness: Although useful for highlighting which groups of employees leave the organisation sooner than others, measures of retention, per se, do not provide information regarding the reasons why some groups of people leave before others.
Improvements: Segmenting attrition data into voluntary and involuntary is useful for identifying whether monitored groups are more likely to self-select or be pushed out of an organisation. Reasons for voluntary attrition should be tapped and recorded through exit interviews and supplemented with information gathered from engagement surveys and focus groups. Involuntary attrition that is overrepresented in a monitored group is indicative of conscious or unconscious bias and should be investigated.
Description: Comparing the number of applicants for open positions from monitored groups against the potential pool of applicants from monitored groups or labour market representation.
Strength: Useful for identifying barriers to entry for different groups, pipeline issues, and narrow or biased recruitment efforts.
Weakness: Does not provide information on why some groups of individuals compared with others are more likely to apply for open positions.
Improvements: Reasons for weakness in applicant diversity should be gathered from employee focus groups, review of job advertisements (bias detection software may be useful), surveys that assess quality of employer brand, and analysis of recruitment strategies for bias (e.g. tap-on-the-shoulder, employee referral programs, graduate internships limited to only some universities).
Description: Tracking appointments of individuals from monitored groups compared with appointments of applicants who are not members of a monitored group.
Strength: Useful for identifying bias in assessment and selection.
Description: Tracking promotions awarded to individuals from monitored groups compared with promotions awarded to individuals who are not members of a monitored group.
Weakness: Does not indicate whether members of monitored groups are self-selecting out of promotion opportunities. For example, studies have shown that women are less likely than men to put their hand up for a promotion. Also, does not track whether members of monitored groups are being developed or promoted at the same rate as non-monitored individuals.
Improvements: Track promotion applications from members of monitored groups compared with promotion applications from individuals who are not members of a monitored group. Track the time it takes for members of monitored groups to progress compared with non-monitored individuals. A difference may be indicative of a performance vs. potential bias that favours members of the dominant group. Track and compare development opportunities offered to members of monitored groups and compare with development opportunities offered to individuals who are not members of a monitored group (refer below).
Description: Tracking lateral moves, appointments to acting roles, training and other learning and development participation, and other stretch assignment opportunities by identity group.
Strength: Useful for identifying bias in development.
Description: Compare financial and non-financial rewards earned by individuals from monitored groups to financial and non-financial rewards earned by individuals who are not members of a monitored group.
Strength: Useful for identifying bias in compensation and reward schemes.
Weakness: Like-for-like pay equality (equal pay for an equal role) obscures inequality in opportunity.
Improvements: Analyse pay and rewards across rank and function. For example, do men, on average, earn more at your organisation (or department or workgroup) than women earn, over average? If the answer is yes, there is a bias against women in your organisation, even if on a role-for-role basis, women earn the same as men.
Description: Compare employee engagement scores for individuals from monitored groups with scores reported by individuals who are not members of a monitored group.
Strength: Useful for identifying whether certain groups of employees are experiencing lower levels of satisfaction and engagement compared with others. A noticeable difference in engagement scores among different identity groups can be indicative of biased mindsets and practices that favour one group of employees over others.
Weakness: Existing engagement surveys may not include specific questions relating to diversity and inclusion. Also, existing surveys may not record diversity dimensions, and so comparisons across identity groups are not possible. Further, disengaged employees may not complete the survey, skewing the results.
Improvement: Solicit voluntarily disclose by respondents of identity, such as race, culture, sexual orientation, gender, age, parental status. Supplement existing survey items with questions that specifically tap diversity and inclusion concerns. These questions may be incorporated into existing engagement surveys or constitute a separate 'Inclusion Survey' or 'Inclusion Index'. For example;
"Employees are valued for their differences and their unique contributions."
"Employees can voice their opinions without fear of retribution or rejection."
"People are rewarded fairly according to their job performance and accomplishments."
"I have confidence in my company's grievance procedures."
Because of the risk of non-completion by employees who are not-engaged, findings must be supplemented with exit-interviews.
Employee focus groups
Description: Facilitated focus groups for the purpose of gathering information on the issues and challenges facing diverse talent.
Strength: Focus groups complement workforce analytics, providing additional information that cannot be acquired from quantitative analysis alone. For diversity dimensions that are not tracked by an organisation, because of historical or legal reasons, focus groups are a key tool for gathering information on the challenges facing members of those groups.
Weakness: Disenfranchised employees may not volunteer for focus groups. Concerns of confidentiality and low psychological safety may also limit attendance.
Improvements: To encourage participation, invitations should highlight that focus group discussion is confidential and that findings will be reported in thematic form with all identifying information removed. Because of the risk of non-completion by employees who are not-engaged, findings must be supplemented with exit-interviews.
Description: An interview held with an employee about to leave an organisation, typically to discuss the employee's reasons for leaving and their experience of working for the organisation.
Strength: Potentially candid source of information on the lived experiences of employees who are voluntarily leaving the organisation. The information may not have been disclosed before resignation due to a fear of recrimination or weak organisational justice.
Weakness: Reactive (the horse has already bolted!)
Improvements: Exit interviews are beneficial only if there is a system in place for reporting on and responding to findings.
Description: Compare the quality and strength of your employer brand among different identity groups.
Strength: Helpful for identifying recruitment barriers.
Grievances and lawsuits
Description: Track internal and external grievances, complaints, and law-suits by identity group.
Strength: Helpful for identifying which groups are more likely to be targets of prejudice, discrimination, and harassment.
Customer diversity, experience, and loyalty
Description: Compare customer diversity to internal, industry or market benchmarks. Track customer experience and loyalty by diversity dimension.
Strength: Helpful for identifying consumer segments are not being served by your business and groups that are experiencing sub-optimal, prejudiced or discriminatory service.
Description: Track the diversity of your suppliers by identity group. For example, women-owned, or Indigenous-owned businesses.
Strength: Helpful for ascertaining whether your commitment to diversity and inclusion extends outside your business to the marketplace.
(ii) Metrics for tracking progress
The metrics above help organisations to identify risk areas and prioritise initiatives. Once implemented, organisations must track the progress of their efforts. Regularly measuring progress enables an organisation to assess whether it is headed in the right direction towards the achievement of its goals. Measuring program success might include tracking improvements in the measures listed above, with the diagnosis measurement acting as a baseline. Other metrics used to track progress include membership of employee resources groups, participation rates in formal mentoring programs or sponsorship schemes, participation rates in diversity and inclusion training programs, diversity awards, positive press.
(iii) Metrics for measuring return on investment
If your organisation is endorsing diversity and inclusion for the purposes of improving its performance, whether financial or non-financial, it's important that you have metrics in place to track how successful your efforts are in achieving those goals. Return on investment metrics translate soft skills into hard returns that align with business goals and the concerns of leaders.
Your choice of ROI measure depends on the ultimate goal of your organisation's diversity and inclusion efforts. The focus here is on linking your diversity and inclusion to performance measures, which are often (but not always) quantified as the financial benefit to the bottom line. For example, if an organisation is seeking to leverage diversity for increased innovation, relevant return on investment metrics are the number of patents or examples of process or service innovation. Those metrics can be further strengthened by quantifying the dollar value of increased innovation, for example, how much revenue was generated by new products or services? For organisations seeking market growth from their diversity efforts, market share and revenue are relevant for measuring return on investment. Organisations that are focused on diversity and inclusion as a talent retention strategy should translate the results of their effort on retention into cost savings. When inclusion efforts are undertaken to improve engagement, it is useful to show how increases in engagement scores translate to increased productivity by measuring output per employee or profit per employee.
4. Establish baseline measures
It is impossible to track progress unless you have a baseline measure. If you have already started your program without taking a baseline measure, however, you can compare your metrics to results reported in other parts of the business or industry benchmarks. For example, let's say you have implemented blind recruitment in one department of your organisation. Ideally, you will have baseline measures to track the impact of that initiative. For example, comparing the number of applicants from monitored groups that make it to interview stage pre- and post-intervention. However, if you have not tracked those figures before the intervention, you can compare the number of applicants for monitored groups that make it through to interview stage in the department implementing blind recruitment withthe number of applicants for monitored groups that make it through to interview stage in departments who have not made any modifications to their recruitment practices.
4. Set targets
Goal setting theory (Locke and Latham) posits that motivation and task performance are positively correlated with setting specific and measurable goals. To elicit a behavioural change, people must have a clear idea of what is expected from them. Goals help individuals to focus their efforts in a particular direction. Well-defined and measurable goals are particularly important in diversity and inclusion because, as noted at the beginning of the article, without goals, our automatic and hidden tendencies that preference some over others would easily override our conscious intentions to be fair. That is not to suggest goal setting is easy, however. Setting diversity targets and goals is difficult and needs to be done with caution. Goals should be ambitious enough to encourage effort and commitment but realistic enough so as not to trigger negative emotions such as resistance or fear. When setting goals, consideration must be given to barriers that can be addressed in the short-term (objective interviewing to minimise affinity bias) and those that will take longer to dismantle (pipeline weakness for women in some professions).
5. Assign responsibility and establish accountability
Once targets or other goals are set, responsibility for their achievement should be assigned to individuals who are held accountable through scorecards and other performance management tools. Ultimate accountability for diversity and inclusion should be at the level of the CEO and the Board of Directors.
6. Track and analyse results
It is important to have a formal plan for measuring your progress—what metrics will be calculated, by whom, and how often? However, merely tracking and reporting diversity and inclusion metrics is not sufficient. The resulting data must also be analysed to assess what is working and what isn't with the findings used to determine what modifications or additions to the initial action plan are required. It is important to assign responsibility for reporting the findings are well as to define the process for responding to findings. For example, findings are analysed by Human Resources and reported to the Diversity Committee who are tasked with responding to the findings with an action and accountability plan.
7. Report results and outline new initiatives
Results of diversity efforts should be transparent internally. This fosters trust and encourages accountability. Sharing results externally can also be valuable for industry benchmarking and strengthening employer brand and an organisation's reputation in the marketplace. Of course, not all metrics need to be disclosed, and consideration needs to be given to the costs and benefits of disclosure of a particular metric. Organisations should remain alert to the possibility that not disclosing a metric may erode trust more than disclosing a potentially unfavourable metric. Employees sense when an organisation is hiding something. Not coming clean on a poor metric out of concern of employee backlash might do more harm than good. Organisations that have experienced a diversity failure or missed their diversity targets should respond honestly and sincerely, outlining a plan for rectification. Negative messages are best delivered by the CEO. While there is no hard and fast rule on the frequency of reporting diversity and inclusion metrics, ideally diversity reports should be published at least yearly.
8. Review metrics regularly
Employers should regularly review diversity and inclusion metrics, changing them as needed as the diversity and inclusion program matures and as business goals change.
Felicity Menzies is CEO and Principal Consultant at Include-Empower.Com, a diversity and inclusion consultancy with expertise in inclusive leadership, unconscious bias, cultural intelligence and inclusion, gender equity, empowering diverse talent. Felicity is an accredited facilitator with the Cultural Intelligence Centre and the author of A World of Difference. Felicity has over 15 years of experience working with and managing diverse workforces in blue chip companies and is a Fellow of Chartered Accountants of Australia and New Zealand. Felicity also holds a Bachelor of Commerce and a Bachelor of Arts in Psychology.
Governor Macquarie Tower
1 Farrer Place
t: 61 2 8001 6166
e: info@cultureplusconsulting.com
© 2018, Culture Plus Consulting Pty. Ltd. ACN 614 463 982