Driving a KPI-led diversity agenda

The mojo for achieving diversity is no different from the steps necessary to achieve other business goals, according to research conducted by Stanford and Harvard professor, David Pedulla.

In the wake of major social and political changes over the past decades, leading companies are taking steps to increase diversity, equity, and inclusion. There are several studies that suggest that diverse companies outperform others with more homogenous demographics, have lower volatility, a better return on equity, and have higher degrees of creativity and cognitive conflict during the decision-making process. 

While organizations around the world understand the need for diversity and are putting efforts to create a more diverse and inclusive work (workplaces), the progress doesn’t seem to be much. Programs designed to increase diversity and inclusion in the workplace often fail. 

Why are we not making progress?

Despite the heightened commitment, the reason for the dissonance between the efforts and outcomes is the ignorance of organizations to put metrics to Diversity & Inclusion. 

According to a very popular research conducted by a Stanford and Harvard professor, David Pedulla, “What Works,” argues that the mojo for achieving diversity is no different from the steps necessary to achieve other business goals. In order to change behavior, firms must develop appropriate goals and metrics, share them with stakeholders, and embrace accountability for outcomes.

Lorraine Hariton, President & CEO, Catalyst shares, “Measurement is a critical component of creating an environment of diversity, equity, and inclusion in workplaces that allow all employees to thrive. You cannot improve what you cannot measure.”

In fact, recently in September 2020, 56 organizations, including Accenture, Bank of America, Chevron, Deloitte, EY, Google, KPMG LLP, Pfizer, Procter & Gamble, PwC, Uber, and Visa, have joined the Gender and Diversity KPI Alliance (GDKA) to support the adoption and use of a set of key performance indicators (KPIs) to measure gender and diversity in their companies and organizations.

Why do we need to track data and metrics?

Tracking data and metrics can help organizations to not only track the impact of their D&I programs but also help the relevant stakeholders to stay accountable and create a transparent work culture. Further, it also helps:

• Assess where diversity problems are—recruitment, hiring, promotion, pay, and/or retention.
• Develop diversity goals and make timelines for reaching them.
• Keeping track of discrimination complaints and outcomes helps firms to develop routines and practices to restore dignity, demonstrate the commitment to equal opportunities, and save on the cost and trauma of legal solutions.
• Allow stakeholders to hold top management accountable for outcomes

What organizations should measure to move the needle?

The above GDKA signatory companies commit to using or working to implement three key performance indicators to evaluate diversity in their organization:

• Percentage of representation on an organization’s board.
• Percentage of representation by employee category.
• Pay equality: the ratio of compensation by employee category (e.g., equal pay for equal work).
• The KPIs focus on the pipeline of women and underrepresented groups moving through the organization, better enabling organizations to track their progress.

However, if one consults BCG’s five key gender diversity metrics– recruitment, pay, representation, retention & advancement, we can frame our KPIs and metrics as follow:

* In this metrics table, we have used females as one of the dimensions of diversity. One can apply these metrics to track the progress of other dimensions of diversity– age, race, ethnicity, gender, physical ability, and sexual orientation.

Who should be monitoring the progress? 

Organizations need to empower a diversity leader or assemble a D&I team that will track diversity numbers, identify gender and racial disparities, and devise hiring and promotion plans for addressing them.

Once it is someone’s full-time job to monitor diversity and inclusion in the company, that person will help the company make progress toward its diversity goals. If no one is accountable, change is unlikely.

Involving managers at all levels to take ownership of diversity goals is an even more prudent accountability strategy, and it is much more effective than threatening them with legal action or treating diversity goals as distractions from core business goals. 

By collecting and analyzing data on diversity over time, comparing those numbers to the numbers at other organizations, and sharing them with key stakeholders, companies can increase accountability and transparency around diversity issues. These goals can further be made accessible to key internal and external stakeholders to promote accountability. However, your KPI-led diversity agenda can only work if the data are appropriately analyzed, progress and roadblocks are continually identified, and key stakeholders are able to inspect, measure and explore a way forward.