Companies are moving ahead with diversity plans to make themselves more inclusive. Some have clear strategies while others are more reactive in terms of how they want to grow this. In either case, the need of the hour is to understand how such steps or measures can be assessed to know if the direction is right or course correction is needed.
Fifty-six global organizations across industries have joined the Gender and Diversity KPI Alliance (GDKA)Opens a new window . The alliance is created to support the adoption of Key Performance Indicators (KPIs) to measure gender and diversity among its members. GDKA is essentially a group of corporations; diversity, equity, and inclusion (DEI) advocates; academics; and trade organizations. Â The KPIs that are being used for the purpose were derived and developed from the work of the World Economic Forum International Business Council, the Global Reporting Initiative, and other advocates.
While the intent to create an inclusive workplace is important, a sounding board that can allow companies to regularly measure their performance is also critical. Effectiveness of each diversity indicator is a way or tool to check on the Return on Investment. The consideration of diversity as a business imperative implies the necessity of calculating its ROI as well.
Importance of Diversity Metrics
As per the agreement with GDKA, the signatory companies commit to using or working on how to implement three key performance indicators which can allow them to evaluate diversity in their organizations. These are:
- 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)
If companies set goals and do not define the next steps, there is no way to know, firstly the baseline from where they need to start, and secondly, whether their direction or even plan for inclusion is correct or not. Without measurement companies might not be able to optimize their financial and non-financial investments.
HR Technology News: Focus on One Diversity Dimension Over True Inclusion: Workforce Logiq’s New Diversity Benchmark Report Shares
Auditing the Inclusion
Inclusion audits are an important part of assessing and even creating new metrics for diversity. They are essential in guiding organizations towards their next steps.
Board Representation Audits
These are done usually as market benchmark studies where companies can compare against their peer groups. It has also become a part of their corporate governance strategy to create well-represented boards. This is easier to measure since it is a simple calculation of number of women as compared to total board members. But addressing this gap is more challenging. Moreover, it also needs further assessment from a race perspective.
Gender Inclusion Audits
This is what most organizations conduct, either in-house or with the help of a consultant. This is primarily an in-depth assessment of gender-wise breakup of the workforce across levels, locations, functions, departments and so on. Some organizations conduct this even for their vendors and external partners or stakeholders, to ensure overall assessment. To gather qualitative data that can supplement findings or even give insights into the reasons for disparity, companies carry out parallel engagement surveys too and slice the data by gender or race or even age, to check for trends.
Equal Pay Audits
Pay is an area of contention for most employee groups. Traditionally many organizations are known to have paid less to women or people of color less than men or white individuals, for the same job. Conducting a pay gap analysis is important. This can be done internally as well as like a market benchmark exercise to know if the company has pay differentials by gender, race or age. More importantly, the leadership team has to be involved since the exercise to equalize pay and close the gaps might entail financial expenditure. Companies such as PaydataOpens a new window offer solutions to measure pay gaps and address the concerns around it.
HR Technology News: The Internet Industry Gets Its Own Diversity Job Portal: Aliro Partners With Internet Association
The companies are clearly acknowledging that this is a business need. The fact that they are ready to be assessed on their performance in diversity, is proof of that. Perhaps this could indicate a new perception of diversity.