Diversity Is a Business Imperative: The Pay of Diversity Officers Indicates Otherwise

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A Glassdoor report found that chief diversity officers’ pay is lower than the average pay of other executives in C-suite positions, as reported by CNBC.

The focus on diversity and inclusion has been amplified across the world with the Black Lives Matter movement. Even countries and companies that don’t have race issues of this magnitude have started internal checks to understand where they stand on core metrics. With this increased focus, the role of diversity leaders has become more complex.

They need to balance the strategic and tactical aspects of their jobs and must spend more time resolving people-related challenges that can lead to a drop in business growth. Diversity officers and leaders also need to be the conduit between leaders and employees. With such an important and sensitive role, it seems apparent that they should be compensated well and in line with other functional leaders at the same management level.

Chief diversity officers (CDOs) work on the entire HR roadmap and framework. This ranges from ensuring that managers and leaders don’t show bias in hiring to creating an inclusive talent management strategy by promoting based on skills and performance, irrespective of race, gender, age, and so on. 

Given the diversity issues that are arising, chief diversity officers appear to be in high demand. But a compilation of data from 12 Opens a new window salary reports by GlassdoorOpens a new window found that the average salary for chief diversity officers is $127,239, reports CNBC. This is less than even the average pay of other executives in C-suite positions.

The primary reason for being underpaid could be the perception of the diversity function as an overhead rather than a business imperative. The other factor is that CDOs’ success in these roles is unpredictable because it still highly depends on factors such as the CDO’s access to the boardroom and executives at the highest levels.

The CDO’s role is also affected by high turnover rates. Most people leave owing to a lack of resources, unrealistic expectations, and inadequate support from senior executives. All these reasons also link back to the view that many organizations and leaders have of diversity as a good-to-do measure instead of viewing it as a business driving function. 

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What Are Some Solutions That Can Lead to Equitable Pay for CDOs?

It might be time for the CDOs to work with their senior executives as well as the board, and use tools as well as technology that allows them to revalidate the business impact of D&I. With that change, there is likely to be a shift in the way organizations see the function as well as the head of the function.

Quantifying and measuring the incremental changes on critical aspects like retention and attrition rates of different employee groups and the effectiveness of a D&I training in terms of improved employee performance are some aspects that should be tracked and measured.

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1. Financial impact assessment

A study by The Sodexo CorporationOpens a new window shows how the organization exponentially increased its return on investment through D&I initiatives. For example, for every $1 it has invested in mentoring, it has seen a return of $19. Mapping online tools that are used to track investments made in training and development initiatives to those that track sales or revenue growth will allow for a comparison of this nature. Similarly, assessing the improvement in retention or even employee engagement by using online tools can give a better insight into the actual impact in numbers.

2. Tools to identify gaps in inclusion

Tools such Exude Inc.Opens a new window ‘s diversity assessment tool allow organizations to evaluate different scenarios for gaps in inclusion. The purpose is to give organizations insight into how their current situation of inclusion Opens a new window will need to be rectified to achieve higher business growth. There are also tools such as WorkhumanOpens a new window , which monitors diversity and inclusion at the current levels and generates personalized recommendations based on this data to avoid unconscious bias during performance management.

As top leaders and board members realize the business impact of D&I, they are also likely to recognize the complexity of CDO roles and work to make changes toward equitable pay.