Reliable metrics helps to improve diversity and inclusion—critical for business success

The normative acceptance of a diverse and inclusive workforce and its correlation with business revenue, innovation and competitiveness is based on multiple pieces of research. Are we making discernible progress on this front? The unfortunate answer is no, as research shows that women are under-represented at every level of the corporate pipeline.

Some societies, including ours, endure biases that propagate workplace inequality, most of which are unconsciously embedded in our mindsets. It will take more than just policies and new practices to do away with that.

The paradigm shift from a conservative workplace culture to a diverse and inclusive culture has not reach its zenith yet. However, metrics points out that the economic returns on investment in diversity and inclusion programs include engaged stakeholders, reinforced leadership devotion, attainment of additional funds, and preparation for further change. According to the IMF, adding one more woman to a company’s board or senior management team, while keeping the overall size of the board unchanged, correlates with an increase in return on assets of 8 to 13 basis points. Similarly, according to BCG’s research, companies with above-average diversity on their leadership teams generate increased revenue from new products—19 percentage points more than companies with more homogenous leadership teams and 9 percentage points more in terms of EBIT.

Diversity and inclusion metrics to watch out for in 2023

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  Recruitment and retention

Forward thinking organizations institute guidelines in advance practices to promote diversity and inclusivity of new recruits. The number of CEOs focussed on talent diversity and inclusivity has increased by 21 percent since 2015. However, the problem is not entirely solved by recruiting women workers from varied ethnic backgrounds as measures to ensure their retention must be put in place. In today’s highly aggressive talent market, monitoring diversity and inclusivity metrics is essential to attract talent. Recent research by PWC found that 61 percent of women look at the gender diversity of an employer’s leadership team when deciding where to work. The takeaway is the most talented individuals go to places that do better with diversity, and this may be what is driving diverse firms to outperform their peers.

Research shows that retaining female employees has been a challenge owing to reasons such as pay-gaps, lack of opportunities for higher roles, fewer openings at the top-level and inability to provide a profound work-life balance. Only 14 percent of female Indian employees feel that they are treated equally to their male counterparts. Apparently, the work-environment falls short of being conducive to women employees. In early 2019, the #MeToo phenomena uncovered harsh truths about the treatment of women at workplaces.

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  Employee engagement

Comparing employee engagement metrics with those of diversity provides interesting insights on the culture of an organization and how conducive it is to the thriving of women and minority groups(specially-abled, mentally-ill, employees from tier-III cities, and backward classes).

Marrying employee engagement with the promotion of inclusion is useful for identifying whether certain groups of employees are experiencing lower levels of satisfaction and engagement compared with others. A conspicuous disparity in engagement scores among different character groups is indicative of unsuccessful practices and biased mindsets that favour one group over others.

For deriving engagement scores of different employees to obtain actionable metrics, it is essential that engagement surveys are evolved and comprise dynamic questioning. 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 personality groups are not possible. Further, disengaged employees may not complete the survey, skewing the results.

Metrics that prove egalitarianism and fairness promote employee trust, happiness, commitment, and strengthen an organization’s employer brand as well as its reputation within the industry. Moreover, metrics also help to equalize the emotion associated with diversity and inclusion in an organization. Presenting data-driven financial evidence of investments and benefits fosters a more empirical, realistic, and beneficial consideration of diversity issues and opportunities.

Gallup has also found that employee engagement and inclusiveness are connected. It found that businesses with above-average employee engagement and gender diversity saw 46% more revenue and 58% more net profits than their peers with a below-average score.

Fast-paced enterprises invest in valuable resources to understand which strategies best support their business-growth. Such strategies generally include attracting and retaining diverse talent and strengthening decision-making capabilities. Prominent companies also identify the mix of inherent traits (ethnic background and sex) and acquired traits (education, learning and experience) that are the most relevant to and beneficial for their organization using advanced business and people analytics.

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  Tracking progress

The metrics used to analyse the progress of diversity and an inclusive work culture help companies retrospect, identify risk areas, and design a road map for the future. Adopting robust diversity practices is just a small step in the process of transforming into an evolved organization; it is equally important to self-monitor one’s progress and endeavours. For this, management must create a baseline before they track improvements. Each organization can develop its own metrics to gauge the success of its diversity and inclusion agenda such as the personality-mix at the top, women representation in different departments , training programs, cross-functional opportunities, global prospects and so on and so forth.

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  Bright Future

The McKinsey study also found that 87 percent of companies are committed to gender diversity, a major increase from past years. Employee commitment to achieving gender diversity, especially among men, has also grown stronger in recent years. The latest Fortune 500 list, published in July 2019, shows signs of optimism as 33 of the companies on the ranking of highest-grossing firms are led by female CEOs, the highest number ever. Although it represents a small share of the group as a whole, just 6.6 percent, it is a jump from the previous year’s 4.8 percent.

In conclusion, we can say that diversity and inclusion cannot be a tick-box or a one-time activity. It requires continuous strategy, implementation and measurement. Empathetic leadership with a forward-thinking mindset is critical for this transformation.