The case for diversity and inclusion in the workplace is compelling – not just because it is the right thing to do, but because numerous studies suggest it can drive better business performance too. McKinsey reinforces this in their 2018 study “Delivering through Diversity”. They document the business case for diversity highlighting the link between diversity and company financial performance, suggesting how organisations can craft better inclusion strategies for a competitive edge.

With advances in technology and the growth of people analytics, HR increasingly has the tools it needs to promote and embed diversity and inclusion initiatives, and perhaps most critically prove that it can be a significant driver of business performance.

Some of the most interesting and insightful research in the D&I space has been undertaken by renowned industry analyst Stacia Garr and her team at RedThread Research. I caught up with Stacia recently to learn more about the research they’ve been conducting.

1. Despite research from the likes of McKinsey establishing a link with financial performance, much of the progress on diversity and inclusion initiatives has been painfully slow. What are the main reasons for this lack of success?

In the past, many of the solutions for diversity, inclusion, and equity were focused solely on the individual. Things like unconscious bias and other diversity training efforts, mentoring, and sponsorship were all focused on the behaviour or understanding of one person. It ended up being something of a game of whack-a-mole — all built on a presumption that bias comes only from people.

I think now we’re beginning to understand that bias may begin with individuals, but quickly becomes systemic — codified into our processes and cultures. And once bias is part of how we work, it is very difficult to change through one-off efforts like training. In fact, training individuals who then return to an institutionalised system of inequity sends all sorts of mixed signals — and can actually undermine even the good faith efforts companies try to make.

Another ingredient that was missing in the past was a lack of energy at the top. Leaders, being largely from populations that don’t suffer from marginalisation themselves, didn’t see, or understand or prioritise D&I, which left organisations struggling to bring the diversity of the world into the workplace, and only perpetuated the lack of diversity at leadership levels. Leaders are gradually understanding the business imperative for a diverse organisation at all levels, and are beginning to realise that building an inclusive culture means also addressing bias as a systemic problem, rather than relying on individual interventions alone.

2. Many companies are turning to technology in a search for a solution, hence the topic of your research. What were the key objectives of the research and how did you define ‘D&I Technology’?

Our definition of D&I Technology in this report is “Enterprise software that provides insights or alters processes or practices, at the individual or organisational level, in support of organisations’ efforts to become more diverse and inclusive.”

Organisations are out there looking for solutions to move them towards greater diversity. They are also beginning to allocate more significant resources to the problem, which has opened up opportunity for technology to step in. D&I technology is a market gaining traction and poised for rapid acceleration, with the capabilities to offer breakthrough insights that can drive new behaviour and actions to further accelerate progress.

The key objectives we had for this report were largely exploratory. We wanted to start a conversation that could help drive further study of this new space. We organised that exploration around four driving questions:

What are the most important things to know about D&I technology?
What is the current state of the D&I technology market?
What specific talent areas do these D&I technologies cover?
How might the D&I technology market change in the next 18 months?

3. What were the key findings of the study?

We came away with five major observations:

The D&I technology market is fragmented, growing, and large. Of the 105 vendors we identified for this research the majority are small, growing quickly, and less than four years old. We estimate the overall market size to already be approximately $100 million.
We found four main categories of solutions: talent acquisition, development/advancement, engagement/retention and analytics. Of the four, the largest segment of D&I technology providers is focused on talent acquisition technologies (43%), where the smallest percentage is working on engagement/retention (12%).
Half of talent acquisition D&I tech vendors in our survey report are working with VC funding. The other three categories (development/advancement, engagement/retention and analytics) have very different models, with nearly 80% being owner-bootstrapped, private-equity-backed, self-funded, or other.
D&I technology vendors we surveyed in all four of the talent management areas are growing rapidly. Nearly 40% within each category are experiencing more than 100% YOY revenue growth.
D&I tech vendors we surveyed are showing real market traction: nearly 60% have more than $100,000 in revenue, and more than a third have more than 100 customers.

4. What are the areas of talent management that D&I technology is supporting?

We categorised the D&I technologies into four specific talent areas with associated sub-categories:

Talent Acquisition: Includes candidate sourcing and candidate selection
Development/Advancement: Includes learning and development, mentorship and career management, performance management, high-potential selection, and leadership development
Engagement/Retention: Includes employee experience, employee communications, and employee voice
Analytics: Includes D&I analysis (e.g., D&I dashboards and pay equity), D&I business case analysis (e.g., data that shows the return on diversity and inclusion investments), and employee resource group (ERG) management and analysis

5. What are some of the benefits companies can expect from investing in these technologies?

Here's a breakdown of some of the broad benefits associated with investing in D&I technology:

Implementing more consistent, less-biased, and scalable people decision-making process.
Increasing the understanding of the current state of diversity & inclusion across the entire organisation, using both traditional and new metrics.
Measuring and monitoring the impact of efforts designed to improve D&I outcomes
Raising awareness of bias occurring in real-time at the individual level and enabling a range of people to act on it.
Enabling action at individual levels by making new, appropriate information available to employees at different levels of the organisation.
Signalling broadly the importance of a diverse and inclusive culture to the organisation.

It’s important to understand that this is an incredibly heterogenous group of companies with a broad swathe of creative approaches to all the different aspects of D&I. If we are to generalise and break benefits down by the four categories, here are some of the more specific benefits the vendors are promising:

Talent Acquisition: Accessing diverse pools of candidates, searching for diverse talent, changing job descriptions and matching candidates to job descriptions to reduce bias. Developing blind resumes, profiles and assessments for less biased hiring and reducing biases during selection and background checking processes.
Development/Advancement: Delivering training, providing communications channels and post-event support for training, offering virtual reality training, and diverse networking opportunities conferences and events, behaviour assessments and debriefing for employees and leaders, help connecting talent with mentors and personalised career pathing. Finding, flagging and offering structure to eliminate bias in performance feedback and scores and recognition practices, as well as 9-box analysis and HIPO identification and representation.
Engagement/Retention: Planning for and understanding diverse groups work experiences, employee surveys to understand employee inclusion. Analysing Slack and written communications for bias and inclusion. Enabling anonymous reporting, aiding innovation and feedback loops while minimising bias.
Analytics: Conducting representation, KPIs, and pay equity analyses. Assessing network inclusion and analysing talent acquisition processes, creating D&I dashboards, measuring ERGs, and quantifying the impact of D&I on business.

6. Can you provide 2-3 examples of how companies have used these technologies and the business and people outcomes that have resulted?

Here are some examples that we included in our report:

ZILLOW AND TEXTIO

Textio is a technology that helps companies write more diverse sourcing email and job posts, highlighting and flagging potential phrasing that could be exclusionary or biased.

Zillow Group uses Textio’s augmented writing platform to engage with passive candidates and expand their talent pool in an inclusive manner. Zillow Group’s VP of Recruiting notes, “With passive candidates you only have one opportunity and need to be very intentional with your approach. You get one email to engage their interest. And with that message, you’ve got to be able to differentiate your company and culture from hundreds of others reaching out. That’s where Textio Hire comes in. It gives my team inclusive language that is statistically proven to attract great candidates and improve our response rates.” Using gender neutral language in recruitment materials saved Zillow Group 2.5 weeks per hire. After deploying Textio, Zillow Group also saw a 12% increase in the number of applicants that identified as women.

BANKWEST AND BEINGVR

Among the D&I technology vendors in the L&D space is BeingVR, which uses digital storytelling to immerse people in realistic scenarios and help them transform workplace behaviour. During the virtual reality (VR) training experience, the user is directed to recognise (by tapping the action button on the headset) when they witness bias while watching a virtual team meeting unfold. The user then learns to call-out offensive comments when encountered in the real world.

Bankwest, an Australian full-service bank and one of BeingVR’s clients, recently used a VR experience for its leaders. Bankwest was searching for a training method to communicate and “see in action” the concept of inclusive leadership. BeingVR customised a three-part VR experience series, in collaboration with Bankwest, on inclusive leadership in order to develop leaders to recognise and leverage diversity for high performance. Using a GearVR Samsung app during the VR training experience allowed leaders to share the same virtual interactions with colleagues (actors) and learn from each other’s experiences and perspectives in peer discussions back in the real world. As a result, 100% of participants agreed that learning in a VR environment was engaging and a memorable experience because it allowed them to encounter the types of situations and scenarios they face in the real world every day.

Fig 3. BeingVR digital storytelling - immerse virtual reality (Source: Stacia Garr, RedThread Research and Mercer) — ***Fig 3.*** *BeingVR digital storytelling - immerse virtual reality (Source: Stacia Garr, RedThread Research and Mercer)*

Fig 4. Balloonr technology (Source: Stacia Garr, RedThread Research and Mercer) — ***Fig 4.*** *Balloonr technology (Source: Stacia Garr, RedThread Research and Mercer)*

DARTMOUTH COLLEGE AND BALLOONR

Balloonr is a technology that gathers feedback and ideas from all employees without allowing bias to influence feedback.

Dartmouth College, a liberal arts post-secondary academic institution and member of the Ivy League, has seen positive results when using D&I technology to gather ideas and perspectives in an unbiased manner. Each year, Dartmouth holds a thorough recruitment and evaluation process to select ten first-year students to become members of the Hill Winds Society – a group of about 40 students who serve as ambassadors to the alumni body and help connect the Dartmouth community.

Two years ago, the Hill Winds Society decided to complement its selection process with Balloonr to gather feedback and reduce bias in their candidate deliberation. “The process for reviewing applications and nominations had become a social competition – ‘who knows who.’ It needed to be more objective based on [our desired] membership characteristics. With a recruitment process based heavily on social connections, the Hill Winds Society needed a way to reduce human bias.” – said the assistant director of class activities and alumni relations at Dartmouth College.

Adding Balloonr to the selection process allowed the Hill Winds Society to collect unfiltered anonymous feedback from evaluators. Members gained confidence to share their thoughts and provide ideas that may have never been voiced in discussions. By using Balloonr to facilitate discussion and evaluate ideas and candidates, the Hill Winds Society observed that unbiased data effectively complemented their deliberations and allowed them to maintain a live record of relevant discussion points. The society was also able to reduce meeting time by 70%, which enabled them to accomplish more in a shorter period of time.

7. What are some of the risks associated with these technologies, and what are the ways companies can mitigate against these?

Some of the risks we have identified that are associated with the adoption and implementation of these technologies include:

Implementing technology that itself may have bias due to the data sets on which the algorithms are trained or the lack of diversity of technologists creating it.
Creating legal risk if problems are identified and the organisation fails to act.
Enabling the perception that the technology will solve bias problems, not that people are responsible for solving them.
Reducing people’s sense of empowerment to make critical people decisions
Implementing technology or processes that are disconnected from other people processes or technology.
Enabling employee perceptions of big-brother monitoring, an over focus on “political correctness,” or “reverse-discrimination.”

8. What is the role people analytics teams are (or should be) playing in the selection and implementation of these tools, and how do they quantify their impact?

By and large, beyond basic reporting (on representation, talent pipelines, etc.), we did not find a lot of instances where people analytics teams are deeply involved in D&I and the technology used. However, moving forward, I anticipate that they will be much more involved for a couple of reasons. First, CEOs’ focus on this topic is making it a mandate that people at all levels throughout the organisation be more involved in making their firms more diverse and inclusive. Second, people analytics teams are uniquely positioned to provide critical insight on how to make organisations more inclusive, given the vast data sets to which they have access. I am starting to hear of how people analytics teams are using ONA more broadly to understand inclusion and the experience of diverse individuals. Further, when we turn our minds to the passive data that people analytics teams have access to, we know there are all sorts of other ways that we could measure diverse employees’ experiences and the extent to which they are being included and if we can expect them to stay at an organisation. There is huge opportunity to use people data to benefit diverse individuals and to make entire companies more inclusive.

9. What are some of the future developments we can expect to see in the area of D&I technology?

When we published the report, our predictions for the next 18 months included: an expansion of D&I technology vendors to larger organisations and industries beyond the knowledge sector; a demand for specialised D&I technology solutions; and though we expect talent acquisition to continue to receive the most VC-backed funding, we believe the market will continue to expand toward D&I tech solutions aimed at guiding decision making in firms through D&I insights and analytics, improving organisational culture, and reducing unconscious bias.

Since we published the report, we’ve seen some new technologies come out that more explicitly address the need for better sexual harassment reporting. You can see all the other new types of technologies we’ve seen since publishing the report here.

As we look further to the future, we recognise several areas that warrant further study as the market continues to evolve. These include:

Legal risk: How organisations can most effectively manage legal risk that may be created by capturing and analysing data related to D&I.
Relationship between D&I technology and human dynamics: Where and how to insert technology to facilitate behavioural changes when manoeuvring complex situations.
Customer insights: Better understanding customers’ experiences with D&I technology and their evolving needs.
Leading practices in using D&I technology: How to best address D&I challenges from a technology standpoint and associated outcomes.

10. Finally, how can myHRfuture readers access the research? What tools are available?

You can read our research paper: Diversity & Inclusion Technology: The Rise of a Transformative Market, and explore our D&I technology interactive market map for free by visiting https://redthreadresearch.com/2019/07/23/di-tech-sign-up/

You can also view a copy of our summary infographic here, and our Summer 2019 update to the report here.

THANK YOU

Thanks to Stacia for sharing the fascinating research RedThread and Mercer are conducting in the D&I Technology space. For those interested in finding out more and/or staying up to date with the work Stacia is doing, I recommend that you connect with Stacia on LinkedIn, as well as following Stacia on Twitter, plus following RedThread on Twitter and check out the research RedThread is conducting by visiting RedThread’s homepage.

ABOUT THE AUTHORS

Stacia Garr co-founded RedThread Research in 2018 after leading talent and workforce research for eight years at Bersin by Deloitte. Before Bersin, Stacia spent nearly five years conducting research and creating learning content for the Corporate Leadership Council, part of CEB/Gartner.

She has an MBA from the University of California, Berkeley, a master’s degree from the London School of Economics, and undergraduate degrees from Randolph-Macon Woman’s College.

David Green is a globally respected writer, speaker, conference chair, and executive consultant on people analytics, data-driven HR and the future of work. As an Executive Director at Insight222, he helps global organisations create more cultural and economic value through the wise and ethical use of people data and analytics. Prior to joining Insight222, David was the Global Director of People Analytics Solutions at IBM Watson Talent. As such, David has extensive experience in helping organisations embark upon and accelerate their people analytics journeys. You can follow David on LinkedIn and Twitter and also subscribe to The Digital HR Leader weekly newsletter.

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