Exploring the Relationship Between Diversity and Inclusion Metrics and Organisational Performance
Diversity, Equity, Inclusion and Belonging (DEIB) are more than just HR buzzwords of the decade. Data-driven decision-making has shown that having an environment of DEIB makes a considerable difference to organisational performance.
In fact, our 2022 Insight222 People Analytics Trends report Impacting Business Value: Leading Companies in People Analytics, found that DEIB is one of the top five areas where people analytics adds business value. This is even more true for Leading Companies, which are the companies we surveyed that are the "best of the best" when it comes to people analytics adding tangible business value.
Additionally, if we look at some of the research conducted over the years, we find some compelling data on how a more inclusive workplace leads to better business outcomes:
A McKinsey & Co global study of more than 1,000 companies in 15 countries found that organisations in the top quartile of diversity outperform their peers in profitability by 25%;
A Gallup study of more than 800 business units across two industry verticals (hospitality and retail) found that gender-diverse units hold a higher average revenue than less gender-diverse units;
Researchers from Harvard Business Review found that companies with higher diversity achieve a higher success rate for investments than those less diverse companies.
These data-driven insights are just a few that show the positive correlation between diversity and inclusion and organisational financial performance. And if we dig a little deeper, research also suggests that:
Employees give higher Glassdoor ratings to employers who have vital DEIB initiatives;
Generation Z job seekers say a company's commitment to diversity and inclusion is important when choosing an employer;
A diverse and inclusive workforce will likely be engaged, creative, and innovative.
The data is clear: diversity and inclusion are integral to a successful organisation. And one way to supercharge your DEIB initiatives is through people analytics.
Measuring Diversity and Inclusion Metrics
Data-driven decision-making is the key to measuring DEIB metrics. And this data can come in many shapes and forms, such as survey data, demographic data, people data and more.
Survey Data
Survey data is compelling for understanding workplace culture, employee engagement and sentiment around diversity and inclusion initiatives.
Anonymous by nature, organisations can measure sentiment around DEIB initiatives by asking respondents questions such as:
How comfortable are you with discussing DEIB topics at work?
Do you feel your opinions and values are respected in the workplace?
Do you feel like your workplace is an inclusive environment?
Then when it comes to the analysis, you can filter down the demographic data asked at the beginning of the survey to see how different demographics feel about their workplace culture.
Demographic Data
This data should include age, gender, race/ethnicity, sexual orientation, disability status and socio-economic status. By analysing this data, organisations can gain valuable insights into how diverse their workforce is and where there may be gaps in representation and track the progress of diversity and inclusion initiatives over time.
During her discussion with David Green on the Digital HR Leaders podcast, Ivori Johnson, Director of DEIB at Charthop, explain how she takes full advantage of her demographic data:
"In order to see the true gaps and disparities across different diversity dimensions, but also just across the organisation, from different department levels, we have to be able to use the data to really help build a foundation of what's actually happening. Then we can add in the qualitative data and any anecdotal data to just really understand what the true picture is..."
She continues,
"so, I can look at all of our people data; I can overlay that with race, sexual orientation, gender, gender identity, so many different things, and look at intersections of data to see where the gaps are per team, per department."
People Data
Finally, data from sources such as HR, onboarding, and attrition data can also be used when measuring DEIB metrics. This data includes job titles, salary data and employee performance data.
By understanding this data alongside survey data and demographic data, organisations can gain a more comprehensive view of their DEIB initiatives. They can understand the data from all angles, identify systemic issues and make data-driven decisions on improving diversity and inclusion metrics within their organisation.
You could use organisational network analysis (ONA) to analyse how people in an organisation interact with each other and how different groups are connected to one another to identify any potential issues that could create barriers for certain demographics.
You could also analyse data from employee performance reviews for implicit bias. For instance, on the Digital HR Leaders Podcast, Joan C. Williams, distinguished Law Professor at the University of California, Hastings College of Law, and Director for the Centre of WorkLife Law, explains how with she helped a company uncover implicit bias in their performance data:
"We did an analysis of their performance evaluations, and we found that only 9.5% of the people of colour had leadership mentioned in their performance evaluations, and that was over 70 percentage points lower than white women. And so, we did a really simple bias interrupters intervention. We redesigned the performance evaluation form, and we helped them develop a one-hour training. We had absolutely dramatic results because, again, we started out with the evidence. In year two, a hundred percent of the people of colour had leadership mentioned in their performance evaluations and that predicted promotion."
Improving DEIB Metrics
When it comes to driving organisational performance, diversity and performance metrics have a role to play. By considering data from all different sources, organisations can use people data to measure their DEIB metrics and better understand how these data points are connected.
But to fully benefit from these core metrics, as HR professionals, we need to improve the diversity and inclusion metrics and data being collected. This data should be comprehensive, reliable and actionable to ensure organisations worldwide can make data-driven decisions regarding improving workplace culture and more engaged employees.
One way to do so is to start tracking every movement in your HR processes. In recruitment terms, this includes tracking all resume applications, the applications that pass the first initial stages of screening, the candidates that make it through to the final round of interviews and finally, data on those who are offered jobs.
In terms of learning and performance management, instead of tracking what managers' think' are tasks that top performers perform (which could be biased towards certain demographics), track what tasks that top performers actually do.
In the words of Charles Jennings, Partner at the 70:20:10 Institute:
"when you spend some time with the top performer, you find that actually that is not what top performers do. That is what managers think they do but it is not what they do. So it is a matter of unpicking that sort of thing.So you need to map critical tasks for specific work and then you look for these other influencing factors; these are the things that inhibit or promote tasks execution."
And finally, start measuring workplace culture and organisational behaviour. This is so important when it comes to DEIB, as understanding organisational behaviour, as Nigel Guenole, Director of Research and Ethics at the Institute of Management at Goldsmiths, University of London shares on the Digital HR Leaders podcast:
"Is the way that things get done at an organisation. It is the way your people behave towards each other, to the outside world, to your partners, and to your suppliers."
Fig 1. Categories of D&I Technology Within Talent Management Activities (Source: Stacia Garr, RedThread Research and Mercer)
This is what forms an organisation's workplace culture. Therefore, data needs to be collected on an organisation's behaviours, attitudes and values if we genuinely want to get a comprehensive view of diversity and inclusion and their relationship to organisational performance.
People Analytics As The Ultimate Solution
Data-driven decision-making is key when it comes to driving organisational performance, and DEIB metrics must be taken into account to ensure that data is being used effectively.
Therefore, people analytics and data literacy are crucial to ensuring that the data collected is used appropriately and significantly. And while there are plenty of artificial intelligence tools to help you along the way, upskilling HR professionals in this area will ensure that they have the skills necessary to understand, collect and analyse quality data to drive better organisational performance.
If data-driven decision-making is something that you're interested in, then sign up for one of our people analytics courses today. We can help you take your data game to the next level and ensure that your organisation's DEIB metrics are on point.
ABOUT THE AUTHORS
Nerea Gonzàlez
Nerea is an experienced consultant having worked in professional services for PwC and Aon for over five years, prior to joining Insight222 in 2022. She has consulted with global clients in the Manufacturing, Retail, Consumer Goods, Pharmaceutical and Financial Services sectors, amongst others, and in a number of functional areas such as human resources, finance and M&A. Nerea was dual educated in Spain and UK, is Spanish by nationality and also has lived in Ireland for part of her education. She is a certified accountant (ACCA) too! Outside of work, Nerea enjoys skiing, wake boarding, water skiing, tennis, paddle and scuba diving for which she is PADI qualified.
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