It’s no surprise that DEI is a priority for so many companies right now. There’s not only pressure from the workforce, but also plenty of evidence supporting the business case for diversity. Among other metrics, the likelihood of financial outperformance was 25% for companies with gender diversity in executive leadership teams, and 36% for ethnic diversity, based on a 2020 McKinsey study.
But, there are some catches:
Catch #1 – Diversity alone is just the start
While a great start, diverse representation is not enough. Why? Just because an organization is relatively diverse does not mean employees are set up for success. Data shows even diverse companies have significantly negative sentiments around fairness, inclusivity, and equity.
In fact, among the companies studied above, those most likely to outperform were those that had systematic and intentional approaches to creating equity and inclusion, on top of increasing diverse representation in leadership.
On the other hand, increasing diverse representation without equity and inclusion is reckless – it subjects your employees of diverse backgrounds and identities to a non-inclusive culture and inequitable practices. There’s a reason it’s “DEI” (diversity, equity, inclusion), not just “D”.
Catch #2 – The most common DEI strategies aren’t necessarily working
Unfortunately, not all DEI strategies are created equal. In fact, research conducted over three decades among over 800 U.S. companies shows that the most popular approaches to DEI – including anti-bias training, hiring tests, and even performance reviews – while intended to enforce equity and inclusivity, actually cause backlash and retaliation. They not only don’t work, but data over the course of 30 years shows they actually decrease diversity in leadership in the years following implementation.
Another popular activity companies frequently mention when it comes to DEI is employee resource groups (ERGs) or affinity groups. These are not to be confused with task forces which distribute responsibility and encourage leaders across the organization to take accountability for improvements. Unfortunately much of this work in ERGs is spearheaded by and left in the hands of the few employees within the organization, often without extra pay or recognition. And while almost always referenced in company marketing, candidate pitches, and as evidence of existing DEI work, these groups are frequently not given the resources nor power to make real systemic change.
If you’re serious about DEI, you must measure it
Not measuring the actual impact of your DEI initiatives is like flying blind. And so far, it’s also the most common pitfall most organizations make while claiming to be investing in diversity, equity, and inclusion. Yes, it’s more challenging than hiring a head of DEI, putting together a speaker event, or pulling data on diversity representation. And, you might not like what you see at first.
But employees and candidates can tell when you don’t know what inclusion or equity look like at your own company. It starts affecting every part of the experience – from collaboration to retention.
That said, which metrics do you need?
Based on research, you should be tracking at least these three North-Star metrics:
- Diverse representation in leadership positions
- Equity (in compensation and promotion rates)
- Inclusion and belonging
The great thing about these metrics is that making sure these are improving will also result in positive ROI when it comes to employee engagement and retention, for all your employees. In fact, According to a 2018 Deloitte study, increases in individual feelings of inclusion, caused by an increase of experiences of fairness, psychological safety, and inspiration result in 17% increase in team performance, 20% increase in decision-making quality, and 29% in team collaboration.
And the best part? Progressary is built to help you measure exactly these metrics.
Implement research-based strategies
Armed with the technology to measure changes in your organization’s inclusion and equity metrics on an ongoing basis, you can then craft a custom, data-proven improvement plan. While there is much evidence supporting the fact that the most common DEI strategies fail to deliver on key metrics of progress, there is also evidence that combining them with other strategies, like accountability, can lessen the negative effects and start to have a positive impact. Some strategies proven to move the needle in the right direction seemingly have no explicit connection to diversity.
The following are elements that can make up a successful DEI strategy with positive ROI:
- Increasing contact across groups
- Positing messaging encouraging voluntary participation
- Creating diversity champions in existing leaders
- Tying DEI work with business value
- Creating empathy between various groups
- Promoting accountability, including social accountability
- Distributing responsibility and getting leaders involved
The best strategies are the ones that drive positive change while customized for your organization’s priorities, existing programs, and structure. The only way to make sure you’re making positive change is to measure the impact. Progressary can help you with both – request a demo to learn more.