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Most companies don't measure the bottom-line impact of diversity programs

By Greg Pernula
| www.cos-mag.com

While most companies agree that diversity issues in the workplace deserve attention, not many have a clear and consistent definition of just what "it" is, according to i4cp's latest study.

The study found overall, only about 1 in 5 (21 per cent) study respondents have a broad and inclusive definition of diversity, while 17 per cent admit they have no definition at all. Higher market-performing organizations are more likely to define diversity broadly, with 28 per cent reporting they include all diversity groups in their definition, compared to only 15 per cent of lower-performing companies that include them all. Roughly one in four (23 per cent) lower-performer companies do not even have a diversity definition, and 12 per cent of higher performers don't either. Also, few organizations measure the bottom-line impact of diversity initiatives. In higher-performing organizations, 76 per cent said they do not calculate a return on their diversity investments, while 80 per cent of lower performers don't measure ROI.

Diversity strategy, however, is a widely recognized topic, particularly among larger companies. A full 78 per cent of organizations with 10,000 or more employees report having a diversity strategy, compared to 44 per cent of companies with 100 to 999 employees and 31 per cent in companies with fewer than 100 workers.

The perceived importance of diversity is not lost on companies, either. Seventy-two percent of higher-performing organizations say that diversity issues are "important" or "very important" today, and 80 per cent believe the issue will be important/very important in 10 years. That compares to 76 per cent of lower performers who feel diversity is important or very important today, and 83 per cent of them believe it will be so in 10 years.

"Defining 'diversity and inclusion' is a primary challenge for organizations to 'move the needle.' If you cannot agree on what diversity is, how do you create a strategy?" asks i4cp's Mary Ann Downey. "How do you know when you have succeeded? Another challenge is measurement. If you define diversity narrowly to attributes that are measurable, such as race/ethnicity, gender, etc., are you addressing the business challenge?"

Regarding budget considerations for diversity programs, larger and higher-performing companies are more likely to set a specific budget. Fifty-nine percent of companies with more than 10,000 workers have specific budgets for diversity issues, compared to 19 per cent of companies with 100-999 employees, and 11 per cent of companies with fewer than 100 workers. Higher performers (48 per cent) are also more apt to specifically fund such initiatives than are lower-performing firms, at 27 per cent.

When it comes to measuring the success of their programs, organizations at all performance levels agree that retention and engagement top the list. Improvement in employee retention was cited by 69 per cent of higher performers as the top diversity success measurement, followed by better employee engagement results at 54 per cent. More than half (56 per cent) of lower performers cited retention as the top measurement, and 54 per cent (the same as higher performers) pointed to improved employee engagement. When reviewing diversity metrics, companies at all levels tend to rely on the previous year's results for comparison purposes.

To support diversity strategies, the most common infrastructure in place is diversity training, favoured by 53 per cent of higher performers and 54 per cent of lower-performing companies. Diversity recruiting is favoured by 49 per cent of higher performers, compared to 36 per cent of lower performers.

The Diversity Practices Survey was conducted by i4cp in September of 2009. The full results of the survey are available exclusively for all i4cp corporate members at

www.i4cp.com

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Greg Pernula is from i4cp.

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