Many organizations have long committed to being more diverse, inclusive, and equitable, but how can people’s leaders ensure that’s happening in practice?
After the tragic murder of George Floyd in 2020, there was a significant surge in corporate efforts to address diversity, equity, and inclusion (DEI). This then led to an unprecedented wave of commitments to DEI policies from companies worldwide.
According to a Gartner report, HR leaders identifying DEI efforts as a top priority rose 1.8 times higher in 2020 than in 2019, just following the incident.
Despite this commitment, there is still a significant shortfall in progress. According to 2022 research conducted by McKinsey, for every 100 men who are promoted from entry-level to manager positions, only 87 women are promoted, and only 82 women of color are promoted.
While many leaders generally agree that individuals should be granted opportunities for growth and advancement based on their merits, the challenge lies in—how organizations can effectively guarantee the implementation of this principle in reality.
And well, we all know it’s (PAST) time leaders need to get strategic about DIVERSITY, INCLUSION, EQUITY AND BELONGINGNESS.
So, in this article, we are going to highlight seven key metrics that span the entire employee life cycle which can help leaders access DEI progress.
- Attrition
Attrition can be classified into two main categories: voluntary and involuntary. It’s crucial to monitor the departure of individuals from underrepresented groups in your workforce to identify any potential imbalances. In cases of involuntary attrition, it’s important to assess for “adverse impact,” a term defined by U.S. law as practices that might seem impartial but result in discrimination against protected groups.
Additionally, tracking voluntary attrition is essential to determine whether it occurs at similar rates among employees from the majority group compared to those from underrepresented groups. It’s also important to distinguish potential differences among various underrepresented groups. This analysis should encompass not only the collection and comparison of quantitative data against internal and national averages but also the conduct of exit interviews with departing employees. These interviews can shed light on the reasons behind their departure and whether factors like bias or a lack of inclusivity played a role.
For reference, the U.S. Department of Labor’s Bureau of Labor Statistics provides attrition rates by industry in the United States. Similarly, in the UK, the Office for National Statistics offers relevant data. These resources can serve as benchmarks for organizations to evaluate and address attrition trends. While attrition is a retrospective measure, indicating an issue after it has occurred, it can serve as a warning sign for the presence of systemic bias.
- Annual Performance Reviews
A significant 63% of companies continue to utilize an annual performance evaluation system, often employing letter or numerical ratings to assess employees. This process “subjective objectivity” since the assignment of scores can create a misleading impression of objectivity when, in reality, it often hinges on personal opinion rather than concrete facts.
In this context, the aim is to achieve an equitable distribution of both high and low ratings across all employee groups. For instance, if one group receives an excessive proportion of low ratings compared to their representation, or if another group garners an unusually high share of high ratings, indicating a discrepancy with their overall representation, this might signal biases ingrained within the evaluation process.
Over time, consistent low-performance ratings for a particular group could unveil not only biases within reviews but also disparities in accessing opportunities to excel. It’s imperative to scrutinize performance outcomes both at the organization-wide level and within specific functions, such as finance and sales. These performance assessments can serve as predictive indicators for promotional results.
Should this connection be evident, it’s advisable to contemplate a shift away from relying solely on performance ratings for promotion considerations. Instead, emphasize competencies that can be objectively measured or observed, along with demonstrated achievements that meet or surpass anticipated outcomes.
- Promotion Evaluation
When assessing promotion rates, it’s crucial to consider factors such as pay grade, race, and gender. It’s equally important to examine whether there’s equilibrium among various demographic groups. Do promotion rates remain balanced at the initial and junior levels, only to tilt towards the majority as positions ascend? Are particular segments experiencing high proportions of promotions in technical roles, yet not in leadership positions?
Conducting an in-depth analysis will reveal biases that might otherwise remain hidden. If organizations genuinely believe in their meritocratic approach, promotion rates should exhibit a relative equilibrium across gender and racial boundaries. The subsequent stride involves fostering transparency in promotion practices. For instance, in the United States, Walmart divulges promotion rates categorized by race and gender in their yearly report on Culture, Diversity, Equity, & Inclusion.
- Nurturing Leadership Succession
Numerous organizations have instituted programs designed to cultivate future leaders. These initiatives typically encompass the top 2-3% of achievers within each functional area, further categorized by pay grade. These individuals are identified as promising talents and are entrusted with challenging tasks that enable them to showcase their abilities, thereby expediting the development of leadership skills and propelling them onto a fast-tracked career path.
This group of exceptional performers eventually evolves into the most senior echelon of leadership a decade or two down the line.
Consequently, if your leadership pipeline lacks diversity, you are essentially cementing a homogenous senior executive team for the future. The selection process for emerging leaders involves both performance evaluation and promotions, both of which are susceptible to biases.
An organization’s leadership pipeline should, at a minimum, mirror the demographic composition of the workforce. However, it should also anticipate what leadership will resemble once diversity objectives have been attained. For instance, if the aspiration is to have 45% women in the C-Suite, then the pipeline for future leaders should also comprise 45% women. Succession plans and programs grooming future leaders should be aligned with the diversity goals of the organization.
- Talent Pipeline Dynamics
The diversity of newly hired employees serves as a frequently employed but delayed measure of the functionality of your talent pipeline. We tabulate the incoming workforce, but that marks the culmination of the hiring process. The substantial groundwork takes place prior to that point. To gain a comprehensive perspective on the efficacy of recruitment practices, organizations should evaluate the entire pipeline, commencing with initial applications and proceeding through interviews, offers, and acceptance rates.
From the pool of applicants, what percentage from each affinity group secure interview offers? Is this proportion consistent across racial and gender lines? For instance, if X percent of white males who apply are granted interviews, do candidates of color and women enjoy a similar rate of success? Of those who participate in interviews, what percentage ultimately receive job offers? Once again, does this vary based on race and gender? Lastly, among those who receive offers, what percentage accept them?
Low acceptance rates among specific groups could indicate potential issues with company culture. It’s imperative to examine factors such as their on-site experience and whether they encountered individuals who shared their background. Did they feel a sense of community?
- Equitable Compensation
“Pay equity” and the “pay gap” encompass distinct analyses. Pay equity signifies that employees are remunerated equally for equivalent work, irrespective of their personal characteristics. The pay gap represents the disparity in average compensation between two groups, regardless of the specific job roles that contribute to that average.
While the pay gap holds societal importance and can underscore varying access to diverse career paths, it involves numerous variables beyond an organization’s control, including educational choices, individual career decisions, attraction to specific industries, and regional influences. Conversely, factors influencing pay equity, such as starting salaries, policies for pay adjustments, and compensation reviews, are largely within the purview of organizations. A common pitfall is rewarding based on tenure rather than competence. Compensation structures should be predicated on performance.
Undertaking assessments for pay equity and sharing the results or steps taken to address disparities swiftly enhances credibility and supports claims of just and equitable treatment of employees.
External specialists like Factorial HR and Rework offer guidance for conducting such in-house analyses. Nonetheless, involving an external party and subsequently disclosing the findings adds an additional layer of credibility.
- Fostering Inclusion
While diversity involves headcount, inclusion centers on ensuring that each individual’s contributions are valued. Evaluating the employee experience has grown more commonplace, encompassing aspects like the quality of manager relationships, a sense of belonging within peer groups, and access to influential networks. Leveraging data analytics and behavior-based algorithms has elevated this evaluation from an art to a science.
Some organizations incorporate inclusion-related questions into broader HR surveys through platforms like Qualtrics or Culture Amp. Others opt for dedicated algorithm-driven Diversity, Equity, and Inclusion (DEI) platforms such as Pulsely. These platforms not only gauge variations in inclusion across different identities but also assess the inclusive behaviors exhibited by supervisors and managers.
For instance, technology and investment solutions firm SEI employs these algorithms to gauge the equity of workplace experiences, while renewable energy company Convergent utilizes data science to evaluate the inclusion competency of their leaders, positioning themselves as pioneers in inclusivity initiatives.
In Summary
By focusing on seven crucial metrics across the employee life cycle, organizations and people leaders can gauge their DEI progress effectively. These metrics offer a comprehensive framework to assess where improvements are needed, ensuring that the commitment to diversity and inclusion translates into meaningful change on the ground. As organizations continue to navigate this complex terrain, it is through a data-driven approach and unwavering commitment that they can pave the way towards a more just, equitable, and inclusive future for all.
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