To say that every company should prioritize diversity, equity, and inclusion today is such standard advice, it's almost becoming a cliche. But just why should organizations across industries place an emphasis on DEI? What makes achieving your DEI goals so important to modern business success, and how can you track progress towards those goals?
These are difficult questions to answer. Most business leaders know that diversity, equity, and inclusion are important, but quantifying the why behind it can be a struggle. And yet, it's that specific answer that can be the missing piece to devoting the necessary resources towards its success.
So let's dig into it. Consider this the quantitative case for DEI, along with a guide on taking a similar quantitative approach within your organization.
The Business Case for Why Diversity, Equity, and Inclusion Are Important
While DEI can be difficult to measure, recent years have seen a few studies that have tried to put make its importance more real. Their results, in many cases, have been astonishing:
A landmark 2019 study by McKinsey found that companies ranked in the top quartile for gender diversity on their executive teams were 25% more likely to have above-average profitability than their competitors in the bottom quartile. That's a significant increase from a 15% increased likelihood for a similar study conducted in 2014.
The same McKinsey study also found that companies in the lowest quartile for both gender and ethnic diversity were 27% more likely to underperform their profitability expectations than all other companies examined in the study.
A 2013 study by the Harvard Business Review found that companies prioritizing diversity and inclusion were 70% more likely to capture new markets, both demographically and geographically, than their less inclusive competitors.
A 2018 study by the Boston Consulting Group uncovered that while companies reporting above-average diversity on their leadership team saw 45% of their revenue come from innovation-related activities, companies with below-average leadership diversity could relate only 26% of their revenue to innovation--a 19% revenue gap.
A research report by Deloitte found that when employees think that their organization is committed to and supportive of diversity, they'll report better business performance in terms of their ability to innovate (83% uplift), responsiveness to changing customer needs (31% uplift) and team collaboration (42% uplift).
The DEI performance boost, in other words, is very much real. A priority on diversity, equity, and inclusion has a clear and measurable impact on an organization's success, ability to innovate, and revenue generation. Now comes the next important question: just how can you measure both that priority and its impact?
How to Track Diversity, Equity, and Inclusion in Your Company
At its core, measuring diversity, equity, and inclusion comes down to making the intangible tangible. We all know what it means; now, it's time to attach some numbers to it. Only finding the right metrics and KPIs can help you truly measure progress and the resulting success your company can gain.
Key Performance Indicators to Track for DEI
Let's start with the most tangible metrics possible. Across industries, these KPIs have led companies to measure just how much DEI is being prioritized across the org chart and various verticals:
Number and percentage of diverse employees across the organization. Even better is breaking this down into micro KPIs for the various types of diversity, including gender, racial, age, and cultural variables.
Number and percentage of diverse employees in leadership positions. This one is much like the first KPI, but with a greater impact on the positions with decision-making power. Clearly define what you mean by 'leadership positions' as a distinct break in the org chart.
Employee turnover rate by diversity category. Employees in underrepresented categories leaving at higher rates than their peers should be a major red flag, especially when it happens in leadership positions.
Investment in DEI initiatives. This is not a successful metric in isolation; after all, great DEI-focused organizations prioritize it across their investment and budget decisions. Still, in combination with other KPIs on this list, it can be a decent metric to track priority within the company.
Each of these metrics, especially when tracked regularly, can provide a valuable trend line to understand the importance and priority of DEI in your organization. They can also offer benchmarks against industry and competitive averages.
For example, calculating your competitors' leadership diversity ratio likely requires little more than a look at their website. Meanwhile, studies like those mentioned above tend to provide averages across industries that can serve as benchmarks to judge your success relative to other organizations.
Informal Metrics and Opportunities to Track DEI Success
Beyond the formal KPIs, gathering more informal data can be just as important to track the success of an organization's DEI emphasis.
For example, employee engagement surveys, especially when analyzed demographically, can provide valuable insights into your employees' attitudes and feelings about the inclusivity of their workplace. Similarly, DEi trainings can be evaluated not just through attendance rates, but also through an informal analysis or survey of the training's impact on its participants' daily work.
Even more informally, interviews with stakeholders across all levels of the organization provide anecdotes and insights on the topic. Together, these informal opportunities provide context and depth that explain the story behind any numbers-based trends you might be seeing.
Taking Real Steps to Prioritize Diversity, Equity, and Inclusion
Ultimately, tracking your DEI efforts and initiatives can only be beneficial if a clear next step can be put in place. Once you paint the picture of the current situation or recent trends, that picture should provide an actionable roadmap of both successes and improvement opportunities across all levels of the organization.
But with the right numbers in place, these steps become easier to conceptualize, receive buy-in, and implement. Being able to show not only the impact of a DEI focus as a whole but also how your organization compares against its competition creates a clear, stated need where improvements need to be made.
That's how a quantitative focus on diversity, equity, and inclusion can enable your organization to take real steps towards prioritizing a now tangible factor for long-term success.
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