Research into diversity in 919 companies across Europe by the European Commission in 2005[1] found that only 30% of companies have systematic measurement and evaluation processes in place for their diversity initiatives. Metrics are simply the measurements organisations can make to help them understand their progress towards gender equality and diversity. Much of diversity work is about changing culture and culture is hard to measure and quantify. These metrics can be seen as a proxy for that, measuring the impact of a diversity programme on other more easily measurable things in an organisation, which could indicate a culture change.
Many of these measures are associated with financial costs and benefits to the organisation (for example costs of recruitment, benefits of productivity) and it is here that metrics meet the business case, allowing organisations to measure and quantify the benefits diversity brings and the costs of failing to get it right.
Recruitment
Analyse your recruitment data to identify:
the percentage of women and men who apply;
the percentage of women and men who are shorlisted;
the percentage of women and men who are appointed
at all levels in all business functions and job roles and in all geographical locations.
Recruitment is expensive, estimates of the cost range from 50% to 150 % of salary. The cost of recruitment includes:
Advertising/agency fees;
HR time administering the process;
Line management time participating in the interviewing process;
The opportunity cost of that management time spent on recruiting rather than direct service-providing and profit-generating activities;
Staff cover for the job during the vacancy period.
Diversity programmes play an important part in making an organisation an employer of choice and can reduce recruitment cost in a number of ways:
Increase in applicants for advertised posts;
Increase in calibre of applicants;
Increase in % of talented female applicants;
Reduction in number of adverts placed/agency time required to recruit;
Reduction in time taken to fill post.
Turnover
Analyse attrition rates by gender. Is there difference between male and female turnover? Analyse data at all levels, in all business functions and job roles and in all geographical locations. If women are leaving at a greater rate than men its worth asking why.
Bearing in mind the costs of recruitment (estimated at between 50 and 150% of salary[2]) reducing turnover for both men and women could have financial and performance benefits for the organisation.
The cost of turnover includes:
Cost of declining performance of leaver;
Staff absences when attending interviews;
Cost of recruitment as above;
Cost of training and induction;
Training required for the new recruit;
Staff supervision of the new recruit during the induction period;
Lost productivity of the new recruit during the induction period;
Impact on remaining staff;
Loss of staff morale due to high turnover and possible loss of productivity/performance;
- Employees who leave take not just key skills and commercially valuable knowledge with them but may actually take customers to their new employer as well.
Diversity programmes can impact turnover in a number of ways:
Reduction of female attrition;
Increase in % of returnees from maternity leave;
Improvement of overall staff morale.
Employee engagement
Employee attitude surveys should be conducted regularly and include questions about employees perceptions of the organisation and its diversity initiatives.
Click here for tips on employee surveys
Focus groups are a useful way of supplementing data from the employee survey. They provide a small sample of more qualitative data but can provide an more subtle and nuanced view than the “blunt instrument “of an employee survey. They are also useful to provide colour and impact and story telling to increase the impact of the statistics from the employee survey.
Exit interviews are a forum where employees may feel more at liberty to voice their concerns about an organisations culture policies and processes. Exit interview should be conducted with all employees by a trained interviewer and data should be collated and analysed as another diversity measure.
Click here for tips on conducting exit interviews
Productivity
Productivity is closely linked to employee engagement. Research has indicated a link between diversity, employee satisfaction and productivity. Measuring improvements in productivity of employees who have been involved in diversity initiatives will provide more evidence of the business benefits of diversity.
At its simplest productivity is the number of products/transactions per unit of time (week month or year) divided by the number of employees engaged in production or transactions. Obviously this formula is not easily applied in all workplaces. Another measure of productivity could be turnover per employee or profit per employee. All of these measures are, of course, influenced by a myriad of other factors. Nevertheless, employers have been able to measure changes in the productivity of particular groups and teams who have been involved in diversity initiatives.
Innovation
Evidence suggests that organisations able to maximise the benefits of a diverse workforce will be more innovative and experience better quality of decision making. Measuring the capacity for innovation has proved challenging for many organisations; Since innovation by its very definition is intangible and not easily measured at the front end (especially at the outset of a new product/service development program), most measures look at the end of the process. Possible measures for innovation include:
The number of products and services successfully completing the R&D process;
Time taken to bring a product/service to market/profit;
Time taken to identify o new solutions for business problems;
Transfer of products from one country/region to another;
New revenue from innovation;
Return on innovation investment: total profits from new products/services launched divided by total expenditures for new products.
Other broader business metrics such as increased margins, increase in customers, and return on investment could also be seen as indicative of innovative capacity.
Legal costs
Employees have become increasingly litigious and the courts increasingly harsh on those organisations which fall foul of employment law. There were 14250 cases of sex discrimination accepted by employment tribunals in 20005/6, an increase of 21% over the previous year (equal pay claims have risen by 100% to over 17,000)[3]. Contravening employment law can have heavy costs, the average award for sex discrimination was £10,807 and the highest award was nearly £218,000.
However, these costs are only the tip of the iceberg. Many discrimination cases are settled before they come to court. A Personnel Today poll in 2000 suggested that 50% of firms settle out of court rather than go to a tribunal. The cost of legal advice prior to settlement whether in or out of court and the employee time required to administer and settle claims pushes costs much higher than the headline awards figure. Added to this should be the indirect costs such as loss of corporate reputation, loss of potential new recruits and even loss of customers.
Measuring the costs of getting it wrong can be a persuasive part of the business case. The cost of failing to comply with legislation includes:
Cost of paying out compensation to employees discriminated against;
Legal costs if the case goes to a tribunal/court;
Costs of HR/admin. time managing the grievance process;
Costs of management time attending meetings/tribunals;
Loss of corporate reputation, leading to difficulties recruiting and possibly loss of customers /clients;
Lower morale of remaining employees.
