Steps to Building an Effective Diversity Measurement System, Part 1

Although interest in measuring the effects of diversity has been growing, the topic still challenges even the most sophisticated and progressive diversity departments. Diversity professionals and practitioners know they must begin to show how diversity is linked to the bottom line or they will have difficulty maintaining funding, gaining support and assessing progress.

But where do they start? Well, I will weigh in on this topic with a few thoughts in a two-part analysis. In this segment (Part 1), I will give an overview of a five-step process to consider and highlight some key background issues. Part 2 will detail each step of the process, including possible diversity metrics, formulas and suggestions.

Although measuring diversity return on investment (DROI) impact is not an exact science, there are a number of valid techniques, tools and reliable methods for translating business performance gains into tangible financial results that C-suite executives will support and embrace. Let’s get started by addressing the fundamental question: Can diversity be measured?

Before we look at what to measure, I’d like to address the concern some practitioners have about the validity of measuring diversity results. Some practitioners seem to believe that quantifiable and quality-based measures cannot be applied to the diversity implementation process or a diverse work culture. Others believe that diversity is not a business-focused activity, simply another form of affirmative action regulatory compliance. However, workforce and marketplace demographics make diversity a business and customer issue, as well as a global competitive issue.

Regardless of the events that led to this conclusion or whether this subjective position is valid or not, the fact that the position exists and that some diversity professionals and other business people support it creates major problems. In particular, it sets managing and leveraging diversity apart from the rest of the organization. While peers in other organizational areas are focusing on metrics that reflect their contribution such as sales, reduced costs, profits, income and expenses, those implementing the diversity process often limit their discussion of diversity’s contribution to increased awareness, improved feelings and increased satisfaction among work groups. Only a select few really show demonstrated, evidenced-based results of diversity’s impact on organizational performance.

As a result, diversity is not taken seriously. Few managers support it in actual practice, such as sending their workforce to be trained, using diversity in potential alternatives to solve business unit and customer problems, etc. Even fewer managers structure their workforce to leverage its richness through teaming, implementing strategic partnerships to penetrate key ethnic customer markets, and so on. We know from current organizational practice that diversity initiatives often experience less management support than other business initiatives.

I’m not suggesting that measurement is the sole solution to diversity’s acceptance into the corporate landscape. But measurement of results is a useful tool that allows the diversity practitioner to talk the language of other managers and top management. Remember, diversity activities are not conducted in a vacuum. They are part of an organizational system of processes, activities and events aimed at delivering “value,” “impact” or both.

Building a Measurement System

The creation of an effective diversity measurement system and “best” practices cannot be a mechanical modeling exercise. It must be preceded by an inspection and utilization of basic business principles. It must focus on organizational and departmental strategic thinking as well as an assessment of the desired quality of work-life. Developing the actual measures is easy compared to the amount of time that should be spent thinking about what is important to the organization’s strategic business objectives and the expectations of the diversity measurement process.

Key Steps to Building an Effective Measurement System

Creating an effective diversity measurement system and process that embodies these concepts involves at least five critical steps:

  • Review the strategic business plan for needs.
  • Formulate research questions.
  • Design the study methodology.
  • Collect and analyze data.
  • Implement solutions and communicate results.

Each step in the process logically builds on the previous step, which generates an evidenced-based framework that creates a “best practice” method for proving diversity’s link to performance.

In the next segment (Part 2), we will explore each step in detail and provide suggestions for their effective use.