The Power of Diversity ROI Measurement Alignment — Part 2

In part one, I discussed four of nine steps to improve the alignment of diversity metrics with the bottom line of the business. In this segment, I will outline the remaining steps of the methodology which cover a wide range of actions and metrics to build practical approaches to verify the strategic business needs of the organization.

Let’s continue examining the remaining alignment steps.

Step 5: Develop Practical, How-To Interventions: A lot of organizations will say they have diversity measures in place. However, when you check them, you see that they are activity counts. They’ll look around and say they’ve established a council or had a celebration on a particular day. And while those are important, senior leaders don’t always see these things as bottom-line outcomes. They’re not looking at how the diversity process increased market penetrations in key ethnic markets or how it added customers. Progressive companies show how they have used diversity and inclusion technologies to integrate diversity process into productivity improvement issues, product quality issues and innovation challenges.

To have credibility, diversity interventions must be developed in a way that seamlessly integrates with key organizational priorities at critical levels and be designed in a way that employees can use them right away to improve the organization’s functioning. This may require having the flexibility to move away from pure “academic images” of diversity theory and venturing into the realm of the “live-lab” of real organizational problems and challenges. It means working hand-in-hand with line managers as strategic business partners to solve the messy problems of performance improvement and change. As diversity professionals, we must ask who we are developing this intervention for — to go along with the latest fad other organizations are using or for internal (or external) clients to help solve their real business challenges? These challenges must be verified with an effective business needs analysis to show the benefits and ROI impact.

It is important to stay clear of theories and fads that are not strategically tied to producing organization-enhancing results. Sure, some of them can help create out-of-the-box thinking that may help produce new, practical approaches that could generate value. However, these ideas need to be well researched and tested for their practical strategic value and potential impact.

It is also critical to limit “diversity and inclusion speak” when working with internal clients and sponsors. We should know the nuances of diversity and inclusion processes, but our audience does not have to be masters of it. It may take a while to gain credibility from their vantage point. This credibility will come faster when you are able to demonstrate specific, measurable results in quantitative and qualitative terms. The results and outcomes of the diversity initiatives must show how the results are tied to the organization’s bottom line. The results you obtain will improve your credibility, commitment and involvement, not the merits of theories and fads alone.

Step 6: Get a Handle on Diversity ROI (DROI): It is essential to master the technologies of DROI analytics and measurement processes for all of the interventions you provide. It is critical to identify interventions, programs and activities that have a measurable impact on organizational performance.

I have always thought of diversity as a professional discipline and field of study. However, if it is to be taken seriously as such, it must possess a structure, framework and critical components that are consistent with other serious disciplines. For example, if we examine marketing, sales operations and the like, we would find they all have well-defined competencies, proven theories and applied sciences that undergird their application. These theories and sciences provide a recognized structure, strategy and a set of measurable standards to guide those who work in the field.

Doctors, engineers, lawyers and others must be certified to practice their craft. There are also certifications for human resource professionals, trainers and organization development professionals.

The Hubbard Diversity Measurement and Productivity Institute has six diversity certifications based on its Diversity ROI and Diversity ROI Analytics methodology:

• Certified Diversity Trainer

• Certified Diversity Advisor

• Certified Diversity Performance Consultant

• Certified Diversity Business Partner

• Certified Diversity Strategist

• Certified Diversity Intervention Specialist

These fields of study contain specific, identifiable roles that are performed, areas of expertise that allow a practitioner to build specialized concentrations of skills and knowledge within the discipline, detailed outputs produced by these roles, as well as a model of measurable competencies that define specific behaviors that enable the work to be completed with a high degree of accuracy and effectiveness.

As a professional discipline, DROI practices must align with key objectives and outcomes to operate with similar standards built on a solid framework of both concept and science. These practices must be delivered through the work of competent, credible diversity professionals using clear standards linked to business performance. Using our talents and skills, based upon a competency-rich diversity discipline framework, diversity professionals will be able to integrate the ideas underlying diversity and inclusion with specific measurement strategies and organizational systems theory to create a diversity-enriched climate that uses diverse resources more effectively. Getting a handle on ROI means identifying units of measure for the interventions and activities that have a measurable impact on performance. We must consistently apply measurement sciences, track our interventions, and publish them as DROI studies such that they can be used as best practices.

Sample measures which support a DROI measurement alignment strategy include covering key diversity scorecard perspectives such as:

Workforce profile perspective

• Diversity hit rate.

• Number/percentage of minorities as officials and managers.

• Number/percentage of diversity survival and loss rate.

• Number/percentage of turnover by length of service.

Workplace climate and culture profile perspective

• Percent favorable ratings on cultural audit demographic group.

• “Employer of choice” ratings versus top 5-10 competitors.

• Retention rates of critical human capital.

• Number and type of policies and procedures assessed for diverse workforce impact.

It is important to design evaluations and use metrics that are practical and reflect a systemic analysis. For example, use before and after measures which examine diversity intervention results compared to key measures which are already established and used in the organization.

It is also imperative that you are cautious and careful with the procedure to demonstrate how you isolated the DROI value from all other possible interventions (that could have contributed to the organizational benefit). Be careful what you take credit for. In a DROI study, it is important that you only list those outcomes you can control which demonstrate a “chain-of-impact” to the outcome. Diversity intervention outputs are “inputs” that fuel contributions to line results. There are usually many intervening variables in the outcome production process. Isolation techniques must include utilizing scientific processes such as control groups, time-series analysis, forecast estimates, etc., to attribute diversity’s contribution to specific business outcomes and benefits (separate and apart from other contributors).

Step 7: Make Some “Hard-Nosed” Decisions About What Is Needed: It is essential to conduct a comprehensive business assessment or needs analysis to determine what interventions are necessary to meet the intent of the aligned business objectives. For example, when evaluating an organizational challenge, a practitioner may be partial to a favorite diversity intervention regardless of the problem or need. It is crucial that a scientific approach is taken where effective data collection helps determine the appropriate response, not what the practitioner favors. Performing a comprehensive needs analysis is the cornerstone of implementing a solid, credible performance improvement process. It helps practitioners make “hard-nosed” decisions and provides an appropriate justification for either developing or not developing a diversity intervention. We must conduct a needs analysis, no matter how abbreviated, before any intervention development takes place.

If a diversity training intervention is required, for example, the objectives of the needs analysis are to:

• Describe the exact nature of a performance discrepancy.

• Determine the cause(s) of the discrepancy.

• Recommend the appropriate solution(s).

• Describe the learner population.

In general, needs analysis consists of the following steps.

• Step 1: Identify and describe the performance discrepancies.

• Step 2: Determine the causes of the discrepancies.

• Step 3: Identify those performance discrepancies that are based on lack of skill or knowledge. Then identify the skills and knowledge needed that is related to diversity and diversity competence.

• Step 4: Determine whether diversity training or another intervention is a viable solution.

• Step 5: Recommend solutions.

• Step 6: Describe the performer’s and organization’s role in behaviorally specific terms that relate to diversity excellence and performance.

How are diversity training analysis and evaluation linked to diversity measurement alignment?

A needs analysis establishes the criteria for measuring the success of training after its completion. A thorough needs analysis should answer the question: “What good will training do?”

A thorough DROI training evaluation will answer the question: “What good did training do and what was the return on investment?”

An effective DROI training evaluation cannot be conducted unless a thorough needs analysis has been completed. We cannot determine what was accomplished by a diversity training intervention or program unless we have first defined what the program was intended to accomplish. The diversity training needs analysis provides baseline measures against which to judge our diversity training efforts and will help us make the hard-nosed decisions about what is the best way to meet our internal/external client’s need.

Step 8: Get Away From a Program Orientation: Diversity is not a program; it is a process of systemic organizational change. Programs have a beginning and an end. However, people will never be finished with their differences. Therefore diversity interventions and the metrics that support them must reflect a range that supports the systems and processes that drive real performance. The context for diversity performance is the organization’s business and its objectives. To be relevant and aligned, it is critical to think in terms of the business, its goals, objectives and its performance needs. It requires diversity practitioners to connect to and work in concert with all levels of the organization.

Many senior executives truly support their diversity organizations and process, but feel they should play a stronger strategic role in the organization’s growth and development. They expect diversity practitioners to help increase productivity and provide solutions that generate a stronger competitive edge. In effect, both top and line managers are seeking diversity professionals who can function as “strategic business partners” to solve real business problems which have a bottom-line impact on the organization’s priorities. To successfully align and link diversity strategies with the organization’s strategic business plan, you must actively pursue top and line managers regarding their specific business problems and speak their language. For example, if we are working with the finance department, we must be able to talk about its problems and potential solutions using diversity in financial terms, impacts and consequences. If the problem is focused in the operations area, we must talk in operational terms, etc.

Step 9: Stick With It!: Developing a DROI measurement capability is a skill, and like any skill we must learn what it is, understand its applications, use it, study the feedback from its use and refine the skill until we build competence. This is an expectation for anyone who offers himself or herself up as an “expert” in a particular discipline. We expect doctors, engineers, social scientists, technicians, etc., to have mastered their craft in order to trust the solutions and alternatives they suggest. The same is true for diversity professionals. We must hold ourselves to a high standard.

A critical element of meeting that standard is a strategic alignment with the strategy, structures and systems that drive the organization’s performance. It is imperative to take advantage of learning and listening opportunities that broaden our understanding, build DROI capability as well as business acumen.

It’s not easy. It will take a lot of work and a heavy persistence for excellence at your craft. It requires that we possess an internal standard that says we do not accept being mediocre at our craft. Developing this expertise won’t happen overnight or without setbacks and frustrations, but it can be done and is worth the struggle. This means that as diversity professionals, we must develop a “strategic alignment mindset” that places our diversity ROI measurement efforts on par with any discipline that drives business results and success.