How Much Statistical Analysis is Enough?

While measurement is important, it is not necessary to introduce heavy statistics to persuade management and employees of the need for progress and accountability in diversity change initiatives and to highlight their impact on profitability. This does not mean control group, financial and mental model processes should be avoided. It suggests only that the optimum array of diversity measures should include a blend of data and levels of measurement. In many business situations, activity- and process-based (report card) diversity measures can play a vital role in the organization’s leadership agenda. But evidence-based outcome measures that go beyond mere report cards are critical to diversity being seen as a driver of business performance.

Report card measures of diversity are like snapshots of the past. They can provide a historical reference to accomplishments or serve as milestones along the path to producing outcomes. Examples are the number of diversity-competent employees, cost per trainee-hour and turnover by performance level by gender by length of service. These measures provide opportunities for personal feedback regarding achievement and measuring accountability for implementing new diverse workforce change or improvement activities and processes. Report card and evidence-based outcome measures are a key part of a value chain for implementing change in any organization.

The Diversity Value Chain

This value chain is comprised of four basic components:

  • Diversity activity/intervention
  • Outcome
  • Impact
  • Value-added

Generally speaking, all diversity processes are begun for the purpose of producing value. Any other purpose would be wasteful. One of your objectives should be to develop more effective ways to measure and evaluate changes made in the organization to improve performance based upon diversity improvement activities/processes, outcomes, impact and resulting value.

Some typical value chain examples:

Example 1:

Diversity Activity/Intervention: Increase diverse talent recruitment sources.

Outcome: Lower agency rates.

Impact:

  • Lower hiring costs.
  • Jobs filled faster.
  • Less need to use temporary help.

Value-Added:

  • Reduced operating expense.
  • Faster human resource to organizational need.

Example 2:

Diversity Activity/Intervention: Improve diverse work team problem-solving processes.

Outcome: Reduced time to solve.

Impact: Increase in reasons given in survey for long service by diverse workforce members  because of enhanced team collaboration skills and respect for ideas.

Value-Added: Retention savings compared with rolling average of previous years.

Example 3:

Diversity Activity/Intervention: Install succession planning for diverse workforce.

Outcome: Fewer emergency diverse workforce hires.

Impact: Less recruitment expense.

Value-Added: Lower operating expense.

For every use of resources to improve an organization using a diversity activity/process, there should be an improvement in results. We call the result an outcome. The difference between this outcome and the previous outcomes before the diversity process improvement was implemented is the impact. The dollar improvement represented by the impact is the value added. An example might include changing the talent acquisition methods used to hire diverse workforce talent (activities/process), which shortens the time to fill jobs (outcome).

Time-to-Fill Formula: TF = RR – OD

Where:

     TF = Time to have an offer accepted

     RR = Date the requisition is received (e.g., January 4)

     OD = Date the offer is accepted (e.g., February 20)

EXAMPLE

TF = January 4 – February 20 = 47 days

As jobs are filled faster, there is less need to use temporary or contract workers. The cost avoidance can be calculated and a dollar savings computed. If, through the diversity department’s effort to change acquisition methods, jobs are filled faster, not only does the organization reduce operating expense, but the cost of the human resource product is lowered and moved to market faster. Lower human resource (human asset) acquisition cost and shorter human resource asset delivery time to the organization can create a competitive advantage, especially in light of less successful competitors based upon benchmarking analysis comparisons.

Thus, report card and outcome-focused measures of diversity activities and/or processes are vital to gain feedback on staff accountability for generating solutions to address such key business issues as inadequate diverse talent acquisition and the like. Without these activities or processes, we could not produce the accompanying outcomes, impacts and results. Even if these activities or processes produced poor results, the diversity department can gain by knowing what else doesn't work and then shift its efforts to more productive outcomes.

Creating an Effective Scorecard

In addition, it is critical to have scorecard measures, a notion popularized by Harvard professors Robert Kaplan and David Norton in their book “The Balanced Scorecard.” In my book “The Diversity Scorecard: Evaluating the Impact of Diversity on Organizational Performance,” unlike the report card, I presented both lead and lag indicators as well as other analytics of performance and profitability that could be used to highlight diversity’s impact on organizational performance.

Report card measures only tell of past performance (lag indicator). Scorecard measures, on the other hand, reflect both “lead” indicators (such as diversity climate survey favorable response ratings that indicate if an employee plans to leave within the next six months) and “lag” indicators of diversity performance such as “high potential diverse workforce voluntary turnover” that indicates what has happened (after the employee has left the organization leaving little chance to retain a valued human asset).

For the most part, any object, issue, act, process or activity that can be described by observable variables is subject to measurement. The phenomenon can be evaluated in terms of cost, time, quantity or quality. The central issue in applying measurement to the diversity change process is this: to decide what is worth measuring and to agree on the measure as a fair representation of progress and accountability (given field limitations). Often, management will accept progress over perfection.

So, if you are not measuring diversity’s ROI impact to demonstrate the effect and contribution your initiatives are having on the bottom-line, what’s stopping you?