With recruitment and retention outcomes increasingly linked to strong diversity, equity, and inclusion initiatives, employers have begun mobilizing to meet the moment. Hiring of diversity leaders has almost tripled since the beginning of 2020. Nearly 60 organizations have aligned with the World Economic Forum on WEF’s Partnering for Racial Justice in Business initiative. The 50 biggest companies in the nation have collectively committed nearly $50 billion to racial justice-related causes. But is the momentum behind DEI efforts enough to drive meaningful change and attract and retain a generation of talent that demands it?
So far, DEI strategies have been researched less than other areas of business. While an August 2021 research report from Grads of Life and Bain & Company uncovered 10 proven tactics designed to drive outcomes for underrepresented talent, much DEI work still lacks the clear data, standard key performance indicators, and rigorous evaluation mechanisms that support other core business units, such as finance, IT, and sales. Employers can turn the tide in this domain. By applying the same rigor and thoughtfulness as in other critical business functions, employers can ensure a greater return on their DEI investments such as increasing hiring, retention, and advancement of underrepresented talent.
We’ve come across four specific DEI actions where companies have an opportunity to reexamine their impact and uncover new insights to better support underrepresented talent. These four areas are an excellent place for businesses to begin evaluating the effectiveness of their DEI efforts—through enhanced deployment, increased measurement, or both.
1. Understand the quantifiable impact of employee resource groups (ERGs).
ERGs (also called affinity groups) are very common in the private sector, and are broadly thought to support inclusive workplace cultures. ERGs can promote employee leadership development, collaboration, and trust, and we’ve observed many of these benefits within our own organizations. As more companies strengthen and expand their ERGs, they’re learning more about the key practices that differentiate successful ERGs, such as ensuring there’s an active executive sponsor, involving ERGs in key organizational decision making, and financially compensating ERG leaders for their time. More research is needed, though, to understand specifically how these and other best practices can most effectively drive strong DEI outcomes. To optimize their approach to ERGs, companies should consider tracking which ERGs they have in place, what roles and responsibilities members take on, the level of involvement among senior leaders, and how retention and/or advancement outcomes differ for employees who are engaged in an ERG compared with the general employee population. AT&T, for instance, has connected its high retention rate for Black employees (85.6% in 2015) to The NETwork, an essential resource for identifying executive candidates.
2. Assess the effectiveness of DEI training for people managers.
DEI training presents many nuances and can be challenging for companies to get right. When it comes to company-wide efforts, we know that compulsory training can be counter-productive, but voluntary training can drive strong outcomes. Less understood is how managers can be most effectively trained to support DEI outcomes, given their powerful influence over the day-to-day experiences of employees. Management training is commonplace at US companies. But these trainings rarely address inequitable workforce outcomes or practices to build connection and interrupt bias. When companies do conduct DEI-specific manager training, the measurement often focuses on manager participation and training satisfaction; companies less commonly measure how effectively these sessions generate a more inclusive, equitable workplace. However, given the cost of underequipping managers responsible for diverse teams, the business case for improved tracking of DEI manager training is compelling.
To determine whether DEI manager training is effectively serving leaders and their team members, employers should consider tracking metrics beyond the training sessions. First, they should measure key outcomes such as retention, engagement, and promotion among direct reports of managers who have gone through DEI training. Companies can then compare findings with historic figures and a control group of employees whose managers haven’t had DEI training (yet). At the moment, the research base here is limited, and we’d encourage companies to actively share as many of their findings as possible to help advance learning in this arena.
3. Scrutinize performance evaluations for bias.
Performance reviews are a standard practice for most jobs. But these assessments are seldom objective, with research substantiating the persistence of racial and gender bias. The first step toward addressing these biases is measurement. Companies should start by auditing performance scores and narrative summaries by race, gender, and other identity groups (educational background, age, etc.) to identify where disparities exist. Reviewing historic quantitative data on engagement, promotion, and termination rates across groups can reveal patterns and trends. When combined with qualitative employee sentiment data on feelings of belonging, manager support, and trust, these insights can be a powerful tool for understanding system shortcomings and establishing the case for change among senior leadership.
From there, DEI and HR leaders can take a number of tangible actions to reduce rater bias, including standardizing evaluation criteria for employees within the same job function, requiring specific examples to justify evaluations, and scheduling regular review audits to continue monitoring decision bias, as well as areas of progress.
Efforts to remove bias from performance evaluations currently lack transparency. While we acknowledge the sensitivities around this topic and the legal constraints on what companies can share, we implore employers to be bold and generous here. By amplifying successes and setbacks, even at a high level, companies can help codify best practices for advancing underrepresented talent and foster trust with their stakeholders.
4. Measure the association of benefits and employee outcomes.
Benefits are a major factor in attracting and retaining talent. In fact, nearly 80% of workers say they’d prefer additional benefits to a pay raise. With millions struggling to meet basic needs like transit and child care, and increased attention throughout the pandemic on hardship and professional development assistance, employers must rethink their benefits packages, with equity and inclusion in mind. Companies are rapidly recognizing this reality. In the last year, the number of employees covered by Bright Horizons, an employer-based child care benefit, increased by 20%.
As the number of companies offering innovative benefits continues to grow, solid impact-measurement plans must be in place. Employers should begin by measuring adoption of their current benefits and gathering important qualitative data from employees about which benefits they most need—with an eye toward differences along demographic lines. This data can inform future investments in benefit plans, to ensure that offerings match what employees truly value. Consistently measuring the relationship of benefits usage with metrics such as absenteeism, turnover, and productivity would also go a long way toward advancing understanding of how employee benefits can improve DEI outcomes. Walmart, for example, recently completed an analysis of its Live Better U tuition-assistance program to understand how employee participation affected retention, performance, and promotion. The education and training subsidy open to all Walmart and Sam’s Club associates has generated a significant returns for all associates, including employees of color. Black employees who participated in Live Better U were 88% more likely to receive promotions than nonparticipants.
Companies could strengthen the impact of nearly every DEI initiative through more deliberate measurement and evaluation. Indeed, the only way to build a more inclusive US workforce is for companies to begin tracking their DEI investments and sharing their findings more broadly. Addressing these four historically understudied practices is an important first step in a broader effort to ground DEI programming in data and contribute to the growing research base on how to move the needle for underrepresented talent.