Diversity, equity and inclusion (DEI) initiatives are often thought to be an issue that can be solved by intuition by some segment of the HR team. However, in reality, it needs to come from a data-driven approach that encompasses the entire workforce.
The primary aspect that companies usually look to, in terms of treating employees fairly, is remuneration. However, having the conversation and agreeing on the need for equality doesn’t mean it will be achieved on an organizational scale.
Particular attention should be paid to addressing inequities in the areas of attracting and hiring candidates, integration, performance assessment, compensation and promotion.
In a recent survey from Mercer that included data from more than 1,000 companies in 54 countries, 81% agreed that it was important to have a plan for advancing gender equality, but just 42% actually had one in place. This points toward a tokenism attitude indicating companies are happy to talk around the issue without addressing it directly.
Despite the fact that women make up roughly half of all college-educated workers in the United States, they are underrepresented in positions of power — just 8% of Fortune 500 companies are led by women, and, incredibly, just 1% by women of color. Furthermore, the last U.S. census revealed that women who are employed full time are paid on average 17% less than men.
While there have been steps to ensure equal pay, such as Canada’s Pay Equity Act, which states that men and women in the public sector should be paid equally, it does not cover the private sector. Given that the Institute for Women’s Policy Research estimates that equal pay will not be reached until 2059, there is still plenty of work to be done.
Particular attention should be paid to addressing inequities in the areas of attracting and hiring candidates, integration, performance assessment, compensation and promotion. Companies need to think about initiatives that are supported by objective tools to drive progress, identify problems and strategize solutions. This is where data can be a great tool to provide insight into DEI: by highlighting shortcomings and areas where there is bias.
Start with data collection
The first step is to create a data set so that tangible metrics can be utilized and turned into actionable decisions. To do this, diversity and inclusion officers need to be given the opportunity to weed out bias.
Obviously, the data would drive decisions on areas such as compensation. But far too often, director-level discussions don’t involve the talent acquisition team. To eradicate the pay gap and ensure compensation is equalized on individual merit, this needs to change. Line managers and talent acquisition teams have the best knowledge of their staff and are well placed to procure the right information to help senior managers make equitable decisions.
Companies can collect data by using advanced analytics, such as a digital compensation platform, which provides details on employee compensation and job movement. This kind of platform can filter compensation data by demographic, role categories and comparative experience so that blatant inequalities can be identified. Furthermore, the platform can provide real-time data on pay equity, so that in the event that a salary needs to be changed, there is analysis available on how this would affect pay equity across the whole organization. The more that employers sign up for this kind of model, the more that companies will be able to compare equity standings on an industry- and companywide basis.
Aside from compensation adjustments, the recruitment and retention process is a key area that requires data collection to give a better understanding of DEI initiatives. Companies can use a variety of platforms with dashboards that are specifically designed for looking into gender, race and generational diversity.
Use data to improve DEI metrics
Once a company has collected the data to see where the main challenges lie in terms of DEI, they can start to implement a preliminary strategy to make DEI improvements, which must be iterated upon. Compensation is, in theory, one of the most clear-cut metrics to improve in terms of DEI, and it is also the best way to prove a commitment to diversity and inclusion.
Insights from a digital compensation platform can steer employers in the right direction, ensuring that employee experience is met with equal rewards. Often this can start with creating awareness around comparative measurements and modeling real-time impacts of decisions.
Directors should work with HR to adjust an employee’s wage according to these insights. Many organizations have a budget reserved for addressing compensation disparities, but those who don’t may want to consider creating one and allocating funds so that employees can “catch up.”
Companies that are committed to auditing their compensation are likely to see improved employee satisfaction and engagement, allowing them to retain and attract the best talent available. A recent survey from Businesssolver found that 78% of employees would be willing to work longer hours for an “empathetic employer,” highlighting the motivational impact that DEI improvements could have.
When hiring candidates, it’s essential to use the data collected to see who is ultimately getting hired and whether they had to go through the same pre-employment assessments, interview questions and scoring of performance. Companies could find that removing possible indicators of gender, name, age and race from the selection criteria could also eliminate the possibility of unconscious bias. For instance, the recruitment tool GapJumpers, where job candidates have to solve skill-based challenges while hiding their personal data, reported a 60% increase in job placement of diverse candidates through this blind testing method.
Employers that make the effort to recruit a diverse range of candidates should see the representation of their organization change positively over time. The evidence for the value of aiming for DEI improvements in the workplace is irrefutable: A report by McKinsey examining 366 public companies showed that those placed in the top quartile for gender diversity and racial and ethnic diversity were 15% and 35% more likely to have financial returns above their national industry average.
It’s time for companies to recognize the tangible benefits that implementing DEI efforts can have by tracking and adjusting pay accordingly through real-time compensation data. While other metrics may be difficult to quantify, compensation can be a clear indicator of an equitable workplace. If companies use the same business intelligence for DEI that would be applied to inventory management or revenue forecasting, for example, then issues such as the gender pay gap can be addressed effectively.
Organizations will then be able to proudly tout their DEI bona fides, safe in the knowledge that they played their part in creating a more equitable business world.