Business Needs Inform Diversity Strategies

News Updates

More than two-thirds (68 percent) of HR professionals polled by the Society for Human Resource Management (SHRM) in August 2010, said they align their organization’s diversity efforts with business goals and objectives. And when asked about the importance of various outcomes of diversity practices, respondents placed business results, such as profits and competitiveness, ahead of HR-related outcomes such as recruitment, retention and employee opinion survey results.

These are some of the findings of Workplace Diversity Practices: How Has Diversity and Inclusion Changed Over Time? released Oct. 12, 2010, and reflecting input from more than 400 SHRM members, selected randomly. The report compares practices between 2005 and 2010.

Although there is evidence in the study that the global economic downturn likely impacted certain diversity and inclusion-related practices—such as efforts to ensure diversity is represented at all levels of an organization (down 11 percentage points from 2005)—other findings suggest a possible shift toward diversity practices tied to key business outcomes.

Baked In

One of the most notable differences between SHRM’s 2005 and 2010 research is the 28 percentage point drop, to 45 percent, of respondents who said their organization was engaged in practices designed to “ensure diversity is a consideration in every business initiative and policy.”

As SHRM reported previously, following the release of an ORC Worldwide research report in 2008, ORC’s director of workforce management consulting, Mary Martinez, said diversity “only endures when it’s baked into the way the company does business day to day.”

The need to “bake” diversity and inclusion into every aspect of an organization’s operations has been stressed by those writing and speaking about the subject for several years.

In a 2006 Knowledge@Wharton online article, for example, Gilbert Casellas, a member of President Barack Obama’s Military Leadership Diversity Commission and former chairman of the Equal Employment Opportunity Commission (EEOC) is quoted as saying that a diversity plan should be “institutionalized” so that it “gets integrated into everything you do, baked in, so to speak.”

And a 2008 paper on “The Impact of Senior Leadership Commitment on Diversity and Inclusion,” published by Industrial Relations Counselors Inc., a not-for-profit research and educational organization, echoed this idea by stating: “To make a lasting difference that can withstand leadership changes and the vicissitudes of the business cycle, diversity must be ‘baked in’ to how the organization goes about its business on a day-to-day basis.”

Some organizations have nudged the “baking” process along by holding people managers accountable for diversity-related outcomes, as part of formal performance management. Nearly half (47 percent) of respondents said their organization followed such a practice in 2010. This question was not asked in 2005.

A less common diversity practice, in 2005 and 2010, is the use of incentive pay tied to the achievement of organizational diversity goals. Just one in 10 respondents said they tied incentives to diversity goals in 2010, virtually unchanged from 2005.

Training on diversity issues remains popular for employees at all levels, and is offered by 71 percent of respondents in 2010, up slightly from 67 percent in 2005.

Notably, more top-level executives are mandated to participate in diversity training in 2010 than in 2005, up from 60 to 68 percent. The report notes that executives at publicly owned for-profit companies (86 percent) and organizations with multinational operations (80 percent) are more likely to face such mandates. Top management support has long been viewed as an essential component of an effective diversity strategy.

Measuring Results

Though it has never been a widespread practice, even fewer employers are calculating the return on investment (ROI) of their diversity practices in 2010 than in 2005, down six percentage points from 14 to eight percent.

Organizations often measure a number of individual diversity-related initiatives to demonstrate results. In 2005 the vast majority of SHRM respondents tracked the number of diverse employees recruited, retained and employed at all levels of their organizations. Yet, each of these measures, though still popular in 2010, was used by at least 12 percent fewer respondents than in 2005.

Similarly, fewer organizations measured diversity results via employee opinion surveys or diversity audits in 2010 (51 percent) compared to 2005 (68 percent).

Decreased measurement can be explained, in part, by the impact of the recession on diversity-related activities such as hiring, retention and employee attitudes. However, it could be a sign of greater organizational support for diversity and inclusion.

Rebecca R. Hastings, SPHR, is an online editor/manager for SHRM.