This study looks at how organizations assess and leverage the return on investment (ROI) of their inclusion efforts, including but not limited to individual diversity, equity, and inclusion (DEI) programs and culture change initiatives, to capture what organizations are currently doing as well as propose solutions and insights on how to better align DEI with business results.
Survey and interview analyses provide key insights on the following themes:
- How do organizations measure their DEI programs’ effectiveness? How consistent are these measures?
- What are some key barriers organizations face when trying to align DEI activities and business results?
- How are organizational approaches evolving to address new workplace and workforce challenges?
The report also includes The ROI of Inclusion Tool Kit, a guide that applies the concepts from the ROI Institute‘s methodology to DEI initiatives and skills.
Executive Summary
The positive connections between diversity, equity, and inclusion (DEI) in the workplace and business results have been documented for years. But examining the business benefits of diverse representation without considering equity and inclusion provides a limited picture of DEI’s true potential. Creating a fair and inclusive work environment where workers of all backgrounds can contribute and succeed is vital—even more so now that diversity is the reality of many workplaces. Plus, business-case analyses often do not account for how lack of DEI can become a strategic risk to the business, whether in terms of brand reputation, innovation, or ability to fully engage the workforce. A return on investment (ROI) approach can help companies design programs and interventions to deliver results, while ensuring DEI long-term sustainability, executive buy-in, and a better alignment of talent, business, and organizational values.
To determine whether and how organizations are assessing the ROI of their DEI initiatives, we surveyed human capital and business executives at 61 global organizations, conducted in-depth interviews with eight DEI and human capital analytics leaders, and gathered insights from two focus groups with The Conference Board Council Members from different industries and regions. The data were collected in fall/winter 2020.
Insights for What's Ahead
- An assessment of the impact of DEI programs helps ensure their sustainability while creating added value for the organization. DEI represents a significant investment for most study participants. A majority of survey respondents reported yearly DEI budgets that ranged from $50,000 to over $1 million. Employee resource groups (ERGs) and partnerships with external organizations take up the largest proportion of the DEI budget, followed by DEI and unconscious bias trainings. However, only a few organizations currently assess whether these programs are effective in increasing workers’ feelings of inclusion or improving representation over time, much less adding value in terms of business outcomes. Investing in DEI without a proper assessment of impact and outcomes makes it harder to ensure strategic alignment and continuation of dedicated resources.
- When investing in initiatives, organizations must consider both the benefits of their DEI efforts and therisks and costs of not having such efforts in place. Our analysis shows that, by and large, organizations use their inclusion data to monitor talent priorities, assess organizational culture, and check whether workers of all backgrounds feel included, with a focus on identifying potential challenges. A few respondents also proactively highlight the added value of inclusion and inclusion programs to the business. As DEI plays an increasingly significant role in shaping the views of stakeholders (shareholders, workers, suppliers, customers, clients, and consumers), a lack of diversity and a culture that is not inclusive can hinder not only an organization’s talent potential but also its business strategy and reputation.
- Ensuring consistency of inclusion measurements can clarify the value that DEI brings to the organization. While more than 70 percent of respondents in our study say they currently measure inclusion, there are still gaps across and within companies when it comes to how the data are tracked and used. Most organizations use an external vendor to track inclusion, and some are still at the early stages of collecting data to create more customized measurements. Organizations with DEI budgets of $500,000 and above are slightly more likely to measure inclusion than those with lower or no DEI budget. More consistent inclusion measurements, data, and usage can help drive strategic alignment and improve the focus of many DEI programs.
- Talent and business leaders throughout the organization should have access to inclusion metrics to guarantee transparency and provide opportunities to improve their teams’ effectiveness. Our survey suggests that not everyone engaged in DEI initiatives uses or has access to inclusion data. Only about one-fourth of respondents say their talent development and talent acquisition teams use inclusion data within their organization, even though these functions clearly play an important role in driving their companies’ inclusion strategy. Without data, design falters. Knowing how the organization performs with inclusion metrics offers leaders across the organization insight into what they can do to contribute to the culture, while also ensuring ownership of and accountability for inclusion goals.
- Regardless of size, maturity of DEI strategy, or DEI budget, organizations can benefit from measuring the ROI of their key initiatives beyond descriptive metrics such as participation and engagement. While many organizations are interested in tracking the ROI of their DEI activities and investments or planning to do so in the future, few are currently doing so. An ROI approach to DEI is not simply about making the business case. It is about designing DEI activities to make progress. Considering business outcomes, including ROI, from the very beginning can help address barriers to implementation and alignment of DEI with business results and better guide investment strategies. Using ROI to evaluate performance is a “new muscle” that requires skill building among DEI leaders and practitioners.
- An ROI approach to DEI investment can improve program effectiveness while sustaining the focus on key behaviors needed to achieve positive outcomes. While many organizations make important investments in DEI activities, there is an opportunity to better align these investments to both talent and business results. Qualitative insights from interviews and focus groups indicate that key barriers to doing so include lack of measurement consistency, unsuitability for business alignment, and inadequate resources. Participants also mentioned that they are still not sure how to make the connection or that doing so is not yet part of their strategy. Asking a few simple questions, such as: “Do we have a clear definition of what inclusion means at our company? Are we using the right measurements to monitor whether our people feel included? How can we use inclusion data to improve our DEI and business strategy?” can be a good place to start. Engaging with DEI business partners from different business units can also enhance DEI’s perceived strategic value.
