07 Mar. 2016 | Comments (0) Share Follow @Conferenceboard
Financial measures enhance rigorous decision-making and appropriate accountability, and many advanced Diversity and Inclusion (D&I) leaders appreciate the need to be held to the same rigor as other functions contributing to the business. (Naturally, they take exception when D&I is held to a higher standard of demonstrating business value or when a posture of scrupulous financial metrics is employed as a barrier to stifle D&I efforts.) Recognizing that executive decisions about where to focus limited resources should not be left to whims, heartstrings, politics, or biases, contemporary D&I specialists have developed increasingly better metrics to demonstrate D&I’s contribution to economic business outcomes. These efforts include the work of Dr. Edward E. Hubbard (Hubbard & Hubbard), Dr. Patricia Phillips (ROI Institute), and others who have contributed to measuring the Return on Investment (ROI) of D&I initiatives.
Economic-based metrics are critical, but they are not sufficient for at least 2 reasons.
First: To achieve an ROI, we must invest
Measuring D&I’s ROI (return on investment) helps leaders demonstrate the impact of their work by comparing the cost of a solution to its monetary payback, and demand for this metric continues to grow. A challenge in our field, though, is the limited investment often devoted to D&I initiatives. In order to achieve a return, there must first be an investment in qualified leaders and resources required to execute their work to create value. More specifically, in our current climate many D&I efforts can be significantly constrained by:
- Severe D&I budget reductions
- Employee / Business Resources Groups’ reliance upon “dialing for dollars”
- D&I responsibility shifting to lower level roles and/or being combined with other responsibilities in one job
- D&I councils full of talented, committed leaders who, nonetheless, often do not have the specific mix of experience, skills, and competencies to lead a potent D&I strategy
Organizations are deluding themselves if they expect D&I to consistently demonstrate remarkable contributions to the business despite the lack of investment in D&I.
Second: Financial Measures do not tell the whole story
Not every solution is a candidate for ROI, and ROI does not measure the full value of any solution. When used in isolation, emphasis on ROI or other financials highlights an important bias in our thinking and can yield notable shortcoming as we seek to measure and achieve the full value of D&I. Just as many in the global community are following Bhutan’s lead in moving beyond GDP, an economic-based measure of the health of our nations and wellbeing of our citizens, we have an opportunity to expand how we measure the vital signs of our organizations. In particular, we in the field of D&I can challenge ourselves, each other, and our organizations to consider more than just financial gains and losses as we thoughtfully expand our understanding of what it means to function and flourish as a vibrant, inclusive organization.
Simply, some valuable impacts of D&I efforts are not measurable in the primary financial language of business leaders. A balanced blend of financial and other quantitative measures along with qualitative metrics are, therefore, necessary to measure meaningful outcomes of the value D&I creates, and to inform the actions important to:
- Influencing investment in and commitment to D&I
- Earning respect from leaders, talent, and customers for the value of D&I
- Replacing ineffective initiatives that deliver suboptimal D&I outcomes
- Informing paths to success not only in Diversity, but also in Inclusion
- Delivering D&I results that genuinely matter to businesses and to individuals
As Robert F. Kennedy reminded us in late 1960s, economic figures alone cannot tell us what we need to know about our communities (including the quality of life in our businesses):
"Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. Our Gross National Product, now, is over $800 billion dollars a year, but that Gross National Product - if we judge the United States of America by that - that Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. It counts special locks for our doors and the jails for the people who break them. It counts the destruction of the redwood and the loss of our natural wonder in chaotic sprawl. It counts napalm and counts nuclear warheads and armored cars for the police to fight the riots in our cities. It counts Whitman's rifle and Speck's knife, and the television programs which glorify violence in order to sell toys to our children. Yet the gross national product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile."
By tuning in to both objective and subjective indicators of our work, D&I leaders can achieve important insights into what it means to be a healthy, productive business and how to propel programs and policy that can effectively and efficiently close identified gaps.
How are you employing a complementary mix of advanced metrics to generate and demonstrate greater value with D&I?