Businesses have a core responsibility to fulfill – to ensure that their workforce is representative of the communities they work with and to foster an environment that’s fair, inclusive, and conducive to employee growth.

Fortunately, progress towards promoting inclusivity at work is steadily increasing. When looking for jobs, 80% of those surveyed said inclusion was a critical parameter and 69% of executives identified inclusiveness and diversity as essential concerns.

The key to advancing your DEI objectives lies in using diversity metrics to evaluate your organization’s progress and then taking necessary actions based on the resulting data.

Modern people analytics solutions can provide access to diverse data and insights, which tell you how your organization performs in its DEI goals and improvement areas.

What are Diversity Metrics?

Diversity metrics serve as a marker of the progress made by an organization in addressing diversity, equity, and inclusion (DEI) initiatives. It helps your company in evaluating the progress and results achieved by DEI. Moreover, they facilitate the formulation of targets and foster a sense of accountability.

These people analytics metrics assess workplace equality, the brand value of an organization, and employee satisfaction as a whole. Also, some DEI metrics prioritize financial returns on DEI initiatives; this data can help allocate additional resources and reinforce your commitment to DEI.

6 Diversity Metrics to Measure in 2024

People analytics data – such as workforce composition, engagement, productivity, compensation, etc. – can reveal a wealth of information about DEI in your organization. From this, you need to focus on:

1. Representation

An essential KPI of inclusion and diversity is representation, which calls for an organization to analyze the business structure and determine the extent to which diversity exists in the workplace. If businesses need to catch up in representation, they should prioritize recruiting individuals from groups that have historically been marginalized.

A method for identifying these categories involves comparing the demographic information of the company with that of the community.

Further, this data can be used to determine whether bias exists at various phases of the recruiting process. For instance, if your team continues to have below-average representation of underrepresented or diverse groups despite their applications for a specific position, this may suggest discrimination during the hiring process.

2. Retention

Without adopting retention strategies, token-hiring underrepresented groups is among an organization’s most detrimental actions. Genuinely prioritizing DEI doesn’t result in employee alienation or a decline in employee retention.

Bear in mind that 47% of African American employees and 49% of Hispanic employees, according to Glassdoor, have resigned from their positions after experiencing or witnessing discrimination at work.

By monitoring people’s analytics, you can detect and nip such trends right in the bud through appropriate actions.

Measuring employee attrition and turnover is essential to determine whether a company creates an environment that welcomes and accommodates workers from diverse backgrounds. A distinct indicator that underrepresented employees feel uncomfortable within the organization is if they depart at a higher rate than their peers and may need intervention through manager training, employee support groups (ERGs), and affirmative action programs.

3. Adverse impact

Adverse impact refers to hiring or even employment practices that, despite their apparent neutrality, affect a protected group in discriminatory ways. The process of negative impact calculation enables one to quantify the possible ramifications of discrimination across every phase of the employee lifecycle and then facilitate remedial actions.

Further, remember that ignoring adverse impact with intent can invite legal scrutiny. According to Title 41 § 60-3.4(D) of the Electronic Code of Federal Regulations (CFR), “A selection rate for any race, sex, or ethnic group which is less than four-fifths (4/5) (or eighty percent) of the rate for the group with the highest rate will generally be regarded by the Federal enforcement agencies as evidence of adverse impact.”

In other words, if an advantaged group succeeds five times, the disadvantaged group must achieve at least four times for companies to demonstrate no adverse impact.

To understand how to calculate this diversity metric, let us take the example of hiring men vs. hiring women as office managers.

Let’s say you have ten male applicants with five male hires, which gives you a 50% or 0.5 male selection rate. On the other hand, you have 40 female applicants with five successful hires, which results in a 12.5% or 0.125 female selection rate.

The group with the higher percentage in an optimistic scenario (e.g., recruitment) is considered advantaged. In contrast, the one with the lower rate in a pessimistic scenario (e.g., attrition) is the advantaged group.

In our example, we calculate the ratio between the success percentage of the disadvantaged and advantaged groups – i.e., 0.125 ÷ 0.5 = 0.25. This is well below the mandated threshold of 80% or 0.80, meaning no adverse impact exists.

Fortunately, people analytics systems today can automate this entire calculation process. It can ingest data from various HR tools and other sources (like payroll) and give you year-on-year visibility into the adverse impact metric.

4. Employee satisfaction rate

This is a relatively easy diversity metric to measure. By using recurring pulse surveys and annual questionnaires, determine which employees are more satisfied with their positions and those who aren’t. Examine the diversity data to determine whether dissatisfied employees represent a particular group.

A reassessment of the organizational culture is warranted if employee satisfaction – for various diverse groups – is shallow. Examine the possibility that these employees feel excluded due to culturally specific factors, such as microaggressions. Additionally, it offers a secure channel for employees to provide feedback. Employees who can share feedback and voice their opinions on diversity (while remaining anonymous) may feel more inclined to do so.

5. ERG participation rate

An employee resource group (ERG) presents a forum for members of the same workforce to connect, support one another, and foster a greater sense of enterprise-wide belonging.

By giving these groups access to leadership and organizational and financial support, ERG programs empower them. It is prudent for organizations with ERGs to assess the level of engagement in these groups. Investigate why individuals are reluctant to get involved and reassess the efficacy of the inclusion programs and the administrators if membership declines.

6. Wage gap

The variance between the average compensation of privileged and disadvantaged groups throughout an organization, including gender, is commonly referred to as a wage or pay gap.

The World Economic Forum’s Global Gender Disparity Report 2022 forecasts that it will take an additional 132 years to eradicate gender disparity globally. The conditions for women in the workplace are worsening even as various geopolitical events unravel, and there’s a growing possibility of a worldwide regression from gender parity.

Pay disparity constitutes the central component of diversity metrics. It’s imperative to develop a study or assessment that informs employers of the detrimental effects of a significant wage gap on their reputation, employee relations, public perception, and capacity to attract and retain highly qualified workers.

Investigating and publishing this data may be part of the essential compliance mandate for some companies.

Sharpening Your DEI Analytics Focus

As DEI leaders aim for tangible improvements in their diversity initiatives, it is essential to remember that not all metrics are pertinent to your organization. Depending on its size and composition, you must inquire about specific concerns before moving forward, including your principal areas of worry/uncertainty or high risk. And it would be best to prioritize metrics that offer the most accurate depiction of diversity within your business.

Finally, it’s equally crucial based on diversity metrics and their measurement. If you’ve initiated your program without undertaking a baseline evaluation, evaluate your metrics compared to those reported by other departments or other available industry benchmarks.

There is no “magic number” when it comes to diversity metrics, and organizations need to focus on continuous improvement through regular monitoring and measurement to stay on an upbeat track.

Read Workjam’s latest whitepaper on Enabling Diversity and Inclusion Down to the Frontline for more actionable insights on DEI.