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CEOs Want to Know the Impact of Diversity ROI on Initiatives but Aren’t Getting It!

A study of CEOs analyzing what CEOs want from their Diversity organizations concluded that CEOs want to see the impact and ROI of their Diversity investments but instead receive only activity and satisfaction data. So, why aren’t Diversity & Inclusion Executives, Managers, Practitioners, etc. measuring their impact and sharing with their CEOs? After all, this is not exactly a revelation. Some of the leading reasons are lack of resources, lack of support from the CEO, lack of funding, lack of skills, etc. My take: these are all just excuses since there are a huge number of resources, books, workshops, etc., available. This strongly suggests that many Diversity Practitioners need a serious skill update or should excuse themselves out of the job. If they remain without these skills, at some point, they may face elimination and/or extinction.

This is the 21st Century, with its emphasis on cutting edge as well as “State of the Practice” technological and analytical advances, yet Diversity Practitioners are using old-fashion measurement skills where the wheels immediately come off of their measurement system wagons. We haven’t been in the “Old West” of Diversity measurement for quite a few decades. State of the Art Diversity ROI processes have been here for quite some time.

Accountability Trends

Many enlightened business managers often take a professional business approach to Diversity, with ROI being part of the strategy. Top executives who watched their diversity budgets continue to grow without appropriate accountability measures have become frustrated with this approach. In an attempt to respond to the situation, they have turned to Diversity Return on Investment (DROI®). Top executives are now demanding DROI® calculations from Diversity departments where they were not required previously.

So, what factors prevent us from mastering Diversity ROI measurement? Here are a few excuses I hear that Diversity Practitioners say are consistently challenging and “Small Doses” to begin to address them:

Assorted Medicine Pills in Caps

Small Doses to Bust Up Measurement Myths and Misconceptions

Issue-1: Lack of Skills and Orientation
Many Diversity staff members neither understand ROI nor do they have the basic skills necessary to apply the process within their scope of responsibilities. Diversity ROI Measurement and evaluation is not usually part of the preparation for the Diversity job or taught as part of a university education focused on diversity. Also, the typical Diversity training program or intervention does not focus on results, but more on diversity awareness concepts, activities, or other issues. Staff members attempt to measure results by measuring learning only instead of the full range of Diversity performance intervention outcomes (at all 7 levels) that drive business. Consequently, this is a tremendous barrier to implementation that must be changed such that the overall orientation, attitude, and skills of the Diversity staff member are focused on business results, impact, and/or outcomes.

Small Dose-1: Build DROI® Skills and Measurement Orientation
Don’t wait until you are asked about the DROI® of your Diversity intervention to gain competency and business acumen in this area, start learning about DROI® today! Attend a Diversity ROI Webinar, Workshop, Read books on Diversity ROI, Use DROI® Tools, etc. (Note: DROI® is a registered trademark of Hubbard & Hubbard, Inc., All Rights Reserved.)

Issue-2: Faulty Needs Assessment
Many existing Diversity interventions are not based on an adequate needs assessment. Some diversity interventions have been implemented for the wrong reasons based on requests to chase a popular fad or trend in the industry. Even worse, they schedule training for everyone in the organization costing thousands or millions of dollars with NO measurable DROI®. If the intervention is not needed, the benefits from the program will be minimal or wasted. A DROI® calculation for an unnecessary program will likely yield a negative value. This barrier can be eliminated by training and certifying Diversity Executives and Practitioner in programs such as Diversity ROI Certification, training and measurement workshops, etc.

Tools and Templates 4

Remember: “If there is no verified need you cannot calculate Diversity ROI Impact”

Small Dose-2: Learn the Detailed Steps to Conduct a Comprehensive Needs Assessment
Needs analysis is the cornerstone of any Diversity performance analysis effort. It provides you with appropriate justification for either developing or not developing your Diversity intervention. You must conduct a needs analysis, no matter how abbreviated, before any Diversity intervention takes place.
The objectives of a needs analysis are to:

  • Describe the target population
  • Describe the exact nature of a performance discrepancy (Ideal versus Actual Performance)
  • Determine the cause(s) of the discrepancy
  • Recommend the appropriate solution(s)

Issue-3: FEAR
Some Diversity departments do not pursue DROI® measurement implementation due to fear of failure or fear of the unknown. Fear of failure appears in many ways. Designers, developers, facilitators, and program owners may be concerned about the consequences of a negative DROI®. They fear that the DROI® measurement process will be a performance evaluation tool instead of a process improvement tool. Also, the DROI® process will stir up the traditional fear of change. This fear is often based on unrealistic assumptions and a lack of knowledge of the process.

Small Dose-3: Overcome FEAR by Taking Action
The best way to overcome FEAR is by (a) taking action, (b) generating results, (c) evaluating the outcome, and (d) implementing improvements. FEAR is often based on a lack of knowledge so the antidote is to “learn” and “master” the DROI® skills and processes.

Issue-4: Discipline and Planning
A successful DROI® evaluation implementation requires much planning and a disciplined approach to keep the process on track. Implementation schedules, evaluation targets, DROI® analysis plans, measurement and evaluation policies, and follow-up schedules are required. The Diversity Change Management team may not have enough discipline and determination to stay on course. This becomes a barrier, particularly if there are no immediate pressures to measure the return. If the current senior management group is not requiring a DROI® evaluation, the Diversity Change Management team may not allocate time for planning and coordination. Also, other pressures and priorities often eat into the time necessary for an effective DROI® evaluation implementation. Only carefully planned implementation efforts succeed.

Linkage Graphic using Puzzle Piece

Develop Strategic Capabilities and Follow-thru

Small Dose-4: Build DROI® Discipline and Planning Focus
There is really no substitute for implementing a thorough approach to a DROI® evaluation process. The practice of Diversity ROI evaluation should be an “industry standard of professionalism and competence” in the Diversity and Inclusion field and discipline. To do otherwise sets us apart from other professional discipline such as Marketing, Sales, Operations, etc. that require standard metrics and analyses to determine their effectiveness and impact. Diversity ROI impact analysis must be implemented using effective project planning and management skills as well as following the DROI® methodology according to each step in its design.

Issue-5: False Assumptions
Many Diversity staff members have false assumptions about the DROI® process that keep them from attempting DROI®. Typical assumptions include: (a) The impact of intervention cannot be accurately calculated, (b) Operating managers do not want to see the results of Diversity expressed in monetary values. They won’t believe it, (c) If the CEO does not ask for the DROI®, he or she is not expecting it, (d) CDO denial – “I have a professional, competent staff. Therefore, I do not have to justify the effectiveness of our programs”, (e) Learning or this type of intervention is a complex but necessary activity. Therefore, it should not be subjected to an accountability process, etc. These false assumptions form perceptible barriers that impede the progress of a DROI® evaluation implementation.

Performance Measurement

Use Evidence-based Data for Credibility

Small Dose-5: Eliminate Any False Assumptions
Credible processes rooted in strategic performance-based sciences to calculate Diversity ROI have been in existence for over 30 years. Yet, Diversity practitioners have been slow to enroll and learn what it takes to be fully competent and capable in this scientific discipline. Let’s face it; the DROI® evaluation process and its associated analytics are here to stay. It’s only realistic that Diversity practitioners eliminate any false assumptions, wishful thinking and/or outdated measurement paradigms that prevent them from being effective. In the future, there is likely to be even more demands for DROI® analysis feedback, demonstrated credibility and intervention performance value that tie to the organization’s bottom line.

Dr H Book Tower Graphic for Proposals

Sample Diversity ROI Resources by Dr. Hubbard

Using these processes has the added benefit of improving the effectiveness of all Diversity interventions we conduct. Only those Diversity Practitioners who can operate as full strategic business partners will have what’s needed to survive for the long term. Do You Have What It Takes To “Survive”, “Thrive”, and “Drive” Real Business Performance using  Diversity & Inclusion? The next move is yours!

Dr. Edward E. Hubbard is President & CEO of Hubbard & Hubbard, Inc. and is recognized as the pioneer and founder of the Diversity Measurement and Diversity Analytics fields. He is the author of over 40 plus books including the ground-breaking “Measuring Diversity Results”, “How to Calculate Diversity Return on Investment”, “The Diversity Scorecard: Evaluating Diversity’s Impact on Organizational Performance”, “Diversity Training ROI”, “The Executive’s Pocket Coach to Diversity and Inclusion Management”, “Measuring the ROI Impact of ERGs and BRGs”, “The Diversity Discipline”, “The Hidden Side of Employee Resistance to Change”, and many more. Dr. Hubbard is available Keynote presentations, Strategic Diversity and ROI Consulting, Training, etc. He can be reached at edhub@aol.com.

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The Power of Diversity ROI Measurement Alignment : Part 2

In part one; I discussed four of nine steps to improve the alignment of diversity metrics with the bottom line of the business. In this segment (Part 2), I will outline the remaining steps of the methodology which cover a wide range of actions and metrics to build practical approaches to verify the strategic business needs of the organization.

Let’s continue examining the remaining alignment steps…

Step 5: Develop Interventions that are Practical, How-To Approaches

A lot of organizations will say they have diversity measures in place. However, when you actually check them, you see that they are activity counts. They’ll look around and say they’ve established a council or have had a particular celebration on a particular day. And while those are important, senior leaders don’t always see these things as bottom-line outcomes. They’re not looking at how the Diversity process increased market penetrations in key ethnic markets or how the Diversity process has added ‘X’ number of customers. Progressive companies show how they have utilized diversity and inclusion technologies to integrate Diversity process into productivity improvement issues, product quality issues and innovation challenges.

To have credibility, Diversity interventions must be developed in a way that seamlessly integrate with key organizational priorities at critical levels and are designed in a way that employees can use them right away to improve the organization’s functioning. To accomplish this, it may require having the flexibility to move away from pure “academic images” of Diversity theory and venture into the realm of the “live-lab” of real organizational problems and challenges. It means working “hand-in-hand” with line managers as strategic business partners to solve some of the messy problems of performance improvement and change. As Diversity professionals, we must ask ourselves…who am I developing this intervention for…to go along with the latest fad that other organization’s are using or for my internal (or external) clients to help solve their real business challenges? These challenges must be verified with an effective Business Needs Analysis in order to show the benefits and ROI impact.

It is important to stay clear of theories and fads that are not strategically tied to producing organization-enhancing results. Sure, some of them can help create “out-of-the-box” thinking that may help produce new, practical approaches that could generate value. However, these ideas need to be well researched and tested for their practical strategic value and potential impact.

It is also critical to limit “Diversity and Inclusion speak” when working with internal clients and sponsors. As a Diversity professional, we should know the nuances of Diversity and Inclusion processes; however your audience does not have to be masters of it. It may take a while to gain credibility from their vantage point. This credibility will come faster when you are able to demonstrate specific, measurable results in quantitative and qualitative terms. The results and outcomes of the Diversity initiatives must show how the results are tied to the organization’s bottom-line impact. The results you obtain will improve your level of credibility, commitment and involvement, not the merits of theories and fads alone.

Step 6: Get a Handle on Diversity R.O.I. (DROI®)

DROI® is a registered trademark of Hubbard & Hubbard, Inc. All rights reserved.

It is absolutely essential to master the technologies of Diversity ROI (DROI®) analytics and measurement processes for all of the interventions you provide. It is critical to identify interventions, programs, and activities that have a measurable impact on organizational performance.

I have always thought of Diversity as a professional discipline and field of study. However, if it is to be taken seriously as a discipline and field of study, it must possess a structure, framework and critical components that are consistent with other serious disciplines. For example, if we examine the disciplines of Marketing, Sales Operations, and the like, we would find they all have well-defined competencies, proven theories, and applied sciences that under gird their application. These theories and sciences provide a recognized structure, strategy and a set of measurable standards to guide those who work in the field.

If we examine the disciplines that include doctors, engineers, lawyers, and others, they must be certified to practice their craft. There are also certifications for human resource professionals such as the PHR and SPHR certifications offered by the Society for Human Resource Management (SHRM) for Human Resource Professionals, the HPI certification for Trainers by the American Society for Training and Development (ASTD), or the CPT certification for Organization Development professionals offered by the International Society for Performance Improvement (ISPI).

The Hubbard Diversity Measurement and Productivity (HDM&P) Institute offers seven diversity certifications based in its Diversity ROI® and Diversity ROI Analytics® methodology:

  • Certified Diversity ROI Professional® (CDRP)
  • Certified Diversity Trainer® (CDT)
  • Certified Diversity Advisor® (CDA)
  • Certified Diversity Performance Consultant® (CDPC)
  • Certified Diversity Business Partner® (CDBP)
  • Certified Diversity Strategist® (CDS)
  • Certified Diversity Intervention Specialist® (CDIS)

These fields of study contain specific, identifiable roles that are performed, areas of expertise that allow a practitioner to build specialized concentrations of skills and knowledge within the discipline, detailed outputs produced by these roles, as well as a model of measurable competencies that define specific behaviors that enable the work to be completed with a high degree of accuracy and effectiveness.

As a professional discipline, Diversity ROI practices must align with key objectives and outcomes to operate with similar standards built on a solid framework of both concept and science. These practices must be delivered through the work of competent, credible Diversity professionals using clear standards of excellence linked to business performance. Using our talents and skills, based upon a competency-rich Diversity Discipline Framework™, Diversity professionals will be able to integrate the ideas underlying Diversity and Inclusion with specific measurement strategies and organizational systems theory to create a Diversity-enriched climate that utilizes diverse resources more effectively. Getting a handle on ROI means identifying units of measure for the interventions and activities that have a measurable impact on performance. We must consistently apply measurement sciences, track our interventions, and publish them as Diversity ROI studies such that they can be utilized as “best practices”.

Sample measures which support a Diversity ROI measurement alignment strategy include covering key Diversity Scorecard perspectives such as:

Workforce Profile Perspective

  • Diversity Hit Rate
  • #/ % Minorities as Officials and Managers
  • #/% Diversity Survival and Loss Rate
  • #/% Turnover by Length of Service

Workplace Climate and Culture Profile Perspective

  • % Favorable Ratings on Cultural Audit Demographic Group
  • “Employer of Choice” Ratings versus Top 5- 10 Competitors
  • Retention Rates of Critical Human Capital
  • # and Type of Policies and Procedures Assessed for Diverse Workforce Impact

It is important to design evaluations and utilize metrics that are practical and reflect a systemic analysis. For example, use before and after measures which examine Diversity intervention results compared to key measures which are already established and utilized in the organization.

It is also imperative that you are cautious and careful with the procedure to demonstrate how you isolated the Diversity ROI value from all other possible interventions (that could have contributed to the organizational benefit).  Be careful what you take credit for. In a Diversity ROI study, it is important that you only list those outcomes you can control which demonstrate a “chain-of-impact” to the outcome. Diversity intervention outputs are “inputs” that fuel contributions to line results. There are usually many intervening variable in the outcome production process. Isolation techniques must include utilizing scientific processes such as control groups, time-series analysis, forecast estimates, etc., to attribute Diversity’s contribution to specific business outcomes and benefits (separate and apart from other contributors).

Step 7: Make Some “Hard-Nose” Decisions About What is Needed

It is essential to conduct a comprehensive Business Assessment or “Needs Analysis” to determine what interventions are necessary to meet the intent of the aligned business objectives.  For example, when evaluating an organizational challenge, a practitioner may be partial to a favorite diversity intervention regardless of the problem or need. It is crucial that a scientific approach is taken where effective data collection helps determine the appropriate response, not what the practitioner favors.  Performing a comprehensive Needs Analysis is the cornerstone of implementing a solid, credible performance improvement process. It helps practitioners make “hard-nosed” decisions and provides an appropriate justification for either developing or not developing a diversity intervention.  We must conduct a needs analysis, no matter how abbreviated, before any intervention development takes place.

If a Diversity Training intervention is required, for example, the objectives of the Needs Analysis are to:

  • Describe the exact nature of a performance discrepancy
  • Determine the cause(s) of the discrepancy
  • Recommend the appropriate solution(s)
  • Describe the learner population

In general, Needs Analysis consists of the following steps.

  • Step 1: Identify and describe the performance discrepancies.
  • Step 2: Determine the causes of the discrepancies.
  • Step 3: Identify those performance discrepancies that are based on lack of skill or knowledge. Then identify the skills and knowledge needed that is related to diversity and diversity competence.
  • Step 4: Determine whether diversity training or another intervention is a viable solution.
  • Step 5: Recommend solutions.
  • Step 6: Describe the performer’s and organization’s role in behaviorally specific terms that relate to diversity excellence and performance.

How Are Diversity Training Analysis and Evaluation Linked to Diversity Measurement Alignment?

A needs analysis establishes the criteria for measuring the success of training after its completion. A thorough needs analysis should answer the question:

“What good will training do?”

A thorough Diversity ROI training evaluation will answer the question:

“What good did training do and what was the Return on Investment (DROI)?”

An effective Diversity ROI training evaluation cannot be conducted unless a thorough needs analysis has been completed. We cannot determine what was accomplished by a Diversity training intervention or program unless we have first defined what the program was intended to accomplish. The Diversity training needs analysis provides baseline measures against which to judge our Diversity training efforts and will help us make the hard-nosed decisions about what is the best way to meet our internal/external client’s need.

Step 8: Get Away From a Program Orientation

Diversity is not a program; it is a process of systemic organizational change. Programs have a beginning and an end. However, people will never be finished with their differences. Therefore Diversity interventions and the metrics that support them must reflect a range that supports the systems and processes that drive real organizational performance.  The context for diversity performance is the organization’s business and its objectives. To be relevant and aligned, it is critical to think in terms of the business, its goals, objectives and its performance needs. It requires Diversity practitioners connect to and work in concert with all levels of the organization.

It is reported that many top and senior executives truly support their Diversity organizations and process, but feel they should play a stronger strategic role in the growth and development of the organization. They expect Diversity practitioners to help increase productivity and provide solutions that generate a stronger competitive edge. In effect, both top and line managers are seeking Diversity professionals who can function as “strategic business partners” to solve real business problems which have a bottom-line impact on the organization’s day-to-day and strategic priorities. To successfully align and link Diversity strategies with the organization’s strategic business plan, you must actively pursue top and line managers regarding their specific business problems and speak their language. For example, if we are working with the Finance department, we must be able to talk about their problems and potential solutions using Diversity in financial terms, impacts and consequences. If the problem is focused in the operations area, we must talk in operational terms, etc.

Step 9: Stick With It!

Developing a Diversity ROI measurement capability is a “skill”. And like any skill we must learn what it is, understand its applications, use it, study the feedback from its use and refine the skill until we build a level of competency. This is an expectation for anyone that offers themselves up as an “expert” in a particular discipline or field of study. We expect doctors, engineers, social scientists, technicians, etc., to have mastered their craft in order to trust the solutions and alternatives they suggest. The same is true for Diversity professionals. We must hold ourselves to a high standard whether or not our C-Suite executives and others ask for it.

A critical element of meeting that standard is a strategic alignment with the strategy, structures and systems that drive the organization’s performance. It is imperative to take advantage of learning and listening opportunities that broaden our understanding, build Diversity ROI capability as well as business acumen.

It’s not easy. It will take a lot of work and a heavy persistence for excellence at your craft. It requires that we possess an internal standard that says we do not accept being mediocre at our craft. Developing this expertise won’t happen overnight or without setbacks and frustrations, but it can be done and is worth the struggle. This means that as Diversity professionals, we must develop a “strategic alignment mindset” that places our Diversity ROI measurement efforts on par with any discipline that drives business results and success!

 

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Diversity ROI Measurement Skills in Small Doses: Moving beyond Excuses

CEOs Want to Know the Impact of Diversity ROI on Initiatives but Aren’t Getting It!

A recent study of CEOs analyzing what CEOs want from their Diversity organizations concluded that CEOs want to see the impact and ROI of their Diversity investments but instead receive only activity and satisfaction data. So, why aren’t Diversity & Inclusion Executives, Managers, Practitioners, etc. measuring their impact and sharing with their CEOs? After all, this is not exactly a revelation. Some of the leading reasons are lack of resources, lack of support from the CEO, lack of funding, lack of skills, etc. My take: these are all just excuses since there are a huge number of resources, books, workshops, etc., available. This strongly suggests that many Diversity Practitioners need a serious skill update or should excuse themselves out of the job. If they remain without these skills, at some point, they may face elimination and/or extinction.

This is the 21st Century, with its emphasis on cutting edge as well as “State of the Practice” technological and analytical advances, yet Diversity Practitioners are using old-fashion measurement skills where the wheels immediately come off of their measurement system wagons. We haven’t been in the “Old West” of Diversity measurement for quite a few decades. State of the Art Diversity ROI processes have been here for quite some time.

 

Accountability Trends

Many enlightened business managers often take a professional business approach to Diversity, with ROI being part of the strategy. Top executives who watched their diversity budgets continue to grow without appropriate accountability measures have become frustrated with this approach. In an attempt to respond to the situation, they have turned to Diversity Return on Investment (DROI®). Top executives are now demanding DROI® calculations from Diversity departments where they were not required previously.
So, what factors prevent us from mastering Diversity ROI measurement? Here are a few excuses I hear that Diversity Practitioners say are consistently challenging and “Small Doses” to begin to address them:

Issue-1: Lack of Skills and Orientation
Many Diversity staff members neither understand ROI nor do they have the basic skills necessary to apply the process within their scope of responsibilities. Diversity ROI Measurement and evaluation is not usually part of the preparation for the Diversity job or taught as part of a university education focused on diversity. Also, the typical Diversity training program or intervention does not focus on results, but more on diversity awareness concepts, activities, or other issues. Staff members attempt to measure results by measuring learning only instead of the full range of Diversity performance intervention outcomes (at all 7 levels) that drive business. Consequently, this is a tremendous barrier to implementation that must be changed such that the overall orientation, attitude, and skills of the Diversity staff member are focused on business results, impact, and/or outcomes.

Small Dose-1: Build DROI® Skills and Measurement Orientation
Don’t wait until you are asked about the DROI® of your Diversity intervention to gain competency and business acumen in this area, start learning about DROI® today! Attend a Diversity ROI Webinar, Workshop, Read books on Diversity ROI, Use DROI® Tools, etc.

Issue-2: Faulty Needs Assessment
Many existing Diversity interventions are not based on an adequate needs assessment. Some diversity interventions have been implemented for the wrong reasons based on requests to chase a popular fad or trend in the industry. Even worse, they schedule training for everyone in the organization costing thousands or millions of dollars with NO measurable DROI®. If the intervention is not needed, the benefits from the program will be minimal or wasted. A DROI® calculation for an unnecessary program will likely yield a negative value. This barrier can be eliminated by training and certifying Diversity Executives and Practitioner in programs such as the Hubbard Diversity ROI technologies, training measurement workshops, etc.

Small Dose-2: Learn the Detailed Steps to Conduct a Comprehensive Needs Assessment
Needs analysis is the cornerstone of any Diversity performance analysis effort. It provides you with appropriate justification for either developing or not developing your Diversity intervention. You must conduct a needs analysis, no matter how abbreviated, before any Diversity intervention takes place.
The objectives of a needs analysis are to:
• Describe the exact nature of a performance discrepancy
• Determine the cause(s) of the discrepancy
• Recommend the appropriate solution(s)
• Describe the target population

Issue-3: FEAR
Some Diversity departments do not pursue DROI® measurement implementation due to fear of failure or fear of the unknown. Fear of failure appears in many ways. Designers, developers, facilitators, and program owners may be concerned about the consequences of a negative DROI®. They fear that the DROI® measurement process will be a performance evaluation tool instead of a process improvement tool. Also, the DROI® process will stir up the traditional fear of change. This fear is often based on unrealistic assumptions and a lack of knowledge of the process.

Small Dose-3: Overcome FEAR by Taking Action
The best way to overcome FEAR is by (a) taking action, (b) generating results, (c) evaluating the outcome, and (d) implementing improvements. FEAR is often based on a lack of knowledge so the antidote is to “learn” and “master” the DROI® skills and processes.

Issue-4: Discipline and Planning
A successful DROI® evaluation implementation requires much planning and a disciplined approach to keep the process on track. Implementation schedules, evaluation targets, DROI® analysis plans, measurement and evaluation policies, and follow-up schedules are required. The Diversity Change Management team may not have enough discipline and determination to stay on course. This becomes a barrier, particularly if there are no immediate pressures to measure the return. If the current senior management group is not requiring a DROI® evaluation, the Diversity Change Management team may not allocate time for planning and coordination. Also, other pressures and priorities often eat into the time necessary for an effective DROI® evaluation implementation. Only carefully planned implementation efforts succeed.

Small Dose-4: Build DROI® Discipline and Planning Focus
There is really no substitute for implementing a thorough approach to a DROI® evaluation process. It must be implemented using effective project planning and management skills as well as following the DROI® methodology according to each step in its design.

Issue-5: False Assumptions
Many Diversity staff members have false assumptions about the DROI® process that keep them from attempting DROI®. Typical assumptions include: (a) The impact of intervention cannot be accurately calculated, (b) Operating managers do not want to see the results of Diversity expressed in monetary values. They won’t believe it, (c) If the CEO does not ask for the DROI®, he or she is not expecting it, (d) CDO denial – “I have a professional, competent staff. Therefore, I do not have to justify the effectiveness of our programs”, (e) Learning or this type of intervention is a complex but necessary activity. Therefore, it should not be subjected to an accountability process, etc. These false assumptions form perceptible barriers that impede the progress of a DROI® evaluation implementation.

Small Dose-5: Eliminate Any False Assumptions
Let’s face it, the DROI® evaluation process and its associated analytics are here to stay. It’s only realistic that Diversity practitioners eliminate any false assumptions, wishful thinking and/or outdated measurement paradigms. In the future, there is likely to be even more demands for DROI® analysis feedback, demonstrated credibility and intervention performance value that tie to the organization’s bottom line.

Using these processes has the added benefit of improving the effectiveness of all Diversity interventions we conduct. Only those Diversity Practitioners who can operate as full strategic business partners will have what’s needed to survive for the long term. Do You Have What It Takes To “Survive”, “Thrive”, and “Drive” Real Business Performance using Diversity & Inclusion?

 

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Why Diversity & Inclusion Professionals Need Predictive and Other Analytics

Challenges of Diversity Metrics

There’s a fair amount of buzz around Diversity measurement and analytics. Advances in software, newly-available data sources, and how-to manuals have made it easier gain access to Diversity measures. Although interest in measuring the effects of diversity has been growing, the topic still challenges even the most sophisticated and progressive diversity departments. Many Diversity professionals and practitioners know they must begin to show how diversity is linked to the bottom-line or they will have difficulty maintaining funding, gaining support, and assessing progress.

The Data-to-Wisdom Continuum

Over the past several years, Diversity journals abound with volumes of information about the impact of a diverse workforce, primarily from a talent representation point of view focusing on organizational make up covering race, rank, and gender (counting heads). Many of these Diversity professionals are working with inconsistent, basic information and have yet to move from being reactive to proactive and predictive. In short, they have made little progress along the data-to-information-to-wisdom continuum needed to provide sophisticated diverse workforce insights that are critical to strategic decision making. How would you respond to the following questions?

  • Do you struggle with defining or measuring the success of Diversity initiatives or other Diversity interventions?
  • Are you constantly fighting the battle to show and justify the value that Diversity initiatives or other Diversity interventions are bringing to your organization?
  • Does your organization view Diversity initiatives or other Diversity interventions as an expense versus an investment with predicted returns?
  • Do you need to link Diversity initiatives or interventions with the value it produces for your company?
  • Do you need a method of predicting (forecasting) the value of Diversity initiatives or other Diversity interventions to help decide whether to train and/or do something else?
  • Are your current Diversity evaluation efforts always after the fact–do you need a way to measure success using leading indicators that drive continuous improvement?

If you answered yes to any of these questions, then Predictive Analytics for Diversity is for you.

For the past 8 years, I have been researching and developing a new comprehensive “Predictive Analytics for Diversity” approach and framework that addresses all of the above questions and more. My goal often is to create the “next-level” of Diversity ROI-based tools that give Diversity professionals a competitive edge and alignment to drive business performance and results. The Hubbard Predictive Analytics for Diversity framework is designed for professionals looking to break new ground to demonstrate the strategic ROI value of Diversity and Inclusion, or breathe life into floundering Diversity initiatives that have little evidence-based value.

What are Analytics

Analytics come in different types with a specific focus. They can be defined as follows:

  • “Analytics” is the Science of Analysis
  • “Descriptive Analytics” tells what has happened in the past and usually the cause of the outcome.
  • “Predictive Analytics” focuses on the future telling what is likely to happen given a stated approach.
  • “Prescriptive Analytics” tells us what is the ‘Best’ course of action.

Descriptive Diversity analytics can help us understand human capital challenges and opportunities in utilizing a diverse workforce. Whereas Predictive Diversity Analytics, helps us to identify investment value and a means to improve future outcomes from Diversity interventions and initiatives.

Companies struggle with evaluating whether their programs meet business needs and whether they are worthwhile investments. Reasons given for not measuring Diversity’s impact on business outcomes include statements such as “It is too difficult to isolate Diversity’s impact on results versus the impact of other factors”, or “Evaluation is not standardized enough to compare well across functions”.

Sound business practices dictate that Diversity & Inclusion professionals collect data to judge progress toward meeting the organization’s strategies and annual multi-year objectives. The Hubbard Predictive Analytics Framework, for example, is a new approach that provides compelling Diversity & Inclusion (D&I) data to executives, including:

  • predicting success of the D & I intervention in the three areas of Intention, Adoption, and Impact and measuring to see if success has been achieved;
  • leading indicators of future adoption (transfer of the intervention outcomes) and Impact (business results);
  • making recommendations for continuous improvement; and
  • isolating Diversity and Inclusion’s impact versus the impact of other factors.

The beauty of Predictive Analytics for Diversity is that it uses leading measures (Intention and Adoption) as a signal of results (Impact). If the leading indicators are below predicted success thresholds, actions can be implemented to “make adjustments” so that the desired results are realized.

You can interweave outcomes and leading indicators into Diversity interventions during the design and delivery phases to enhance their predictive validity and consistency in achieving sustained benefits. Predictive Analytics practices helps Diversity and Inclusion organizations move from an event-driven function to one that predicts success, measures its performance against those predictions, and is seen as returning significant shareholder value for the funds invested.

Benefits of Predictive Analytics for Diversity

The area of human capital analytics and “big data” has been around us for a while, yet I have found few Diversity professionals who are ready to step up to the challenge and opportunities that utilizing Predictive Analytics for Diversity offers. The greatest strength of a Predictive Analytics approach for Diversity is the active involvement of stakeholders setting their own intentions and measurement of adoption rates. This adds a high level of credibility to the practice of forecasted Diversity outcomes. To reap its benefits, it requires a genuine commitment to implementing a “science-driven”, rigorous approach to demonstrate Diversity’s value as a worthwhile business investment.

In addition, predictive analytics practices involving Diversity and Inclusion must implement measurement approaches based upon “utilization” (making heads count) not merely representation (counting heads). The presence of Diversity alone does not ensure progress, the strategic utilization of Diversity does. Diversity’s ability to add investment value and improved capability means, at least to some degree, the ideas, creativity, new perspectives, etc., generated from a diverse workforce have been applied and have generated a modicum of benefits. Predictive Analytics for Diversity and Inclusion offers tremendous insights into the value of a Diversity and Inclusion initiative’s approach and creates “informed-choice” decision making potential.

A recent monograph published by The Conference Board cited that organizations begin their analytics journey by using data at hand. Most organizations have access to an employee head count that decision makers can use to manage staff cost. This usage is akin to organizations that simply use head count data to reflect race, rank, and gender to ensure ethnic Diversity is present at all levels. Other organizations, however, use people data to make real-time staffing decisions to help drive revenue and performance. MIT Sloan Management Review, in collaboration with IBM Institute for Business Value, describes a continuum representative of organizational capability with analytics. They conducted a survey of more than 3,000 business executives, managers, and analysts from organizations around the world. Based on “how thoroughly their organization had been transformed by better uses of analytics and information,” the authors segmented respondents’ organizations into three categories:

1) Aspirational organizations that use analytics to justify actions. The focus is primarily on efficiency rather than revenue growth, and they have limited ability to capture and analyze data to make decisions.

2) Experienced organizations that build on what they learned at the aspirational level and use analytics to guide actions. They focus on revenue growth, with less focus on efficiency. While they still lack an understanding of how to leverage analytics for business value, they are moderately skilled at capturing, aggregating, and analyzing data to make decisions.

3) Transformed organizations are highly skilled in analytics across functions. They use analytics as their competitive differentiator. These organizations focus more on revenue growth and less on cost than either the aspirational or experienced organizations. Data analysis includes the most rigorous approaches to make decisions using insights to guide future strategies as well as day-to-day operations. According to the MIT study, organizations described as transformed are “three times more likely than aspirational organizations to indicate that they substantially outperform their industry peers.”

Applying this three-tier framework to your organization’s use of analytics for Diversity, what level of practice and application does its use of metrics reflect: Aspirational, Experienced, or Transformed? Are you ready for the full implementation of Predictive Analytics for Diversity and Inclusion as an integrated practice in your organization’s Diversity measurement strategy?

Beyond these benefits, you may be wondering why should Diversity professionals learn these new analytic skills? No one is really asking us to provide measures other than “representation”, “rank” and “gender”. Looking at a few numbers helps to answer this question. Let’s start with intangibles for example – organizational assets that are not physical in nature. Intangibles include intellectual property, knowledge, reputation, etc. These sorts of assets represent an ever-growing percentage of the average organization’s market value, increasing dramatically from 9 percent of market value in 1980 to 65 percent today.

And what do all forms of intangibles have in common? They’re created by people. A few decades ago, if you wanted to increase your company’s value, you focused on managing your physical assets – plants, equipment, etc. Today, if you want to increase value, you need to manage your people – your human capital.

This, more than anything else, explains why analytics are now an essential strategic Diversity professional competence area. Executives and boards of directors are always focused on company value. Today, that means they need to be focused on their people. Some companies and Diversity practitioners recognized this earlier than others, and some companies have done a better job managing their people. How have those companies fared? Extraordinarily well!

A Boston Consulting Group study from 2012 found that companies appearing on the Fortune “100 Best Companies to Work For” list at least three times in a ten-year period cumulatively outperformed the market by an average of over seven percentage points per year for ten straight years.

All told, the numbers certainly support the world’s current fascination with analytics – and suggest that focus will continue to intensify in the years to come. Are you on board? If so, you will find an informative body of knowledge and insights waiting for your use to drive strategic performance improvement and success for your organization!

 

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Diversity Process Consulting or Intervention Consulting: How Do We Demonstrate Our Unique Value?

Building an Effective Diversity Measurement System

The creation of an effective Diversity measurement system and “best” practices cannot be a mechanical modeling exercise. It must be preceded by an inspection and utilization of basic business principles. It must focus on organizational and departmental strategic thinking as well as an assessment of the desired quality of work-life. Developing the actual measures is easy compared to the amount of time that should be spent thinking about what is important to the organization’s strategic business objectives and the expectations of the diversity measurement process.

Key steps to building an effective measurement system

Creating an effective Diversity measurement system and process that embodies these concepts involves at least five critical steps:

  • Review the Strategic Business Plan for Needs
  • Formulate Research Questions
  • Design the Study Methodology
  • Collect and Analyze Data
  • Implement Solutions and Communicate Results

Each step in the process logically builds on the previous step which generates an evidenced-based framework that creates a “Best Practice” method for proving Diversity’s link to performance.

With proper training and skill/competency development, one of the more critical roles a Diversity Practitioner and Professional can perform is that of a Diversity Performance Consultant/Technologisttm. This role in the Hubbard & Hubbard, Inc. Diversity Discipline Framework requires the Practitioner to design, develop and deliver or evaluate diversity performance solutions; maintain and apply an in-depth working knowledge in any one or more of the diversity performance improvement areas of expertise; take a disciplined approach to assessing individual and organizational effectiveness in the midst of collective mixtures of differences and similarities, diagnose causes of diversity tensions from differences, similarities and complexities, and recommend a set of interventions; as well as design solutions to improve diverse workforce performance and/or solutions to improve the organization’s performance.

I have always viewed Diversity ROI & Inclusion methods as “performance improvement technologies”. I am also a strong supporter of participatory approaches to performance improvement, from involving stakeholders in the identification of needs and their causal factors to determining solution alternatives, selecting the solution, planning and managing the change, and monitoring and evaluating the change. This active stakeholder participation is critical to the sustainable success of any Diversity & Inclusion (D&I) intervention, not only because we gain real buy-in from stakeholders, but also because part of what we do as rigorous Practitioners ultimately, is to change the way people think about and approach D&I performance solutions in organizations.

Diversity Intervention Consulting is primarily focused on a specific transaction, the provision of an intervention (e.g., Cultural Competency Skills for Leaders training), whether it is a specific process or product. In this case, the performance consultant, as “expert,” carries the bulk of the responsibility for delivering the intervention, but does not typically stick around for the consequences of such interventions. Partially rooted in the sociological tradition in new systems theory which views organizations as self-organizing social systems, Performance/Process Consulting provides a different approach. With a Performance/Process Consulting approach, however, the Diversity Performance Consultant/Technologisttm and the client are equal partners who share the responsibility for the desired change. There is a reduced chance of falling into fads or trendy solutions that may be insufficient or not fully applicable to the organizational realities, because both the Diversity Performance Consultant/Technologisttm and the client are partners in the change and its consequences. Both have a stake in the success of the intervention, and both learn lessons along the way. Moreover, they involve others in the organization, so that these lessons learned benefit more than just a few.

I am convinced that the real value of our work is much more than a roster of interventions (no matter how evidenced-based); rather, it is the paradigm shift that we contribute to in the course of our involvement with our stakeholders. Our ultimate value is in the sustainable and positive change of the organization’s performance system that is now able to operate at its goal or outcome level. While neither resource was utilized exclusively, it is certainly worthwhile for us to reflect on our own approach and determine whether we consciously or subconsciously assessed the situation to determine what balance or blend would be of most value for the given situation.

It is always helpful to review our Performance Consulting approach because of the wide range of relevant topics and ROI-based metrics that fit under the performance improvement umbrella. I am fond of saying that “focusing on tactics without a strategic framework is like learning to run faster in the wrong direction”. You cannot make a strategic contribution without a tight alignment and linkage to the business objectives and success metrics of the organization. If you want to have your interventions resonate with the C-suite and line managers of the organization, they must be based in the real bottom-line needs that drive organizational performance. Whether the organizational initiative is diversity training to teach cultural competency skills, selling products to emerging market clientele, innovating new products and services for a global market, delivering healthcare services, serving governmental constituents, meeting a wide range of student needs, improving the customer service experience, etc., “strategically aligned” diversity performance strategies have the best chance at success and sustainability.

Let’s take a look at an example that helps to clarify this relationship. First, among the organization’s strategic objectives, you find a series of crucial performance areas. One of these areas focuses on an objective of improved customer service. Based upon the importance of this area to the business, the diversity organization has created a corresponding strategic objective to analyze and improve service across all demographic market segments. In the second step, you determine that for service to be improved in these targeted markets, the critical success factor areas must include “improved communication”, “culturally appropriate interactions”, quick access, increased satisfaction, and accurate information. Finally, these critical success factor areas lead you to select diversity performance measures and indicators that support each critical success factor area such as the “percentage of multilingual service transactions delivered”, “number of rings to answer” when a customer calls the organization, “percentage of favorable response on your diverse customer satisfaction survey”, etc. This type of alignment drives improved performance and gains top management support.

Both Diversity Process Consulting and Diversity Intervention Consulting can offer strategic value to the organization. The key is how well each Performance Consulting method meets critical needs of the business to drive its goals, outcomes and success. At what value level would stakeholders rate your internal Performance Consulting methods today? What do you need to do differently to enhance your role as a value-added business partner?

Dr. Hubbard is an expert in Organizational Behavior, Organizational Analysis, Applied Performance Improvement and Measurement Strategies, Strategic Planning, Diversity Measurement, and Organizational Change Methodologies. He holds a Practitioner Certification and Master Practitioner Certification in Neurolinguistic Programming (NLP), a Neuro-science discipline. Dr. Hubbard earned Bachelors and Masters Degrees from Ohio State University and earned a Ph.D. with Honors in Business Administration.

 

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Three Critical Dimensions and Seven Levels that Turn Diversity & Inclusion Evaluation into Results

“Three Critical Dimensions and Seven Levels that Turn Diversity & Inclusion Evaluation into Results”

Evaluation is a task that every Diversity Practitioner will face at one time or another. No matter what your role such as Trainer, Consultant, Chief Diversity Officer (CDO), Council Member, ERG/BRG Leader, etc., conducting an evaluation to assess key aspects of your Diversity and Inclusion initiatives is inevitable.

Two Definitions of Evaluation

 

People do not always agree on one definition of evaluation. Following are statements that reflect two different definitions:

  • “Evaluation is the systematic process of collecting and analyzing data in order to determine whether and to what degree objectives have been or are being achieved.”
  • “Evaluation is the systematic process of collecting and analyzing data in order to make a decision.”

Notice that the first ten words in each of the definitions are the same. However, the reasons-the “Why!”-for collecting and analyzing the data reflect a notable difference in the philosophies behind each definition. The first reflects a philosophy that as an evaluator, you are interested in knowing only if something worked, if it was effective in doing what it was supposed to do. The second statement reflects the philosophy that evaluation makes claims on the value of something in relation to the overall operation of a Diversity program, project, or event. Many experts agree that an evaluation should not only assess program results but also identify ways to improve the program being evaluated. A Diversity program or initiative may be effective but of limited value to the client or sponsor. You can imagine, however, using an evaluation to make a decision (the second definition) even if a program has reached its objectives (the first definition). For example, for Non-Profits, Federal grants are based on the first statement, that is, whether the program has achieved its objectives, but the harder decision to downsize or change may be a consequence of the second definition of evaluation.

For some, endorsing Diversity Evaluation is a lot like endorsing regular visits to the dentist. People are quick to endorse both activities, but when it comes to doing either one, many Diversity Practitioners are very uncomfortable. In this blog, I want to reduce your discomfort by demystifying some important aspects of designing and conducting a Diversity ROI evaluation by helping you get to know a few Diversity metrics processes that matter in evaluation design.

In both for-profit and nonprofit organizations, organizations possess data (and information) that could help to evaluate a Diversity program or project. These data are the one thing that all evaluations have in common regardless of the particular definition of evaluation you embrace: “evaluation is the systematic process of collecting data that help identify the strengths and weaknesses of a program or project. The data may be as simple as records of attendance at training sessions” or, as complex as “showing test scores showing the impact of a new educational program on increasing students’ knowledge across an entire school system”.

Evaluating Efficiency, Effectiveness, and Impact

We can define Diversity evaluation even more closely as a process. The process is guided by the reason for doing the evaluation in the first place. An evaluation might be a process of examining a Diversity training program, in light of values or standards, for the purpose of making certain decisions about the efficiency, effectiveness, or impact of the program. To carry out this task, you need to understand the concepts of efficiency, effectiveness, and impact. Think of these three terms as the levels of a program evaluation.

“Efficiency” relates to an analysis of the costs (dollars, people, time, facilities, materials, and so forth) that are expended as part of a program in comparison to either their benefits or effectiveness. How is efficiency, or the competence with which a program is carried out, measured in a program? The term itself gives clues to what this is about. Diversity Practitioners would look at the efficiency with which details are carried out in a program. Diversity programs and initiatives often begin with recruiting, gathering materials, providing for space, setting up fiscal procedures, and so forth. In other words, the relationship between the costs and end products becomes the focus of an efficiency evaluation. Although very important, these aspects of efficiency have no bearing on the program’s effectiveness. If the investment in the program or project exceeds the returns, there may be little or no efficiency.

For example, let’s consider an assembly line facility that houses a rather substantial training and staff development department. As part of this department, ten instructors are responsible for ensuring that five hundred employees are cycled through some type of Diversity training every six months, for a minimum of twenty hours of training each cycle. The training revisits the employees’ basic knowledge of their job and introduces new concepts of Diversity that build additional competencies since the last training. The staff development department might work very efficiently by making sure that all employees cycle through in a timely fashion, in small enough groups to utilize the best of what we know about how adults learn. The students’ time on task is often not enough, however, and many of them do not retain much of what was covered in the training. Thus the program is not effective.

The department may be efficient in that it fully utilized the time of each of the available trainers, it stayed within the parameters of the staff development budget, it kept employee “down time” to a minimum, it used materials and equipment that were available, and it completed the Diversity and Inclusion training agenda for the company. Yet there may be an increase in cultural miscommunication incidents and generational conflict across levels because employees make simple, basic mistakes and assumptions about others who are different than themselves. The department’s training was efficient but not necessarily effective.

When you examine the “effectiveness” of your Diversity and Inclusion initiatives, you are asking this question: “Did the activities do what they were supposed to do?” Simply put, an initiative’s effectiveness is measured in terms of substantive changes in knowledge, attitudes, or skills on the part of a program’s or initiative’s participants. Although the right number of participants may have been recruited and the best possible site may have been secured, the effectiveness test is this: Did the activities provide the skills to effectively handle Diversity and Inclusion-related situations! Did the participants gain the knowledge they need to work across generational differences? In another example, the same Diversity and Inclusion department staff may conduct a training session on a new approach to deescalate cultural conflict situations. The trainer may pretest all the employees as they begin their training session. Upon completion, the employees are post-tested and the results compared to determine whether their knowledge increased, decreased, or stayed the same. An increase in their knowledge would be an indication that the training was effective-it did what it was supposed to do. Yet two weeks after the training, when one of the employees was back at her job location, a situation arose in which she engaged in a serious altercation with another employee and failed to use the skills taught. She used her older, more comfortable procedure for addressing communication differences across cultures and caused a problem that put her and her coworkers at the risk of suspension. Here is an example of training that was effective-the worker passed all the posttests-but had little impact on changing the behavior of the employee.

Thus the impact that the program has had on the people or organization for which it was planned becomes an important evaluation consideration. “Impact” evaluation examines whether and to what extent there are long-term and sustained changes in a target population. Has the program or initiative brought about the desired changes: Are employees using the new procedures? Do your employees have more job satisfaction?

Evaluators frequently pay too little attention to assessing impact. One reason is that “impacts” often manifest themselves over time, and Diversity Practitioners have already turned their attention elsewhere before computing this aspect of the evaluation. The actual impact that training in new procedures might have in people’s everyday life often needs time to percolate and evolve. An attempt to collect impact data after allowing for this delay may run into a number of roadblocks such as learner turnover (you cannot find them), job or circumstance change (they no longer are in situations that demand heavy use of the skill taught), or lack of time or resources for the evaluator to conduct these follow-up activities.

Still, program and project sponsors are most interested in impacts. Whether a learner feels satisfied with the training or the training results in knowledge gain means little to a sponsor or employer if the learning doesn’t help the organization.

Evaluating Alternatives

The second philosophical statement that defines evaluation presents it as the process of delineating, obtaining, and providing useful information for the purpose of selecting among alternatives. Thus, it may not matter whether the program was efficiently conducted, effective, or had an impact on behavior or functions, Instead, the value of the evaluation is in its being able to compare one activity to another, one initiative or program to another, or one employee to another so that decisions can be made in the presence of empirically collected data. Diversity Search Committees perform this kind of evaluation. In the course of their work, they describe job candidates’ strengths, outline previous experiences, and acquire other useful information that makes it possible to choose among a number of candidates. A company planning to adopt and purchase a computer system will perform this kind of evaluation on all the systems it is considering. It will select the one that performs the best given the needs and resources of the company.

 

Identifying Areas to Improve

Finally, there is a third way of defining evaluation: Evaluation is the identification of discrepancies between where a program or initiative is currently and where it would like to be. For example, an organization’s multicultural marketing department may have as one of its goals at least one face-to-face focus group with emerging market customers per year. Currently, its Sales force sees fewer than half of the multicultural customers in a year. Records of face-to-face calls indicate the discrepancy between where XYZ Corporation is currently as opposed to where the organization wants to be.

Personnel evaluations often take on this definition as well. A new employee’s first evaluation may be an example of the first definition, that is, an evaluation against some minimal standard of performance. After this initial evaluation, certain performance goals are set for the employee (either mutually or by the supervisor or team. The next and all subsequent evaluations of the employee are compared with those performance goals or standards. The discrepancies are identified and remediation strategies are developed.

The Critical 7 Levels — Don’t Perform Your Diversity Initiative or Diversity Program Evaluation without Them!

Other levels of evaluation as defined by the Hubbard Diversity ROI Methodology refer to the eventual us of the evaluation data and who might make use of the results

Diversity Return on Expectations (DROEx®), for example, must be based on evidence and impact results. I have found it useful to first to distinguish the “evidence-based, outcome-focused” measures from other types of “activity only” measures. Anyone responsible for implementing Diversity initiatives is also responsible for evaluation. Whether you calculate the impact or not, from management’s and/or the stakeholder’s point of view, “you will always own the ROI of the initiatives you implement”. So, the amount of evaluation that you provide to meet expectations depends on the types of decisions that your organization must make and the information needed to make those decisions. There are 7 levels you can use in the Hubbard Diversity Return-on-Investment DROI® evaluation methodology to effectively demonstrate your ROI impact and show a “chain of impact” to meet customer and stakeholder expectations that is evidence-based and credible:

  • Level 0: Business and Performer Needs Analysis
  • Level 1: Reaction, Satisfaction, and Planned Actions
  • Level 2: Learning
  • Level 3: Application and Behavioral Transfer
  • Level 4: Business Impact
  • Level 5: Diversity Return-on-Investment (DROI®), Benefit-to-Cost Ratio (BCR)
  • Level 6: Intangibles

For example, if your only requirement is to ensure that participants have positive attitudes toward the initiative, then a Level 1 evaluation is sufficient. But, if your goal is to determine whether your diversity initiative is having a positive effect on job performance, then you will have to perform a Level 3 evaluation. This means you will also have to conduct Level 1 and 2 evaluations in order to assess the learning performance applications and Job impact at Level 3 (an example of the “DROI® Chain of Impact”). They provide the basis for determining whether participants demonstrated that they learned by putting these skills and attitudes to use (verified by a Level 3 evaluation).

There’s no doubt that we must communicate effectively and demonstrate our value to the bottom-line. Diversity ROI metrics and performance improvement processes help us focus first on tangible outcomes, then on interventions to meet expectations. When Diversity Practitioners focus primarily on the intervention, such as the Diversity content, the method, or the technology, it’s easy to be led astray by current fads, thus wasting valuable time and money. Instead, focus first on the desired outcomes and DROI® analytics to determine what kind of measurable diversity intervention, if any, is necessary to meet customer and key stakeholder expectations.

Conducting glitzy Diversity training or other Diversity activities and implementing fad-based interventions can distract decision makers from what truly counts. The glitz may make things fun, louder and interactive, not necessarily better. Without a clear, data-based front-end analysis of organizational performance gaps, any intervention, including Diversity training and the like, is a guess. Add in sophisticated Diversity intervention technologies without an adequate front-end analysis, including metrics, and it becomes an expensive and often complex guess. Systematic Diversity training design procedures, for example, must include DROI® analytics and metrics, needs assessments, objectives, targeted competency-based design, and multi-level evaluation processes. That framework provides a method to get the coveted seat at the C-Suite table. Why? Because when used properly, that knowledge base can help companies increase revenue and decrease costs using Diversity and Inclusion practices that impact organizational performance outcomes. In other words, you can earn your seat at the executive table by applying what you already know as a Diversity ROI-focused professional. It’s successful because the DROI® metrics and processes you use are solidly based on the behavioral science research results which provide strategies detailing how diverse people interact and what drives their behavior to produce successful organizational outcomes.

If we examine any other professional discipline or field of study, like Medicine, Engineering, Accountancy, Science, etc., we expect that they are able to prove the efficiency, effectiveness, and impact of the solutions, programs and initiatives they what us to support. Why should Diversity and Inclusion be any different if we want our processes to have credibility and support?

Conducting a comprehensive Diversity Evaluation is the only true way to know if your Diversity and inclusion programs or initiatives are delivering the outcome results expected by key stakeholders to meet the needs of the organization. It is essential that Diversity Practitioners master critical Diversity and Inclusion evaluation methods using technologies that are rooted in Diversity ROI science. Why? Because the perceived value and credibility of what we do to be seen as a true Business Partner and Professional depends on it! Are you evaluating your Diversity and Inclusion initiatives and programs at this level?? What’s your department’s Brand and Credibility Image in your organization??

 

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Using a Diversity ROI Analytics Business Case to Show Diversity & Inclusion’s Payoff in Big $$$

Organizations depend on their diverse employees to grow their bottom line and achieve the aggressive goals needed to win in today’s global, fast-paced economy. They know the marketplace is full of a diverse group of customers, yet they do not always effectively utilize their diverse workforce members to create innovative, paradigm-shifting solutions.

This guide is designed to help you build your Diversity ROI Business Case to demonstrate value-added by aligning with key business goals and objectives:

  1. Market Share Improvement
  2. Improving Global Leadership and Management Capability
  3. Lowering Costs and Increasing Productivity
  4. Developing New Revenue Sources

Why should you concern yourself with effective Diversity ROI Measurement and Management? In the past, many managers answered this question out of a sense of the “right thing to do” or because they were seeing more and more people who didn’t look like them in the workforce, or merely felt they had to meet the organization’s requirement for working with diverse groups. However, today’s managers know that without effective diversity management capability, organizational effectiveness is in jeopardy. Being effective at managing a diverse workforce for example, helps to lift morale, improve processes, bring access to new segments of the marketplace and enhance productivity of the organization. In essence, it is good for business.

In profit-making organizations, maximizing the difference between revenues and costs optimizes performance. This same goal exists in many non-profit organizations, except that the result is called surplus instead of profits. The question therefore is: “How are workforce Diversity and its management related to revenues, costs, or both?” To answer this question we can explore several concepts and strategies that illustrate the impact of diversity on business performance. These concepts and strategies include items such as marketing strategies, problem-solving strategies, creativity and innovation that can be viewed as important factors in revenue generation.

Marketing Strategies and Market Share Improvement

We live in an increasing global world that is diverse. Whether your business includes marketing financial services, computers, telecommunications products, social services, health care equipment, manufacturing processes, engineering expertise, and the like, expertise in addressing a diverse customer market (Business-Consumer Archetype) will be essential to your success. For example, an automobile manufacturer in Japan cannot afford to ignore the fact that nearly half of all new car buyers in the United States are women. This is true regardless of the gender make up of car buyers in Japan. Likewise, no reasonable person in the consumer-goods industry can afford to ignore the fact that roughly a quarter of the world’s population is Chinese and immigration to the United States from mostly Asian and Latin American countries is occurring at a rate of more than a million people per year.

We know that in the United States, Asians, African-Americans, and Hispanics combined now collectively represent over a $Trillion dollars annually in consumer spending. The Selig Center for Economic Growth (from the University of Georgia Terry School of Management) estimates and projections of buying power for minorities—African Americans, Asians, Native Americans, and Hispanics—definitely share in driving business success, and together wield formidable economic clout. As these groups increase in number and purchasing power, their growing shares of the U.S. consumer market draw avid attention from producers, retailers, and service providers alike.

The buying power data presented here and differences in spending by race and/or ethnicity suggest that one general advertisement, product, or service geared for all consumers increasingly miss many potentially profitable market opportunities. As the U.S. consumer market becomes more diverse, advertising, products, and media must be tailored to each market segment. With this in mind, new entrepreneurs, established businesses, marketing specialists, economic development organizations, and chambers of commerce now seek estimates of the buying power of the nation’s major racial and ethnic minority groups.

In a Business-Consumer Archetype (B to C), your diversity measurement strategies and analytics must be “Relationship/Brand Focused”. They must measure your organization’s ability to build customer intimacy knowledge and “use it” in measurable ways to generate outcome-based results that add revenue and other value to the bottom-line. Sample Diversity measurement strategies must focus on areas such as: Cultural Competence, Market Share, Brand, Relationship/Service-based outcomes, etc.

Sample metrics may include:

  • % Market Share
  • $ Share of Wallet by Demographic Group
  • #/% Diversity Competent Leaders/Managers by Demographic Group
  • #/% New Products generated by Demographic Group and for Demographic Groups
  • Improvement in Average Speed of Problem Resolution using Diverse Work Team Suggestions
  • % Favorable Response on Diverse Customer Satisfaction Surveys

In a Business-Business Archetype (B to B) on the other hand, your Diversity Measurement strategies and Diversity Analytics must be “Relationship/Product/Process Focused”. Sample Diversity measurement strategies must focus on areas such as: Innovation, Creativity, Process Improvement, Relationship/Service-based outcomes, etc.

Sample metrics may include:

  • Consultative Selling-Culture/Style Match
  • Customer Relations Effectiveness using Diverse Workforce Suggestions
  • Creativity (Competitive Edge Generation) – # Patents Generated by Demographic Group
  • Innovation (Diverse Work Team)
  • Cycle-time Reduction – Process speed to market
  • Solution Set Match-to-Problem (Improvements generated by diverse team)
  • Cost Reduction (strategic Diversity)

Research to prove the value of Diversity and Inclusion must clearly demonstrate a “causal chain of impact” working through seven levels of analysis as well as isolate Diversity and Inclusion’s contribution from other possible contributors. These processes and sciences are embedded in in the Hubbard Diversity ROI Methodology and the Diversity High Impact Mapping process.

Improving Global Leadership and Management Capability

If an organization plans to sell or deliver goods and services in a diverse marketplace, it must be fully capable of effectively utilizing its diverse workforce in key strategic ways. For instance, it is important from a public relations point of view to be viewed as a company that is known for managing and utilizing its diverse workforce assets well. There are a number of well-publicized ratings for “The Best Company for Working Women and Working Mothers”, “The Most Admired Company” and the “The Top 50 Companies for Women and Minorities”. This fuels a public relations climate where workforce talent and consumers make choices about the organizations they would work for and buy from. This line of thinking is also supported by a study of stock price responses to publicity that changed either positively or negatively on an organization’s ability to manage diversity. Many studies have found that announcements of awards for exemplary efforts resulted in significant positive changes in stock prices while announcements of discrimination suits resulted in significant negative changes in stock prices.

In addition, organizations can gain a lot from the insights of its diverse workforce to understand the cultural effects of buying decisions and mapping strategies to respond to them. Depending on the product or service delivered by the organization, many employees may also represent part of the firm’s customer base! A good reputation inside the organization can help product and service sales outside the organization. Another key marketing strategy includes tapping employee network or resource groups. They can be an excellent resource for focus groups, feedback and ideas for honing the organization’s reach into diverse marketplace opportunities.

Lowering Costs and Increasing Productivity

Revenue increases can also show up due to improvements in diverse work team problem solving and decision-making. Diverse work teams have a broader and richer base of experience to draw on in solving organizations problems and issues. The presence of minority views creates higher levels of critical analysis of assumptions and implications of decisions. In addition, it also generates an increase in the number of alternatives from which the group chooses. Problem solving benefits from diverse work groups do not happen by simply mixing people together who are culturally different.   The improved outcomes heavily depend on a diversity-competent manager “utilizing” key diverse insights and experiences of the total group.

In one study, researchers found that properly managed and trained diverse work teams produced scores that were six times higher than homogeneous teams. Researchers also found that it is important how a diverse team uses its diversity. For example, those diverse teams that recognized and utilized their diversity had higher productivity. Even when the team was diverse, if that diversity is not used effectively, it can cause process problems that result in lower team productivity. The essential variable is a Leader’s or Manager’s ability to “effectively manage and utilize the team’s diversity”.

Developing New Revenue Sources

Creativity and innovation can be vital to an organization’s ability to perform. New product introductions, advertising, process re-engineering, quality improvements and the like are examples where these skills are required. Diverse work teams have also been found to promote improved creativity and innovation that generates revenue. In her book “The Change Masters”, Rosabeth Moss Kanter notes that highly innovative companies have done a better job of eradicating racism, sexism, and classism; tend to have workforces that are more race and gender diverse, and take deliberate steps to create heterogeneous work teams with the objective of bringing that diversity to bear on organizational problems and issues. Many organizations such as Pepsico for example, with the introduction of Guacamole Chips, and other innovations, created a plethora of new product SKUs generated by utilizing their diverse Employee Resource and Business Resource Groups.

As the buying power of diverse consumer segments including women, Hispanics, African Americans, and the lesbian, gay, bisexual and transgender community continues to grow, these segments represent a marketplace opportunity too big for retailers and consumer product manufacturers to ignore, according to “The Changing Consumer and the Workforce Imperative” Report. “This report focuses on how the retail and consumer products industry can unleash our multicultural workforces to achieve results that benefit our employees, our communities and our companies,” said Network Chair Michelle Gloeckler, senior vice president for merchandising execution at Walmart Stores. “Research for this project began at last year’s NEW Multicultural Workforce Conference and the results were previewed at this year’s conference in March. The Network believes that diversity and inclusion is critical to the future of our business.”

The report, based in part on one-on-one interviews with more than two-dozen leading U.S. consumer goods and retail executives, explores the correlation between workforce diversity and the ability of the consumer goods and retail industries to engage the changing U.S. consumer.

“Cultural connections are critical to understanding what drives purchasing decisions and brand loyalty across different market segments,” said Alison Paul, immediate past president of the Network of Executive Women, and vice chairman and U.S. retail sector leader, Deloitte LLP. “Making these connections rely on retailers’ and manufacturers’ ability to not only become more culturally aware-which are increasingly table stakes–but harness and value diverse perspectives as a source of innovation.”

Consumer insights most often come from those who share a consumer’s cultural experience, the report concludes. As such, recruiting, retaining and advancing a diverse workforce are integral to creating a brand/consumer connection, as consumers feel most comfortable doing business with companies whose employees mirror their communities.

According to the report, consumer product manufacturers and retailers may be able to achieve an inclusive culture by first understanding the bottom-line business opportunity, then making a commitment to diversity that touches all company departments. Top management should view workforce diversity not as a stand-alone program, but as an essential element for business survival. Achieving cultural competency involves leadership commitment and communication, employee accountability, strong talent recruiting and retention programs, progressive succession planning, diverse supplier relationships, and effective ROI measurement and analysis processes that capture impacts and results.

Appealing to a carefully segmented, diverse market is no longer only a niche opportunity for adventurous store managers and edgy entrepreneurs: Multiculturalism is fast becoming a retail and consumer goods industry opportunity too big to ignore. The same is true for “B to B” organizations as well. A diverse workforce serving a broadened customer base is a critical success factor because, as market research further demonstrates, a diverse workforce improves service outcomes and enhances financial performance regardless of the specific archetype.

Embracing Diversity as a way of thinking is the most effective response for business leaders and an important driver of an organization’s innovative engine. This means Diversity and Inclusion, and the archetypes that drive its constant performance, need to be brought to the forefront of your value proposition and ingrained in the organization’s cultural DNA. It must become a branded component of how you do business. When an authentic, inclusive culture is at work, a diverse workforce becomes capable of producing a broad range of original and engaging ideas that is simply not possible among homogenous employee populations. At the top of the organization, this can translate into more apt and financially rewarding decision-making.

The Diversity ROI Business Case highlighting the link between “Diversity and Inclusion Utilization” and Business Performance, not merely acquiring “Representation” alone, can be made by utilizing Diversity ROI processes and practices. From a Diversity ROI standpoint, Diversity measures and analytics must capture the outcomes and impact of these Diversity and business strategies in a way that demonstrates compelling evidence of Diversity’s contribution to the organization’s business objectives and results. By using tools such as the Diversity ROI 7-Level Chain-of-Impact, the Hubbard Diversity ROI Methodology, the Diversity High Impact Map, a ROI-based Diversity Scorecard, etc., a strong business Diversity ROI Business Case can be made in dollars and “sense” that clearly shows Diversity and Inclusion as “great for business”!

Dr. Hubbard is an expert in Organizational Behavior, Organizational Analysis, Applied Performance Improvement and Measurement Strategies, Strategic Planning, Diversity Measurement, and Organizational Change Methodologies. He holds a Practitioner Certification and Master Practitioner Certification in Neurolinguistic Programming (NLP), a Neuro-science discipline. Dr. Hubbard earned Bachelors and Masters Degrees from Ohio State University and earned a Ph.D. with Honors in Business Administration.

 

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