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The Power of Diversity ROI Measurement Alignment – Part 1

Misaligned metrics, like cars out of alignment, can develop serious problems if they are not corrected quickly. Like the cars, they are hard to steer and don’t respond well to changes in direction. Alignment is a response to the new business reality where organizational business requirements are in flux and competitive forces are turbulent, and the bonds of employee loyalty and engagement can be challenging. Old “representation-focused” approaches to diversity metrics are not strategic or performance-driven.

Mis-Alignment

 

A familiar criticism of diversity and inclusion metrics is that they are often put together in a piecemeal fashion without a clear framework of how they are relevant to the current and future business needs of the organization. Many diversity and inclusion interventions have the best intentions, but they sometimes lack this alignment or linkage to the firm’s overall strategic direction. A great majority of the measurement approaches tend to focus primarily on “activities” rather than “evidence-based outcomes and targeted results.” They are usually not built on comprehensive business needs assessments that are targeted to solve real business challenges. I will weigh in on this topic with a few thoughts in a two-part analysis. In Part 1, I will discuss four of nine steps to improve the alignment of diversity metrics. In Part 2, I will outline the remaining steps of the methodology which cover a wide range of actions to build practical approaches to verify the organization’s strategic business needs.

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, they must be based in the real bottom-line needs that drive organizational performance. Whether it is diversity training to teach cultural competency skills, selling products to emerging market clientele, innovating new products and services for a global market, delivering health care services, serving governmental constituents, meeting a wide range of student needs, etc., strategically aligned diversity measurement strategies have the best chance at success and sustainability.

Let’s 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 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,” “percentage of favorable response on the diverse customer satisfaction survey,” etc. This type of alignment drives improved performance and gains top management support.

What Is Top Management Support?

Top management support is not a speech or a memo; it is real actions taken by the leadership function in an organization that undergirds building a successful diverse and inclusive work environment. It is not something nice that the president or CEO of the organization mentions in a speech. It is a continuing commitment backed up by words and deeds over a sustained period of time. It means a strong personal involvement on the part of management in shaping the diversity vision and accountability of leaders, employees and others. In a word, it requires commitment.

Diversity leadership commitment can be defined as demonstrated evidence and actions taken by leaders to support, challenge and champion the diversity process within their organization. It reflects the degree to which the organization’s leaders utilize behaviors that set the diversity vision, direction and policy into actual practice. It also reflects the individual level and degrees of accountability leaders have in forging an implementation strategy, and it analyzes the level of specific behavior they exhibit as a model diversity champion.

From an organizational change point of view, Diversity leadership commitment is the behavior that helps establish a direction or goal for change (a vision), provides a sense of urgency and importance for the vision, facilitates the motivation of others, and cultivates necessary conditions for achieving the vision. Diversity leadership commitment is critical to the diversity change process. It cannot be delegated or given just tacit consideration. It is clear that the CEO of the organization and heads of the main operating units have primary responsibility for breakthrough progress on diversity. If they do not hold themselves accountable for the leadership requirements to execute diversity initiatives, the change effort is doomed to failure.

Diversity officers and their staffs have a crucial role to play as facilitators of the diversity change process. Leaders alone cannot be held responsible for making it happen. As a unifying force, Diversity leadership commitment throughout the organization serves as a key lynchpin for success that is combined with the efforts of others to sustain forward progress.

Defining diversity performance measures that help sustain alignment can be broken down into three steps: first, identifying specific diversity objectives; second, determining where and how the organization must succeed to accomplish each diversity performance objective, spelling out the wheres and hows as a set of critical success factor areas; and finally, selecting diversity performance measures for each critical success factor area. These measures help determine if the organization is in fact performing well on its objectives. Diversity performance measures are the tools we use to determine whether we are meeting our objectives and moving toward the successful implementation of our strategy.

How Do You Begin the Alignment Process?

If you want to successfully align your diversity measurement process with the business strategy of the organization, you can utilize a nine-step method to improve and effectively calibrate your work.

Linkage Graphic using Puzzle Piece

Step 1: Start Thinking of Diversity and Inclusion Metrics as a Critical Part of the Business. It is important to discard the idea that diversity and inclusion is separate from the rest of the organization or can be addressed by simply implementing a series of well-intentioned activities. All diversity interventions must be measured and integrated with the ongoing operational activities of the organization. It requires conducting an analysis to set as top priority those metrics that help the organization meet its strategic objectives.

It is also important to get copies of the organization’s strategic business plans and mine them for ideas, impacts and consequences. Meet with key managers to talk about their plans. Determine where they will need diversity and inclusion support and ROI-based metrics to measure their success. You should also look for new technologies, organization changes, new product lines and new company directions.

Step 2: Learn the Business! Knowing the business is critical to the alignment process. If you want to talk with managers coherently about their challenges, you must know the business and how it affects their business, especially the financial end. It is crucial to know things such as company earnings per share, net profit as a percent of sales, gross profit margin, net income, etc.

It is important to talk with colleagues in the accounting and strategic planning departments about the state of the business. Study the annual reports and anything else you can get your hands on until you are comfortable with the company’s financial objectives and competitive position. Know the company’s ROI numbers, sales figures, operating profit, debt-to-equity ratios and cash flows.

You should be conversant about new business ventures and the company’s direction. Know your company’s products and services. Learn what’s selling, what’s not and why. Alignment requires that you are able to identify with line management priorities to build understanding and credibility.

Step 3: Develop Measurement Strategies and Activities That Line Managers Want.

Start identifying business and line department priorities first, then focus on diversity and inclusion priorities. This is called being other-centered. It improves the diversity metrics alignment by creating a business context for developing analytics solutions. Use your study of strategic plans, operating reports and talks with line managers to locate an appropriate set of metrics to evaluate your diversity interventions. It is critical to get customer input and feedback on proposed initiatives.

Step 4: Involve Top Management. Top management’s involvement is critical to the alignment process. Therefore, it is important to interview them and ask what organizational needs they consider important. You must complete research at all levels of the organization to create a comprehensive measurement strategy.

Develop a master plan by department, level or position to focus your diversity metrics strategy. This means conducting a utility analysis to determine which metrics are critical, important or nice to include to effectively assess the success of the diversity intervention. Use leaders and managers as much as possible as subject matter experts versus your own process knowledge to gauge the performance gap that exists. Once the specific gap is known, an appropriate diversity intervention can be designed.

In the next segment (Part 2), I will cover the remaining steps in the process and a wide range of actions and metrics to build additional approaches to align with the strategic business needs of the organization.

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