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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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Are Your ERGs/BRGs Struggling to Demonstrate their ROI Value?

Introduction

Companies discovered that one way internal resources can contribute to a company’s business objectives is to use them as an Employee Resource Group (ERG) or convert them to Business Resource Groups.

These groups have a primary focus to assist the organization in meeting its strategic business goals and objectives. There is growing pressure on both Employee Resource Groups and Business Resource Groups to show measurable results for their initiatives, programs, and company-sponsored events. As companies continue to look for ways to cut costs and improve financial returns there is increasing interest in establishing Business Resource Groups and transforming ERGs to BRGs that have the skills to measure the ROI of their initiatives. There is a book and other resources I have used that provide a comprehensive, yet practical approach for aligning, collecting, analyzing and reporting the ROI impact of all ERG and BRG initiatives.

Calculating Costs and Benefits

Taking the time to calculate the costs and benefits of an ERG/BRG initiative is an essential step in developing the Diversity Return on Investment calculation since it represents the denominator in the DROI formula. It is equally critical to pay attention to both the costs and benefits of any ERG/BRG initiative that you put in place. In practice, however, the costs are often more easily captured than benefits.

Today there is more pressure than ever before to report all initiative costs or what is commonly referred to as fully loaded costs. This takes the cost profile beyond the direct cost of ERG/BRG initiatives and includes the time all participants are involved in developing and participating in the initiative, including all costs, benefits, and other overhead. Taking the conservative approach to calculate diversity return on investment, you should plan to report fully loaded costs. With this approach, all costs that can be identified and linked to a particular ERG/BRG initiative are included. The philosophy is simple: When in doubt in the denominator, put it in (i.e., if it is questionable whether a cost should be included, the rule suggests that it should be included, even if the organizational costs guidelines don’t require it). When Diversity ROI (DROI®) is reported to your target audiences, it should withstand even the closest scrutiny in terms of its accuracy and credibility. The only way to meet this test is to ensure that all costs are included. Here is a link to the book I mentioned and other ERG and BRG ROI resources:

Link: http://www.diversitysuperstore.com/mm5/merchant.mvc?Store_Code=DS&Screen=PROD&Category_Code=ergbrg&Product_Code=MROI-ERG-BRG_Bk

A Seven-Stage Model of ROI Analysis

It provides a 7-stage model to generate ERG and BRG value to the bottom-line. This Diversity ROI approach can help ERGs and BRGs save time, resources and efforts when developing methods to measure and demonstrate the financial ROI impact their initiatives are having on the organizations bottom-line. It is a “must read” for any group that wants to highlight their success in performance improvement terms and impact!

Dr. Ed Hubbard is the President & CEO of Hubbard & Hubbard, Inc., and recognized as the Founder of the Diversity Measurement and Diversity ROI Analytics fields. For more information about the Hubbard Diversity ROI Institute, log onto http://www.hubbardnhubbardinc.com/certification-workshps.html

 

 

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