by Ana-Cristina Grohnert
No other topic in the sphere of Diversity Management has absorbed consultants, scholars, diversity officers and HR practioners as much as the issue of effective Diversity Management (DM) reporting. Having worked through decades of research, debated the business case back to front, and finally understood the importance of DM to workforce sustainability and organizational competitiveness many companies are now spending (or are prepared to spend) considerable amount of time, money, resources on “getting Diversity Management going” and most importantly “getting it right”. The logical questions that follow a decision to pursue DM as an organizational strategy can be boiled down to the core of three Change Management queries:
1. Where are we today?
2. Where do we want to be?
3. How do we get there?
The resulting issues of quantifying and qualifying Diversity in terms of current status (where are we?), future status (where do we want to be?) and approach / progress (how do we get there?) are the subject of an ever increasing number of papers and publications. On the one hand the sheer amount of debate (and subsequently solution possibilities provided) shows, that there is an urgent need and requirement from organizations to manage and measure DM with the same rigor as any other strategic initiative or process – with clear targets and performance / progress indicators. For the development and further professionalization of DM that is a good thing. On the other hand it is also a sign that DM (particularly in the corporate context) is still in its early stages of maturing to a fully professionalized and standardized business practice and establishing itself as a practice alongside other fairly “new” disciplines such as Sustainability Management for example.
Talking about the latter - what started out as a “nice to have” activity for many corporations (cynics would say with “too much time” or “too many reputational issues” on their hands) has – over the past 3 decades – developed into a core business function, driven by international regulatory standards and compacts, sophisticated reporting instruments, controlling methodologies, strategy setting frameworks and quality criteria. Of course we can still see constant developments and improvements, but in terms of putting the same rigor around DM we are probably where Sustainability Management was in the 1980s. The following article aims to outline a number of practical considerations for addressing the dilemma of quantifying and qualifying Diversity in management reporting structures and thus advancing its status and perception as a strategic business issue. Given the vast span of Diversity Management dimensions the article will focus on Gender Diversity or Gender Equity Reporting. After a short introduction to Gender Equity in the DM context we will take a look at approaches to status and progress reporting, closing with a future outlook.
Contexting Gender Equity Reporting
There are a number of good reasons that would support the approach of establishing Gender Equity Reporting as a “first cab off the rank” when looking to successively implement effective DM management information. Before, however, a word of caution. Modern DM approaches in the business context were “imported” from the United States to many organizations and institutions in Europe. The US very clearly came from an affirmative action background and initially connected DM much closer to the “ethnic minorities” / “cultural identity” context – other diversity dimensions, including gender, age, disability, sexual orientation, religion, followed in the process. In Europe a comparable affirmative action history or similar contexts do not really exist. When DM appeared on corporate agendas in the 90s years of equal opportunities and anti-discrimination legislation – mostly in the context of women / gender – had preceded. The result was that DM overtook these conversations and became “equal opportunities in a new outfit”.
Looking deeper into DM strategies in organizations a suspiciously large amount of initiatives under the name of “Diversity Management” will focus solely on women. This is not necessarily a bad thing, when organizations have made an informed and conscious decision to focus on Gender as a key strategic priority (see many good reasons in the following paragraph), but it threatens to undermine the full potential and breadth DM can bring to organizations, when it is just used as a synonym for Gender Equity or women’s advancement. Diversity is not Gender and Gender is not Diversity. When focusing on Gender as part of a diversity strategy one should ensure it is positioned and communicated correctly as one of many dimension – especially when DM is new to the organizational agenda – and using it as a “test case” or “foundation” for maturing a more comprehensive and inclusive approach.
The reasons that speak for a focus on gender as part of a DM strategy are plenty. At the beginning of the 21st century the corporate world in general – apart from a few niche sectors or organizations – faces significant issues with Gender Equity. “The Gender Gap”, “Equal Pay”, “Women on Boards” are just some of the buzzphrases that trigger associations confirming that businesses have a long way to go in terms of building inclusive work environments and allowing women to fully and equally participate in the economic realm and at all leadership levels of organizations. So questions of Gender Equity are almost universally applicable in the corporate context. In addition the business case for including women in the workplace and in management is one of the most researched and probably best understood arguments.
Demographic changes impacting talent pools and workforce composition, social changes impacting traditional gender roles and life models, technological changes transforming the way we work, collaborate and interact, changes in regulatory frameworks, changes in market structures, target audiences, and consumer spending as well as research underpinning the improved profitability and innovation capability of gender mixed teams, etc… are just some of the arguments that quickly add up to a solid business case for ensuring the playing field for male and female talent in the workplace is leveled. Organizations that have understood this put “Gender” on top of their DM agenda.
Looking at the operational / reporting side of the argument Gender - amongst all other diversity dimensions - is probably the most clearly defined and best understood. Privacy regulation in many countries would prohibit or strictly regulate data collection or analysis on dimensions such as sexual orientation, religion or even age – yet the feature “male / female” is across the board mostly unproblematic to quantify, track and report. All in all “Gender Equity” is in many cases an obvious choice for kick starting the operationalization and institutionalization of DM into organizational planning, reporting and management processes. What to consider when setting up reporting structures for gender equity will be addressed in the following paragraphs.
Reporting as a critical success factor
One important aspect that organizations should be aware of is that introducing DM means introducing a fairly significant change process. Effective, strategic DM is not a self-contained project that can be dialed up or down as convenient. It will not develop or evolve naturally by itself, but has to be managed deliberately, with clear goals and actions in mind. DM means fundamentally changing the organizational mindset and permeating core organizational processes.
Maturing DM throughout an organizations means assessing (and if necessary changing) the way the business functions: The way talent is recruited, developed, promoted and retained, the way employees are teamed up and evaluated, the way work is organized and structured, the way the organization communicates internally and externally, the way clients are approached, the way management decisions are prepared, communicated and implemented, the way innovation and knowledge is managed, the list could go on. This means that many success factors identified for organizational transformations (e.g. restructuring or turn-around initiatives) hold true for the introduction of DM as well.
In the recently published results of a global survey McKinsey (“McKinsey Global Survey results: What successful transformations share” McKinsey Quarterly, March 2010) identified a number of key success factors that successful transformations shared. Amongst the few tactics that helped drive transformational change were setting clear, aspirational targets and creating a change plan that involves assessing the company’s present situation rigorously. Organizations that followed these 2 recommendations reported a higher success rate in reaching their transformation objectives. We can clearly see the parallels to our change management questions 1 (status) and 2 (target). Assessing the status quo – the company’s present situation – is often quoted under the term of “auditing”.
Diversity Audits are a well known, practical and fairly easy exercise to capture a “current picture”. There is a wide range of tools that can be used to perform an audit – most commonly used are workforce demographic data extracted from HR information systems, but questionnaires / opinionaires, internal checklists, or interviews and focus groups are valid tools to gather quantitative and qualitative information on the state of Gender Equity in a given environment. The key question - apart from which tools to use - is the question on which aspects of Gender Equity to baseline. In order to understand which Gender Equity data is going to be important and meaningful the question of what Gender Equity means to the organization i.e. what goals are pursued in terms of Gender Equity, must be answered as well.
We would like to argue that whilst many would think that “assessing current status” and “understanding future picture” are two independent exercises they are in fact closely link if not interdependent. One can avoid “analysis paralysis” during the initial baselining phase if one clearly outlines what gender equity means to the organization and what it would like to achieve. The following table gives a few examples that show the relationship between a broader organizational Gender Equity goal and how it can be broken-down into baseline metrics.
Creating a baseline
There is a controversial debate amongst DM practitioners whether an issue such as “Gender Equity” can be measured or mandated, when in fact many elements that would define a fair, equitable and inclusive environment are cultural, qualitative and hard to express in numbers. We would like to argue that there are certain ratios, metrics, proportions that give a pretty clear indication of how equal power and opportunities are distributed amongst different groups. Whilst it might not be a very elegant approach ensuring that these ratios change / improve is often a first critical step to change the environment and eventually the dominant model and underlying mindsets towards a more diverse and inclusive paradigm.
Setting targets is important because targets raise awareness about the gap to be closed in the organization, they give the topic of Gender Equity the right management focus and rigor, they allow for exact monitoring and reporting, they help define and direct priorities for action towards those that will make the biggest difference, and they allow the break-down / cascade of target contributions at all (leadership) levels of the organization. So in a first instance goals have to be quantified and progress has to be measured against these precise goals. The following table gives a few examples of how initial baseline data can be reflected in a target and set-up for continuous progress reporting.
In conclusion it is important to point out that measures and metrics in any gender equity report can only be useful if they allow for some form of qualitative assessment: Is this a good or bad number? Have we made progress or a step back? Do the numbers reflect the effectiveness of actions taken? So, targets turn measures into key performance indicators (KPIs). Especially when trying to implement what is often regarded as a “soft topic”, it is critical to present meaningful management information that provides a framework for making focused business decisions.
With metrics that give an indication of performance, progress or success you can drive initiatives much more consistently, make well-reasoned decisions, and build further support for action. Eventually a good D&I- (Diversity and Inclusiveness) report will be integrated into the broader sustainability or strategy reporting established in the organization. Last but not least one should not forget that reporting is a tool only – it is not the necessary change itself. Establishing accountability for progress, ensuring the right leadership in keeping the momentum and focusing the organization on the new “model” and “culture”, as well as involving and engaging a broad base of employees in the transformation are just as important as getting the facts on the table.
(1) Ranks or Levels (L1 roles, L2 roles etc.) are used synonymously and can be translated in German as „Führungsebene“ – i.e. Erste Führungsebene, zweite Führungsebene etc…
Ana-Cristina Grohnert is Partner at Ernst & Young. She leads transaction advisory projects for Financial Services. She is specialized in all forms of capital procurement, and structured finance.