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Analyzing Diversity, Equity & Inclusion

D.E.I. is an area that has garnered added attention over the years.  Diversity describes all the ways in which people differ.  This can be along the lines of nationality, gender, education and socioeconomic status, to name a few.  Equity deals with access to opportunity and advancement for all people.  Finally, inclusion focuses upon the variety of people who have influence on the decision making process.

Why Measure D.E.I.?

In order to properly measure diversity we must first understand the purpose for measuring it.  Below are a few reasons why metrics in this area are important:

Organization Mission – The first reason to measure diversity, equity & inclusion (DEI) is because it ties to the organizational mission.  Many institutions have included DEI into the mission statement, performance reviews and job descriptions, to name a few.  In order to effectively move forward, the mission measurement is needed.  

From Mission to Margin – The margin is a financial term which means the difference between a product/service selling price and the cost of production.  Studies have shown that more diverse organizations are more profitable.  A study by Boston Consulting Group revealed that management teams that were more diverse recorded revenue that was 19% higher than counterparts.  Diversity leads innovative approaches to problems and unique program offerings, to name a few.

Societal Good – From a community standpoint, being equitable in the distribution of jobs and decision making is good for society.  In general, decision making and commitment toward a cause are higher when a diverse group is involved. 

Marketing – Diversity is the “linga franca” of the day.  Institutions are talking about diversity more frequently and including them in their product & service offerings.  The ability to quantify these initiatives and their impact on society can better support marketing efforts.

Attract Talent & improve retention – Finally, another reason to measure DEI is to attract and keep the best people.  Good employees want to be in companies that are the cutting edge and in institutions that are leading the pack rather than laggards in the group.

How to Measure D.E.I.?

The old adage holds true “what gets done, gets measured”.  In order to quantify the impact of diversity and communicate to key stakeholders, it has to be measured.  Key demographic information must be collected.  For example, if you are measuring personnel diversity, you would data points, such as gender, ethnicity or country of origin, to name a few.  Once a company has collected that information, it can compare seniority levels or compensation packages by demographics.  Once the baseline of the organization is understood, then targets for improvements can be set. 

What to Measure?

Once the data points are identified and collected, there are few analytical options available to an institution.  Below are a few techniques:

Trends  – The first thing that an organization should do is measure the change in these data points over time.  If the organization implemented specific initiatives to improve the demographic mix, a trend analysis would quickly display improvements.

Key Performance Indicators – Another area to measure would be the key performance indicators (KPI) of the organization.  For example, the profitability of the organization is a KPI.  Have diversity efforts improved the bottom-line?  Another KPI would be the number of products/services brought to market.  Have diversity efforts created new products/services?  Another KPI could be employee or customer satisfaction ratings.  Have diversity efforts improved these scores? 

Correlations – One analytical technique that is often overlooked is correlation.  Once data on demographics and KPI are gathered over time, a correlation analysis can follow.  An institution can then determine which areas are more sensitive to changes in diversity.

Benchmark – The techniques stated above were all in-ward facing.  Benchmarking is an out-ward facing exercise.  Benchmarking is the process of comparing demographic and KPI’s to competitors or the industry. Diversity is hidden competitive advantage dismissed by many organizations.  To cultivate this asset, it has to be measured.  The preceding paragraphs are a brief outline of the purpose and methods of measuring diversity.

About the author



Othniel Denis is currently Principal of Excellent Ones Consulting LLC. He brings with him a background in finance, training, and information management systems. Prior to opening his own firm, Othniel spent the last 13 years in finance as an Analyst at organizations like New York University, Nassau County Government and Brookhaven National Laboratory to name a few...

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