It’s easier to measure objective things like distance or profit than it is to measure things like happiness, beauty, or the ROI of inclusion. Wait. How did the ROI of inclusion sneak into that list? Isn’t ROI a measurable business metric? Sure, assuming that we actually agree on what inclusion is and why and how we’re measuring it. But that often isn’t the case.
First Things First: What is Inclusion, Really?
Diversity and inclusion go hand in hand. So much so that some organizations use the two terms interchangeably to describe the composition of their workforce. Used that way, inclusion (a.k.a. diversity) is easy to measure: Simply count the number of employees in certain categories, such as gender, age and race. Of course, that’s an oversimplification. Diversity also includes employees’ culture, religion, personality, decision-making style, education, marital status and many other factors.
The reality is that diversity and inclusion represent two very different sides of the same coin: Diversity describes who is working in your organization, and inclusion describes how those people are working.
True inclusion means that regardless of cultural background, each employee
- is valued for who he or she is,
- is able to fully contribute to the team or organization, and
- feels comfortable sharing his or her ideas, perspectives and opinions.
In other words, inclusion describes an environment in which an organization takes full advantage of its diversity. That may sound like a hard-to-measure abstraction (like happiness or beauty), but as I’ll explain later, it’s not. First, we need to understand why we’re measuring inclusion in the first place.
Generational Differences Understanding Diversity & Inclusion
Research shows that different generations have a different understanding of diversity and inclusion in the workplace. According to a 2015 survey by Deloitte, baby boomers generally see diversity and inclusion as being about morality (i.e., the right thing to do), equality, and compliance. In that frame, inclusion is indeed hard to measure. And even if we succeed in measuring it, and the results are positive, arguably the only outcome is that we’ll feel good about ourselves. None of that is likely to be compelling in the boardroom.
In contrast, the same survey found that millenials see diversity and inclusion as means to a business outcome. They see inclusion as fueling teamwork, innovation, professional growth, and, ultimately, profits. Because business outcomes are generally easy to measure, it’s also easier to measure the things that directly contribute to those outcomes (no one doubts that you can calculate the ROI on digital marketing, for example). Looking at inclusion through the millennial lens can help organizations efficiently measure the ROI of their diversity and inclusion efforts to move effectively down the path toward success.
Determine Your Diversity & Inclusion Goals
Before you can measure the ROI of your diversity and inclusion strategy, you have to know what the return should look like. In other words, there must be a context in which you look at the investment because perceived ROI can change depending on which data you look at.
Suppose, for example, you want to slash employee turnover by 40%, so you decide to train all your mid-level managers in cultural awareness. This could help improve intercultural communication between managers and employees, in turn driving employee satisfaction. After training, you measure a 38% reduction in turnover—seems like positive ROI, right? But a closer look reveals that turnover in your IT function actually increased. Does that mean the initiative failed in IT? Not necessarily. Perhaps a shortage of talent in the field is driving up salaries and people left for better pay. The results warrant further investigation before assuming the initiative passed or failed.
To really know whether you got a return on your investment, you must be clear about your goals, ask all the relevant questions, and look at the data through multiple filters.
Consider The General Principles About the ROI of Inclusion
As you think about the ROI of inclusion in your organization, it can help to keep these principles in mind:
- Avoid a home-country bias. When determining what to measure and how to measure it, be careful that you don’t allow home-country dynamics or realities to carry disproportional weight. For example, an initiative to increase the representation of different racial minorities in leadership positions might make sense in a diverse society, such as Australia. But it would make a lot less sense in a more homogenous society, such as Japan. Similarly, an initiative in support of LGBT awareness might have a strong ROI in Europe, but not work at all in countries in which homosexuality is illegal or stigmatized.
- Expect to invest more time than money. When calculating ROI, most organizations focus on the return more than the investment. And, when considering the investment, the focus is usually on direct expenses, such as training. But inclusion is ultimately about interpersonal dynamics, and that demands a major investment of time—particularly for managers. They must invest in both individuals and teams, and to be accurate your ROI has to account for that time.
- Inclusion takes time. Many organizations are in the habit of looking at quarterly financials and making decisions based on those financials. But achieving true inclusion takes time. Significantly changing the composition of your board or senior leadership, for example, can take years. Therefore, your measurement of ROI needs to reflect that reality.
- Check-in with your employees. Although meaningful ROI depends on hard data, inclusion (or its absence) reflects how people feel about where they work. That means data will never tell the whole story. Joe Gerstandt, an inclusion consultant and keynote speaker, draws an analogy to medicine: After running diagnostic tests to get blood counts and heart rate, doctors are still going to ask patients how they feel. No ROI effort can be complete until you ask employees the same.
Inclusion may seem like an abstract thing to measure, but with the right mindset and a clear understanding of your business goals, it’s possible. Like anything else related to culture in business, diversity and inclusion takes time and effort. But given the fact that, these days, everything is global, nothing is local, that dedication will certainly pay off.
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