10 DEI Metrics Your Organization Should Track

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10 DEI Metrics Your Organization Should Track

Companies have a responsibility to ensure their employees reflect the communities they serve and build an equitable and inclusive environment for them to thrive in. Using DEI metrics to assess your organization’s efforts and then acting on the resulting data is key to ensuring furthering the DEI mission. What are the key DEI metrics to track?

Without a clear and concise way to track diversity, equity, and inclusion (DEI) efforts, minimal progress is likely to be made as organizations revert to old habits. Having great DEI metrics does not automatically mean that the organization is achieving its efforts in this regard. Still, it is important to measure how you’re doing as it helps identify management bias, unconscious bias, fairness, and justice in the workplace.

According to Gartner, the wave of DEI efforts has undoubtedly risen, with an over 800% increase in demand for recruiters with experience in diversity hiring. Tracking your DEI metrics is thus a matter of priority.

Contents
What are DEI metrics?
Useful DEI metrics
1. Demographics across organization levels
2. Retention across employee groups
3. Employee turnover
4. Adverse impact
5. Candidate demographics
6. Employee advancement / Promotion rate
7. Equal pay and pay equity
8. Employee resource group (ERG) participation
9. eNPS
10. Initiative-focused DEI metrics

What are DEI metrics?

DEI metrics are an indicator of the state of diversity, equity and inclusion (and belonging) efforts at your organization. It helps your organization assess DEI outcomes and progress. There are metrics that help you track this directly and indirectly. They further allow you to assign goals and develop accountability.

DEI metrics measure fairness in the workplace, strengths of your organization’s brand, and overall employee satisfaction. Some DEI metrics also focus on the financial return on DEI initiatives which should be used to strengthen the commitment to DEI and allocate additional resources.

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Depending on the size and make-up of your organization, not all the metrics might be applicable. You need to ask yourself certain questions before proceeding:

  • Which of these metrics will best tell the most accurate story of DEI in your organization? 
  • Which of the metrics needs to be highlighted as an urgent priority?
  • Where are key areas of concern or high risk?
DEI Metrics

Useful DEI metrics

How do you measure the DEI progress of your organization? Here are some helpful metrics to use:

1. Demographics across organization levels

It often happens that the organization is diverse at the employee level but less diverse higher up. That’s why you need to understand your employee demographics not only on the company level but also across different levels all the way to the leadership.  

To calculate demographics across organization levels, you would divide the number of people in the particular demographic group by the total population. For example, let’s say you were calculating the number of senior managers (400) between the ages of 60 – 65 (20). Your calculation would be: 20/400 = 0.05 or 5 %. This is a good starting point and would be known as your baseline data. Here is an example of how it would look on a dashboard:

Diversity dashboard
KPMG’s diversity goals published in The Guardian.

For example, a DNA-testing company, 23andMe, has the diversity data broken down into overall and leadership, as well as by department, and publishes it on their website.

On their website, 23andMe also describes the concrete actions they’ve taken to foster DEI at their organization.

The benefit of publishing it for everyone to see is that it shows a seriousness to commitment for DEI. It also lets your customers know that DEI is a priority, and your organization will be held accountable by the public as a result.

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2. Retention across employee groups

Drilling down into your retention data will help you uncover if there are any retention issues with particular groups of employees. To calculate the employee retention rate, use the usual retention rate formula, but use the specific data of the employee group you’re calculating.

Employee Retention Rate Formula

As an example, if you were to calculate the employee retention rate of women, your formula would look something like this: 

The employee retention rate of women = Total #of employees – Total # of women who left / Total # of employees x 100

You can segment your population group even further to gain more interesting insights. For example, you might want to combine age group and gender. Or different generations (Gen Z vs. Millennials vs. Baby Boomers) and calculate the difference in retention rate. You can combine these retention rate results with exit survey data to drill down into more specific reasons as to why employees of a particular demographic group are staying or leaving, and take action.

3. Employee turnover

Retention rate looks at the percentage of people who stay, whereas turnover looks at the percentage of people who leave. To calculate employee turnover:

Turnover rate formula

In general, employee turnover is a key metric to track for HR professionals. You can drill down to the results.

The turnover rate across employee groups based on gender, age, or race is an essential calculation to consider.

For instance, if an organization had 200 employees in the ‘Baby Boomer’ age group and 30 employees left, the formula would look like this: 

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Turnover rate for Baby Boomers = 30 / 200 = 15%

Research shows that women in tech jobs are twice as likely to quit than men. Further research also shows that Black and Latino employees in the same industry are almost four times more likely to leave than white or Asian employees.

4. Adverse impact

Calculating adverse impact allows you to measure the potential adverse impact at each stage of the employee life cycle and then address it. It identifies discriminatory practices and ultimately makes HR processes fairer. For example, if you have a discriminatory practice in your recruitment stage, it trickles throughout the organization and has an adverse effect on the organizations’ diversity, equity & inclusion efforts. 

To calculate adverse impact, you need to make use of the Four-Fifths Rule. The Fourth-Fifths Rule means that “the selection rate of protected groups – which include race, sex, age (40 and over), religion, disability status, and veteran status – should be 80% or more of the selection rate of non-protected groups to avoid adverse impact against the former.”

To calculate adverse impact, there are four steps. We’ll use the recruiting process as an example:

  1. Determine the selection rate for each group. (For example, there are 100 applicants, and 10 of them are African-American, that’s 10%.)
  2. See which group has the highest selection rate. (Let’s say, for example, Latinos had the highest selection rate at 40%.)
  3. For each group, determine the impact ratio by comparing it to the highest selection rate. 
  4. Determine if the rate is less than the selection rate for the highest group. This is the four-fifth rule, in other words, at 80%. If it is less, then it means an adverse impact has been identified. In our case, 10/40 is 25% which is less than 80%. Adverse impact is present.

SHRM provides another example of this:

SHRM Adverse Impact Calculation

“A comparison of the Latino selection rate (30 percent) with the Caucasian selection rate (60 percent) shows that the Latino rate is 30/60, or one-half (50 percent) of the Caucasian rate. Because one-half (50 percent) is less than four-fifths (80 percent), adverse impact is usually indicated.”SHRM

5. Candidate demographics

What kind of candidates are you attracting? Which sources from? How is diverse talent progressing through the funnel? This will give you an indication of which sources attract candidates from diverse backgrounds, if you use inclusive language in your job postings, etc.

You can collect candidate demographic data anonymously during the application process. For each stage and each demographic group, calculate it as a percentage of the total number of candidates through each stage.

Besides doing the demographic calculation at each step of the process, it’s also a great idea to ask your talent acquisition professionals to take Harvard’s Implicit Association Test. It’s a great eye-opener for evaluating unconscious biases.

6. Employee advancement / Promotion rate

To calculate employee advancement or promotion rate, use the formula:

Number of employees promoted in the group / headcount.

Once you have the overall number, you can start looking into promotion rates across different groups and how they compare to your general employee advancement rate.

Despite the progress that has developed with diversity, inclusion, and equity in the workplace, research by McKinsey shows that women are still experiencing slower promotion rates than men. And this is further exacerbated for women of color, who lose ground at every step of the promotion pipeline. 

7. Equal pay and pay equity

Looking at pay disparities within your organization will help you uncover potential issues with your pay practices and design solutions to remedy them. One of the most notable issues in diversity is equal pay for equal work. There is often a sentiment that people from different demographic groups are compensated differently for doing the same work – and that’s why it is important to calculate this regularly. Let’s use gender as the variable to understand the calculation. Before starting, you would need the following information: 

  • List of all relevant employees
  • Gender of all relevant employees 
  • A list of ordinary pay received (allowances, base salary, leave, any other pay variable relevant to your organization. 
  • Sign-on bonuses and annual bonuses
  • Weekly working hours of all relevant employees

To calculate on average, if there is a gender pay gap, you would need to calculate the average hourly pay of male employees and female employees. Then, add up the average hourly pay of all male employees, and divide it by the number of male employees. Do the same for female employees. Then subtract the average female hourly rate vs. the average male hourly pay rate, divided by the average hourly pay rate for males, multiplied by 100. 

For example, an organisation has an average hourly pay rate for males at $50, whereas for females, their pay rate is $42. 

$50 – $42 = $8 

$8 / $50 = 0.16 x 100 = 16%

Therefore, the average gender pay gap is at 16%. You can do the same calculation for other demographic groups.

A detailed pay equity analysis will help you understand pay disparities across your organization.

8. Employee resource group (ERG) participation

If you have ERGs, what are the participation rates? ERGs aim to give a voice to various groups in the workplace. 

Knowing the participation rate will help you determine if these groups actually serve their purpose. You can understand ERG participation by looking at the frequency of meetings and initiatives and the effectiveness of any projects. You can also calculate the overall participation of employees in ERGs by taking the number of employees actively participating in ERGs divided by the number of employees in the organization. It would also be good to note which ERGs are most active and why. 

9. eNPS

Again, you should break it down per demographic group to better understand if there are differences between them. If you’re conducting annual employee surveys and measuring eNPS, be sure to include open-ended questions. In this way, if there is a low eNPS of a particular demographic group, you can drill down further to understand the reasons why in the ‘open-ended’ questions. 

10. Initiative-focused DEI metrics

These are metrics that measure the outcomes of DEI-focused initiatives. For example, if you were to run an accelerated leadership program for Black employees, you would need to be able to measure its success. This is not only to establish if the participants completed the program but also the financial and business outcomes of the program. You would need to have a particular goal in mind to do this. These goals need to be further broken down into specific DEI outcomes which the particular initiative will address.

After you launch an initiative, you can measure the results of it by tracking: 

  • Sales growth correlated to the diversity initiative. 
  • Revenue per employee (segmenting the particular target group to understand the impact of the initiative).
  • Promotion rates (for example, for a program that targets accelerated promotion for under-represented groups).
  • Job level representation
  • Net promoter score

You can also approach it differently and quantify the initiatives. For example:

  • Number of events organized by your ERGs
  • Number of participants per ERG event / in total
  • Number of participants in voluntary diversity training

Over to you

DEI initiatives need to be measured over a long period of time, as sometimes these changes are not immediate. 

While keeping track of your DEI metrics is important to understanding the state of DEI and its progress at your organization, it is even more critical to turn this data into actionable insights and use it to improve.

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