Improving Diversity & Inclusion with HR Analytics

Most organizations now proudly proclaim that their company policy includes diversity and inclusiveness. However, despite such efforts, some companies struggle to see the results reflected in their workforce. Sometimes it is because only lip service is paid to it and other times recruitment policies do not live up to the expectation of aggressively following the mandate.

Recent innovations in HR Analytics and AI are helping human resource personnel to identify gaps in their diversity hiring strategies and work towards fulfilling these deficiencies.

HR Analytics Diversity in the Workplace

Ethnically diverse companies are 35% more likely to have financial returns above national industry medians and gender diverse companies are 15% more likely to do the same (Study: McKinsey).

A McKinsey study says that a diverse workforce in a developed region could earn $12 trillion or 11 percent of their annual GDP. Moreover, the global GDP could increase by 26 percent or $28 trillion.

Nowadays, technology plays a big part in recruitment. Right from advertising for the post, receiving applications and weeding through them, the whole process is automated. In the event, a vast amount of data is collected, which can be utilized to see patterns in the hiring process, the gaps in the algorithm software and possible solutions.

Understanding the Real Benefits of HR Analytics

Human beings set the algorithms for the recruitment software, and, naturally, human biases do creep in. When programmers make the algorithms or software code their own experiences and biases and cultural predispositions creep in.

But leveraging big data can help get rid of that and present recruiters an opportunity to see unfiltered reams of information that can be used in the recruitment process.

Recent studies by Deloitte have shown that analysis of big data has helped in increasing job offer acceptance rates and optimizing compensation among the employees.

One can make smarter, more strategic, and data-backed talent decisions throughout the employee lifecycle with deep learning–from hiring to performance management to better retention policies. Employee diversity is not about using the same old traditional way of recruitment and expecting people from all walks of life to walk in. It is about opening up and diversifying the recruitment process by using innovative methods, expanding the reach by tapping into varied educational locations and socio-economic status, and using the might of the deep learning and AI to achieve workplace diversity and inclusion.

Technology in recruitment is used massively. Data is collected in the process and what is wonderful about it is that it sees patterns and deficiencies and presents solutions to it.

Advantages of using HR analytics in diversity and inclusiveness effort are many.

Getting niche and specialized in your search for talent leaves a huge number of people in the big data set out of the picture, and one loses out on potential talent. Big data has the advantage of diversifying and expanding this search.

Improve Diversity Analytics HR Inclusive

Earnings before interest and taxes (EBIT) increased by 8% for every 10% increase in the ethnic and gender composition of senior executive teams in the United States. (Study: McKinsey)

Improved decision making: Big data can help improve the hiring decision by presenting data on how many minority and diverse ethnic people applied for a job and what percentage was accepted. If the number of applicants is high, but that does not translate into the hiring numbers, then there is a gap in decision making, which needs to be addressed.

Big data helps one to extend the data search. You can geographically expand and look into more colleges, institutes and such for the correct fit. Stephanie Lampkin, CEO and founder of Blendoor, sums it up best: “Even the most advanced AI won’t affect the results of job recruitment if the data isn’t using the full scope of the qualified talent pool.”

Building an equitable pay structure: The press is full of the gender pay gap that exists covertly or overtly in most industries. Be it the entertainment industry, media or the board rooms of tech or auto companies. Women tend to get the short end of the stick. Almost 50 percent of the workforce is kept at bay by policies that are not conducive to their advancement.

A study says only 3 percent of top women are represented in the boardrooms of their workplace. Minorities and women tend to face a glass ceiling. Pay offered to a woman compares poorly to what is offered to her male counterpart.

This inequitable distribution of opportunities and payment sees many talented people leaving organizations. Big data can give you a picture of these biases and HR analytics of this data based on performance metrics can help you arrive at a fair dispersal of bonuses, pay and benefits without being colored by biases of gender and more.

Creating Value through HR Analytics

The data analysis can help you determine the turnover rates. The reasons for leaving, and the patterns. If it throws up numbers that are worrying in terms of a certain set of people leaving, the company can come up with a better retention policy that is inclusive and diverse.

Research has shown that diversity and inclusiveness are good for the business.

Here are some statistics to prove that claim:

According to one recent study, THE MIX THAT MATTERS: INNOVATION THROUGH DIVERSITY, companies with higher diversity in management earned 38 percent more of their revenues, on average, from innovative products than companies with lower diversity.

In 2016, nearly two-thirds (65%) of employees felt that the respectful treatment of all employees was a crucial factor in their job satisfaction.

A Sodexo study found that a gender diverse team delivered better performance. Another case study by Catalyst and Harvard Business School study of Fortune 500 boardrooms found that companies with gender-inclusive teams were better at CSR efforts and contributed more to charitable funds. Companies with more women on the board statistically outperform their peers over a long period of time.

Another catalyst study says that even one team member from the targeted audience (age, gender, race, sexual orientation) of a product improves efficiency by 158%. Wanda Hope, Chief Diversity Officer of Johnson & Johnson in New York, emphasizes the above point in her statement. According to her, to cater to their customers efficiently, their workforce makeup must reflect their customer makeup as well.

A McKinsey Global Institute (MGI) study, “DIVERSITY MATTERS”, says employee diversity is associated with better business results. The researchers questioned 366 public companies from across the western world. They found:

Gender-diverse companies are more likely to perform 15% better

  • Ethnically diverse companies are 35% more likely to have financial returns above national industry medians and gender diverse companies are 15% more likely to do the same (McKinsey)
  • Earnings before interest and taxes (EBIT) increased by 8% for every 10% increase in the ethnic and gender composition of senior executive teams in the United States
  • In the United Kingdom, companies have seen a 3.5% increase in EBIT for every 10% increase in gender diversity in the same senior executive team.

Business leaders are becoming more aware of the diversity and inclusiveness agenda and are working actively towards incorporating such policies in their companies.

Workplace Diversity Goals HR Analytics Big Data Inclusiveness

In the United Kingdom, companies have seen a 3.5% increase in EBIT for every 10% increase in gender diversity in the same senior executive team. (Study: McKinsey)

Recently, over 150 global CEOs signed the CEO Action for Diversity and Inclusion Pledge, which “aims to rally the business community to advance diversity and inclusion in the workplace by working collectively across organizations and sectors.” According to PwC’s 18th Annual Global Survey, 85% of CEOs have said that having a diversified and inclusive workplace population improved their bottom line.

The leadership can do much to improve the employee mix by adopting an aggressive outlook.

Have clear diversity goals and actively work towards hiring and retaining a diverse workforce.

What culture goals a company adopts reflects on their hiring talent too. Most HR professionals agree that their HR function is playing a vital role in establishing the right culture. “While the business must own defining the organizational culture they want, HR is the key driver and influencer in making culture stick,” said Kate Holt, Partner, People Consulting, KPMG in the UK.

Technologies keep on evolving, but it is the mindset of the leadership that has to be changed. Finding the right team to implement the company goals of diversity and continuing with the same is essential. The analytical tools can aid in the process of decision making.

Try to find out the diversity issues within the company. Get the HR department to carry out surveys or talks with employees to find out the pain points and chalk out policies to address the same.

Be open about the policy changes and follow up on them. Have regular updates to see that the polices are being implemented and accepted and what actual changes have been noticed.

Tackling a diverse workforce comes with its own issues and problems, so it is prudent to train the HR professionals in time to address the issues that will arise.

Taking an HR analytics-based approach makes it easy to represent data visually. Graphs and charts make compelling arguments and are practical and easier to assimilate. Leaders can make informed decisions based on the data available and plug any gaps if the company has a diversity problem.

Going by census reports also it makes more sense to be gender diverse and inclusive. Very soon, the minorities will be maybe losing the minority status. According to the Census Bureau, groups that were traditionally seen as “minorities” in the United States will reach majority status by 2044 due to their projected growth.

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Jane Harper
Writer. Human resources expert and consultant. Follow @thehrdigest on Twitter

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