How to Measure Diversity Effectiveness to Establish the Right Diversity Mix

Written by James O. Rodgers

Sometimes companies learn to understand the value of diversity management by accident. Some of the most successful products that have been introduced in the last ten years are the the result of companies executing a similar strategy when managing diversity. Consider the world’s most innovative and most productive companies, they almost always do business in a way that approximates our 7 step process, they just call it something different.  

One example of this that comes to mind is Proctor and Gamble. P&G created a huge amount of new revenue by organizing their company in way that managed diversity effectively. They set up innovation teams formed on the criteria of radical selection. These teams were made up of people from different departments, different backgrounds and even different companies. The idea behind this was that they would challenge one another and not think in the P&G way. They were able to come up with things that nobody else had ever thought of before because they were working in a way that nobody at P&G had ever worked before. They thought outside the box because they worked with people from different backgrounds in a setting that allowed for the exchange of ideas and challenges to these ideas from unexpected perspectives– and the company gained a whole lot of new value as a result.

The P&G example is evidence that diversity management should be understood as a strategy that is capable of making a business more successful overall. It should therefore be evaluated according to the same sorts of metrics that we use when measuring that overall success.  

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Usually when people think of measuring diversity in a company, they think about doing a demographic analysis of their employees. They want to measure how well minority  groups are represented within their company. They think that the way to increase diversity is to alter their hiring practices in order to ensure that women, for instance, are represented in their company at a rate proportionate to the rest of the population. This way of thinking about diversity grossly undervalues it as a business asset.

Instead, we can measure the success of a diversity initiative by looking at the same sorts of numbers that we look at when we measure the success of any other business initiative. The purpose of diversity management is to better your business, therefore we need to understand where we were when we started in order to tell us how we are doing. A thorough analysis must be conducted to determine how much money has been saved, or how much new revenue has been generated as a result of the initiative, so as to determine if we are managing diversity effectively. The only way to know whether or not we have found the right mix of people is to measure how much value our hiring practices add to the company.

Implementing an effective diversity management strategy is an experimental process. Because there is no magic formula for calculating the right diversity mix to ensure that we are managing diversity effectively, a degree of trial and error is required on the way to getting the right team of people together.