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Best Practices, Not Diversity Department FTEs, Drives Talent Management Success

November 3, 2016 12:44 pm

New white paper shows that is the strength of best practices, not the FTEs in the diversity department that drives equity and fairness in talent management.

By Shane Nelson

Effective Use of Best Practices Drives D&I SuccessOur benchmarking consultants frequently are asked for data on the number of full-time employees (FTEs) in diversity and inclusion (D&I) departments. We find that companies often associate a higher number of FTEs in the D&I department with success of the company’s D&I efforts. In theory, that makes sense — the more resources you put behind something, the more successful it will be.

However, in this case, the data tells us otherwise. We looked at a number of companies by industry, employee size, number of FTEs in the D&I department, best practices in place and human-capital results. We found that higher numbers of FTEs in D&I did not necessarily correlate to more successful D&I efforts. Rather, companies with more effective utilization and leverage of best practices — such as executive diversity councils, mentoring and resource groups — yield better human-capital results than those with less utilization of best practices.

We also found that those companies with larger D&I departments and better performance have very mature, advanced D&I programs and human-capital operations in multiple regions/states/markets, and have successfully connected D&I management with the bottom line. The implication here is that you can have a large D&I department and be successful, but only if it is warranted and the company has done its due diligence in laying the groundwork (having effective best practices in place). Similarly, your company can have a small D&I department and be very successful — but, again, only if it has effective best practices in place.

To give you a visualization of this, below are some company comparisons with best practices utilization, or lack thereof, and the human-capital results yielded.

 

Companies in the Same Industry with Very Different Number of FTEs in D&I

We analyzed two technology companies with U.S. workforces just shy of 40,000 employees and found very different D&I management paths. One has fewer than 10 full-time employees in its D&I department (Company A). The other has more than 20 FTEs (Company B). So, which company is more efficient and successful at managing D&I? The answer is the company with fewer than 10 FTEs. That company is ranked on the DiversityInc Top 50 Companies for Diversity list and is moving upward while the other is not ranked on the Top 50. Let’s examine why.

The first notable contrast is that Company A has superior senior leadership commitment to Company B. Company A has an executive diversity council chaired by the CEO, while Company B does not. An executive diversity council sets and governs the D&I strategy for the organization. More importantly, the council holds stakeholders accountable for results.

If your company doesn’t have an executive diversity council, please see How to Start an Executive Diversity Council.

If your company doesn’t have a diversity council, odds are the D&I strategy isn’t being enforced. Case in point — Company A links executive compensation to diversity metrics, Company B does not. Linking executive compensation to diversity metrics causes specific action at the company, creates forward momentum and yields positive results linked to business goals. One key metric directly linked to business goals is talent development.

This brings us to the second notable contrast. Company A has yielded much better results in promotions of Blacks, Latinos and women than Company B. Company A promoted 41 percent, 42 percent and 17 percent more Black, Latino and women managers, respectively, than Company B. Why? Company A has formal mentoring programs while Company B does not. The most important aspects of a successful mentoring program are that it is formal and cross-cultural, that mentors and mentees be given cultural-competence training and that there are checkpoints and metrics to assess success. Company A’s mentoring programs have all of these components, and a high percentage of leaders in its top three levels participate.

For more on formal mentoring, see Mentoring Fundamentals.

In conclusion, Company A is yielding better results because it has an executive diversity council that sets D&I strategy and holds executives accountable for results.

 

Companies in the Same Industry with Identical Number of FTEs in D&I

We analyzed two financial services companies on the DiversityInc Top 50 with an identical number of U.S. employees and FTEs in the D&I department. In this case, Company X is ranked in the top half of the Top 50, and Company Y ranked in the bottom half. Both companies have seen progress in management of D&I but Company X experienced more acceleration than Company Y.

Both companies have executive diversity councils, formal mentoring programs and engagement of senior leaders in those programs. However, Company X distances itself from Company Y with employee resource groups. A significant chunk of employees are out in the field, which is indicative of this industry. However, Company X has one-third of its employees participating in resource groups, which translates to 80 percent more than Company Y. When we looked at resource-group participation at corporate headquarters, Company X has two-thirds of all employees there participating — almost three times that of Company Y.

How does Company X’s superior engagement of its employees in resource groups give it a competitive advantage over Company Y? Both companies leverage their resource groups for recruitment. However, Company X recruited 40 percent, 26 percent and 116 percent more Black, Latino and Asian managers, respectively, than Company Y. We found that other groups of companies with similar size workforces, in similar industries, that had a higher percentage of employees participating in resource groups, on average, recruited a higher percentage of Blacks, Latinos and Asians, than those with lower participation.

To see how one company uses resource groups to boost its bottom line, click here.

In conclusion, the data shows that the number of FTEs in your D&I department does not correlate to yielding successful human-capital results. Rather, effective utilization of best practices such as executive diversity councils, holding leaders accountable for results, mentoring and resource groups all help drive better human-capital results.

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