Diversity, inclusion and equity: 7 metrics to monitor

16 de October, 2024

Portugal came third in the European DEI Index, a study developed by EY that compares the progress of Diversity, Equity and Inclusion (DEI) in companies in nine European countries. The dimensions in which Portugal scored highest were gender diversity, cultural diversity and the existence of employee networks. In contrast, Portugal scored lowest on the indicator measuring diversity in disability.

Although satisfactory, these results show that there is still a long way to go when it comes to diversity, inclusion and equity in organizations.

It seems clear that companies in general are becoming more and more diverse (according to EY, around 70% of the global population can be included in some diversity group). However, they are not necessarily more inclusive. Employees don’t always feel that their individuality is welcomed, respected and valued.

In this context, it is essential that organizations define indicators and metrics that allow them to evaluate their efforts to promote diversity, inclusion and equity in a concrete and measurable way.

Read also: 6 Benefits of diversity and inclusion in companies

Diversity, inclusion and equity metrics

Measuring diversity can be challenging, especially for global companies, which need to identify which groups are under-represented in each geography.

But the challenge increases when we talk about measuring inclusion. Referring to the way in which each individual should feel equally welcomed, valued and respected, inclusion can be a little more “invisible” and difficult to classify.

Even so, it is essential for organizations to evaluate the success of their strategies for promoting diversity, equity and inclusion (DEI), so that they can check whether the objectives are being achieved and identify areas for improvement.

1 – Diversity in candidates

An organizational culture that intrinsically favors diversity and inclusion must begin at the moment of recruitment. Any bias, even if unconscious, can lead HR managers to disregard candidates from different groups, such as women, ethnic minorities, people of a certain age or people with disabilities, for example.

Some metrics you can monitor are: the percentage of applications received from people from under-represented groups; the percentage of candidates from under-represented groups at each stage of the recruitment process; and the percentage of candidates from under-represented groups who are selected.

2 – Employee diversity throughout the hierarchy

It’s important to look at diversity in your company at all levels. Could it be that in entry-level roles, your teams are diverse, but the same is not true in leadership and C-level roles?

If this is the case, it is likely that your company is measuring diversity in the company as a whole and, consequently, neglecting these discrepancies in the leadership and management functions. Instead, you should analyze diversity in a segmented way for each level of the hierarchy.

Consider the different demographic aspects – such as gender, age, race or ethnic group, for example – and assess the percentage of employees from under-represented groups in relation to the total number of employees at each hierarchical level. For example, if your company has 20 managers and only two of them are women, this means that only 10% of management positions are held by women.

It is important to follow this logic for the different demographic criteria, since it is possible for there to be diversity and inclusion with a certain group and, at the same time, prejudice with others.

3 – Employee satisfaction

Measuring employee satisfaction on a regular basis is key to finding out what they think about various issues, including diversity, inclusion and fairness.

By applying an eNPS – Employee Net Promoter Score – you can ask questions that allow you to understand whether people feel satisfied and happy at work and welcomed, respected and recognized by their colleagues and managers.

Once again, it is important to analyze the results as a whole, but also concretely at each hierarchical level within the organization. This finer analysis can make it possible to identify patterns and nuances between different levels. In addition, you should also analyze, in particular, the degree of satisfaction of the different under-represented groups.

4 – Retention rate

Another metric for determining whether your company’s diversity and inclusion strategy is succeeding is the employee retention rate. Companies may find it easy to hire diverse talent, but it is essential to build a healthy, safe and inclusive working environment in which people remain satisfied and motivated.

In this sense, measuring the retention rate by demographic group can help you see if there are any discrepancies and, if so, identify any problems with inclusion. For example, such an analysis may detect that the retention rate is much higher for men than for women.

To calculate the annual retention rate in your company, all you need to do is divide the number of employees at the end of the year by the number of employees at the start of the year and then multiply by 100. For example, if your company had 100 employees in January and only 90 in December – (90/100) x 100 – the annual retention rate is 90%.

Apply this logic to the different under-represented groups and compare the different retention rates, of these groups with each other and of these groups in relation to the overall retention rate.

5 – Voluntary and involuntary turnover

The turnover rate, or turnover is also an important indicator of employees’ levels of satisfaction with their jobs and with the company. A high turnover rate is a sign that people are not satisfied, and one of the reasons for this dissatisfaction may be related to gaps in inclusion and fairness.

Measure the voluntary turnover rate in your company (employees who decide to leave) and, again, compare the overall turnover with the turnover seen in under-represented groups.

At the same time, it is crucial that you carry out an exit interview and try to understand what drives people to take on a new professional challenge. The perspective of someone who is leaving of their own volition is essential so that you can identify aspects to improve in the workplace and in the organizational culture (particularly if these aspects are related to a lack of diversity, equity and inclusion).

Finally, don’t just consider voluntary turnover, but also involuntary turnover. If the involuntary turnover rate is high in under-represented groups – compared to the overall involuntary turnover rate – it could mean that there is some kind of unconscious prejudice or even discrimination against the people who belong to them and that the company is not trying to retain these employees in proportion to the rest.

6 – Pay equity

Fairness or equal pay exists when people who work in the same organization, and have the same functions, receive the same pay, regardless of their individual characteristics (such as age, gender, nationality or others).

This is a fundamental aspect when we talk about diversity and inclusion, especially when we realize that there is still a long way to go, particularly in our country. According to Eurostat data, the pay gap between men and women has been widening in Portugal: while in 2018 women were paid 8.9% less than men, in 2022 they would be paid 12.5% less for the same jobs. At this rate, it is estimated that wage parity between men and women will not be achieved until 2071.

In this context, it is essential that companies analyze salary distributions by gender, but also in other underrepresented groups, so that they can detect any gaps.

It’s true that measuring pay equity can be challenging, since salaries are determined by various factors, such as the experience and qualifications of employees or even external factors, such as the company’s sector of activity or its geographical location. However, the company can control other aspects that impact pay equity, such as the definition of entry-level base salaries, salary adjustment policies, salary reviews and salary transparency.

7 – Promotion and advancement

This metric is directly related to diversity in leadership and management positions. To ensure inclusion and maintain diversity at all organizational levels, companies need to ensure that their career development and promotion policies are fair and available to all employees.

As such, monitor the overall promotion rate in your company, but also the promotion rates at the various hierarchical levels and for the different demographic groups. This analysis can allow you to identify discrepancies that are indicative of unequal opportunities. For example, are fewer women promoted to leadership positions than men? Or do some groups have more technical roles and fewer managerial roles?

In an organization that promotes diversity, equity and inclusion, and that prioritizes meritocracy, promotion rates will tend to be balanced between the different demographic groups.

In short, organizations’ diversity, inclusion and equity policies must be intrinsically linked to their purpose and organizational culture.

Embracing diversity and promoting inclusion implies a cultural transformation that must involve not only those responsible for human resources, but the entire company and every single employee.