Why Quantifying Diversity & Equity MattersQ&A with Dr. Solange Charas, sponsored by Success Performance Solutions
Today’s workforce is one of the most diverse in our nation’s history. The public outcry for social justice, fairness, equality, and better economic performance has elevated diversity, equity, and inclusion (DEI) to the highest priority for business and HR leaders. But while diversity awareness is high, true equity and fairness remain elusive. New evidence from HC Moneyball suggests that certain EEO, gender, and ethnic categories experience privilege at different velocities. They experience the opportunity and benefits of mobility, advancement, and training differently. That’s not fair nor is it good for business and economic performance.
Joining me on this webinar is Dr. Solange Charas, founder and CEO of HC Moneyball, LLC, and the “brains” behind this research.
“Equity is what organizations are beginning to measure and what they need to measure to understand whether or not they are actually treating people the right way or in a fair way. ”
Dr. Solange Charas, HC Moneyball
Additional resources mentioned during the webcast:
Learn more about organizational justice and how it is linked to firm performance
Learn more about Diversity
Learn more about DE&I – A tutorial for organizations
Learn more about how training and development drives corporate financial performance
Ira S Wolfe
We appreciate everybody being here and being on time. We’re going to have a great conversation today and I don’t think it could come at a better time. We’ve got the two political conventions going on. We’re experiencing lots of division. Discussions about diversity, inclusion and equity are being met head-on…and ignored. Today we’re going to hopefully share how equity can be quantified today and put some evidence behind some of the rhetoric.
Again, we appreciate everybody being here. I have just a couple of announcements before we get started. As you can see on the screen in back of me and on the screen in front of you as well, my company, Success Performance Solutions, is sponsoring this webcast. Many of you know who I am so I’m not going to spend a great deal of time here. But quickly we work with small and medium-sized businesses, helping them recruit faster, hire smarter. We primarily do that through pre-employment and leadership assessment. We also help companies recruit better using marketing tools and hacks. You can learn a lot more by visiting our website and following me on LinkedIn. By the way, we’ve also just added an LMS which includes 2600 online courses. And the best way to keep with these events like today and other news about the future of work is to sign up for GooglizationNation.com. It’s free. It’s my community. Each week I send out updates about webinars like this.
But today you’re here to hear from Dr. Solange Charas so I’m going to turn the slides back to here. Remember to go up and register for a copy of my book and keep posting your questions into the chat. Once again, we really appreciate you being here. And we do plan to have a fair amount of time for Q&A.
Solange, please introduce yourself. Solange, I was trying to remember when and how we met, but I think you were participating in another panel. I reached out to you. We had a conversation and immediately I was impressed and intrigued by the work you were doing.
We re-connected maybe two or three months ago and our conversation shifted to equity and more specifically, quantifying equity within the community, within a company, and then relating that beyond that. Not only is equity the right thing to do and the fair thing to do, it’s the moral thing to do. In addition, you’ve also been able to relate that back to economic performance. Now, I’m going to turn it over to you.
Dr. Solange Charas
Hi. Thank you, Ira. I’m delighted to be here and to be speaking to you about this new focus on equity. I’m a dyed-in-the-wool executive compensation consultant. So when you say the word equity, what that means to me is a stock and long term incentive plans. I’m retraining myself to think about equity in a different way. And so I have to relearn what equity in the DEI sense means. Hopefully, everybody on the line doesn’t have to relearn it but basically find a new vision or a new lens that we can apply to understand organizations and organization’s performance.
I’m really excited to be here today and I’ll share a few slides to hopefully generate a dialogue about them. We’re going to be talking about diversity and equity today. I know that diversity and equity usually go alongside inclusion. Inclusion is really important. It’s always important that we talk about inclusion. But we’re going to put inclusion to the side today because it’s a different type of experience or a different type of attribute. We measure it in the organization by surveying the employees because inclusion is an experience.
This is what I tell my students. You can actually measure diversity without talking to anyone. All you have to do is look around the room or look around an organization or I-9 files or employee demographic files. You actually have the diversity data right there. Inclusion, on the other hand, is an experience. You can’t look at somebody and know whether or not they’re having an experience of inclusion. So diversity is really easy to measure. Inclusion is a little more difficult to measure because you have to actually go out and get information from the participants. Sometimes that’s hard to do.
Equity is this new idea. Trust me, it wasn’t around when I was growing up or when I had my first job in an organization. It’s this new concept about fairness, right? Equity is what organizations are beginning to measure and what they need to measure to understand whether or not they are actually treating people the right way or in a fair way. So today we’re going to really be focusing on diversity and equity and we’re really going to be focusing on ways to measure that.
A very smart man once said that you can’t improve what you can’t measure. I’m a big proponent of measurement and I’m a big proponent of data. I am a pure data wonk. If you give me data, I am so happy. And diversity and equity can absolutely be measured through data and inform you about the effectiveness of your diversity and equity programs and also inform your strategies going forward.
Organizations are embracing the new Business Roundtable definition of a corporation. It’s no longer purely profit-seeking. The Business Roundtable, about a year ago, basically said that organizations shouldn’t just be purely profit-seeking or only focused on the shareholder as their primary focus. But that they should be looking at other elements of the organization and the community in which that organization performs to understand the true purpose of the organization.
So if we embrace that and we say we’re not just in it for just money, but we’re actually in business to have an impact on our employees, on our vendors, on our community, then you can see that understanding how we treat employees in the workplace has social and ethical issues associated with it. And we want to do the right thing. I don’t think any of us wake up in the morning like Simon Legree and say, oh, who can I disadvantage today?
I think we wake up and we go to work with this aspiration in mind that we want to do well and we want to do the right thing and we want to do work that benefits our community. However, you define the community to be the people in the workplace or to be the people in your town or even people in the world. We want to do the right thing because it has social and ethical implications when we treat our employees. And when we do the right thing, we’re actually doing the smart thing.
Let me put up here a causal model, something that says these things are related to one if we want to have enhanced organizational outcomes. If related, we then need to focus on our human capital performance and the return on investment on that performance. We all know that employees do better, perform better when they’re engaged and they’re productive. And what’s the trigger to get people engaged and productive? We need to treat them fairly.
Think about the fundamental measure for the best place to work surveys. If you unpack what those best-place workforce surveys really focus on, they focus on fairness to employees, feeling like they’re being treated well, they’re being treated fairly, and they have opportunities so fundamental to the best place to work. So if we treat employees fairly, equitably, they will be engaged and productive.
You will get a return on the investment that you make in employee programs and that will drive corporate financial performance ultimately. Companies that do better in society enhance societal good. That’s how we’re thinking about this causal relationship. I’m going to stop there for a second and basically ask for questions. Ira, do you have anything you want to add here?
No, I think it’s going along well. If there are other questions, put them in the chat. Solange triggered this thought. I’ve started to attend and observe and listen and read a lot of different discussions. A lot of people have different opinions about how to describe equity. Until we can agree on a definition of equity, it’s tough to achieve it.
I’m curious what everybody thinks about that. Solange will discuss different types of equity, which opens up another rabbit hole. I’ve been introducing these different types of equity in quite a few conversations I’m in. And there’s always a little bit of silence on the other end because companies realize that they may be working hard and getting diversity, improving diversity, meeting the guidelines. But then we talk about equity and there’s a long way to go. I’m going to throw it back to Solange unless somebody else has a question.
Let’s turn our attention to what we want to measure and what we’re thinking about, what we work with our clients in terms of measuring.
We are recording this. So if you have a problem having this being recorded, don’t say anything. Don’t turn on your video camera. The slides that I’m sharing with you are proprietary and confidential. They’re all stamped with copyright. So if you plan on sharing any of these slides, please make sure that you provide the right execution. Thank you, David, for bringing this to my attention.
So let’s get back to what we want to measure. We basically think of equity along some different dimensions. If you are in an organization that has more than 50 employees, you are already providing information to the Department of Labor in your filing. So every year, if you have an organization of more than 50 employees, you have a requirement to submit to the EEO an analysis of the diversity in your organization. Hopefully, you’re all familiar with that.
It basically looks at a bunch of ethnic categories and looks at nine different job levels for job categories. So in a sense, you’re already one step closer to understanding equity in the organization. What we want to understand is how your organization performs along with those same ethnic and racial categories, to baseline your current performance in the areas that we want to understand is not only your diverse character, but we want to understand how you’re treating your employees.
When we say that, we mean we want to engender a sense of fairness to the employees. So let me stop there first because I’m not sure I explained how fairness works. I’m going into Professor Wonk mode for a second. But I think this is important because you’re going to wonder what is fair and just and how do we measure fairness? Fairness in the academic community has actually been studied for about 60 years.
They don’t call it fairness, they call it organizational justice. Think of fairness and justice in the terms researchers have been studying it, this concept of organizational justice. And what we do know is that organizations that have high levels of organizational justice tend to perform better, both from a competitive perspective and also from an absolute profitability perspective. There is a relationship between people feeling that they’re being treated with justice and organizations doing well. If we dig into justice, there are actually four attributes in organization justice and the two that are most often studied or researched are procedural justice and distributive justice.
Procedural justice measures the perception that the employees have that their organizations are designed to treat them fairly. When you’ve got a compensation plan now, you’ve got a training and development program, or you’ve got mobility or an advancement succession planning program – that the employees perceive the design of those plans to be fair, that they have an equal shot of getting bonuses, getting training and development, getting lateral moves or promotions than anybody else or everyone else in the organization. So is the organization designed in a way to provide fair treatment to employees? That’s called procedural justice.
The second big justice is called distributive. If I don’t get results that I perceive as being fair, then. It may be designed well, but I’m not getting anything distributed to me that feels like it’s fair. So we look at things that are distributed to the employees for their perception of value. So procedural justice really is a reflection of the organization design and distributive justice is really the perception that the employee is the beneficiary of that program design.
The third justice that is studied a lot is called interpersonal justice. I call it managerial justice. That’s the perception that my boss is treating me well, right. The boss-subordinate relationship can be measured in terms of the perceived fairness of the way that the employee is being treated by the supervisor.
You have probably heard this a million times, that people go to work for a company, but then leave their boss. So it’s really important to have all of the justices measured in the organization. This is where I think equity is the linchpin concept. The thing about equity and measuring equity and communicating your performance against equity is one way of communicating to employees that not only are they designing programs to treat everyone fairly, but they actually are treating everyone fairly and not just the individual person one way in the Dallas office and but Mike differently in the Boston office, but across the board, all employees in the aggregate.
That’s why I think it is critical to measure and communicate an organization’s performance against this equity concept. Now with that foundation, what do we consider equity? Well, we can think about pay equity, which a lot of people have been talking about. And it’s on the Democratic platform now to ensure that we achieve pay equity because we’ve got laws on the books, but we don’t actually penalize organizations for not following the law. So pay equity is a big one and it’s got a lot of attention.
The pay legislation that was passed by Obama and then got nixed by Trump was the government’s attempt to ensure that there was pay equity based on gender, based on race and based on ethnicity. And that actually went away. Now, some companies got to actually report on 2017 and 2018 results. But there’s no requirement to report on 2019 or beyond results. And even though you don’t have to report to the government, you should be doing it anyway.
Understand whether or not your pay practices are biased to make sure that all ethnic and gender categories and all job categories are treated fairly. Pay is a big discrete element that employees can actually evaluate. It’s really easy to say I’m getting paid more or less in the market or I’m getting paid fairly and that will go a big way to engender this sense of distributed fairness.
I see in the chat room a question about the fourth attribute. I never told you about the fourth. I will tell you that now and it’s called informational justice. Informational justice is the perception by the employee that they are being treated fairly by their peers. And that’s the fourth attitude. We don’t see a lot of research on informational justice. It hasn’t been studied a lot.
It doesn’t seem like it was really important in the last 10 years. But I think informational is just a measure of inclusion. Its conclusion is do I feel well? And I feel like I have the freedom to be myself in my workplace. And I think we’re going to see a lot more research on information. But I’m not sure that the organization, other than changing its culture, can do anything about it.
But if we make headway on the equity measurement, I think that will translate into employees being much happier and feeling like they’re in the right place. So pay equity is really important to understand whether or not we’ve got biases in the way that we pay people. And again, we’re not saying that you should single out Sue in the Dallas office or Bobin the Boston office, we want to look across the organization in aggregate to basically understand our performance.
The other big thing for employees, probably more important than anything else for Millennials, is training equity. Employees really look at their opportunities within an organization, whether or not companies invest in training and development and provide employees the opportunity to grow professionally and personally. Training equity is really important. We want to make sure that we are not biased in the way that we offer and deliver training and development so we can understand what ethnic and gender categories receive the benefit of training and where our training dollars go.
Is it equal across the board? All genders, all ethnic groups, all races, all job categories. We can monitor and know how much we’re paying people. That’s really easy. That’ll be in a payroll system or an HRIS. Training is the same thing. We know when our employees go to training. We know who is in those training classes, either as aggregate group classes or employees that are taking developing and training on their own.
We’re reimbursing them for their expenses or we’re sponsoring them. Training is a company-sponsored activity and companies will know what they’re doing in that area.
OK, let’s stop here for a second. Anybody have any questions before we move on? We’re getting some nice comments in the chat. Here’s a quick question. Do you ever talk about the CEO to say the average worker ratio?
Well, when we get a little further on in the slides, we’ll be able to look at executive management compared to everybody else in the organization. I know that the S.E.C. at some point during the Frank-Dodd bill had actually made a requirement to look at the multiple of t CEO pay compared to the average employee. And that also went away without anybody doing anything about it. So there’s no requirement to disclose but good governance says that you should actually look at that and figure out whether or not it makes sense.
I see a question about the availability of funds, grants with training equity. It’s a really interesting question, and we are actually doing some research right now on all public companies to understand the relationship between training and corporate financial performance. We’re doing some special research but for the last 20 years, this has been studied in the academic literature. I’ll reference this now, but I will also send out the link to the study, Beeferman and Berman.
If you Google it, you’ll find an article by Beeferman and Bernstein about the return on investment in training or the return or the impact of human capital on corporate financial performance. And I’ll send out the article. I don’t remember the exact name, but we and Bernstein, and they’re both out of Harvard, or at least they were when they wrote this article, did a meta-analysis. So they looked at research to understand this relationship between investment in training and corporate financial performance.
They looked at something like ninety-four studies and they unequivocally determined that there is a material relationship between training and corporate financial performance. In other words, organizations that invest in training are doing better financially than organizations that don’t. So if you have to think about a limited resource, which we all have to think about in human resources, we have budgets. How do we optimize the return on investment? And probably the first place that you should think about is beefing up your investment in the right kind of training.
I’m not advocating that you just throw training dollars at everybody. You really need to understand what’s going to be effective for your organization. But the research shows, and it’s supported by quantitative analysis, that training is a driver of economic value creation. So we should seriously think about how we’re training people. Let’s see, how do you provide training equitably with limited grant funds? I get that there’s some money that you have to spend on people. What the approach to analyzing equity in training will do is give you insights about where you should be investing money, either based on a job level or based on gender or based on ethnicity.
I can give you a prescription here. All I can tell you is that something that you need to think about and analyze and enhance or optimize your return on investment in training dollars.
This is a fascinating question. Putting some numbers to it, if we receive a hundred thousand dollar grant to train someone, currently, it’s random how we distribute it.
We submit a proposal. We want to do customer service training or software training and we get the grant and then we distribute it. The first question is are we using those funds for the right training? But the second part is if it is distributed to the right people and is that fair? Even if there’s a group of people that get it or you open it up to everybody, did everybody have equal access to it? Was everybody prepared? And then what happens to the people after the training. If you have 50 people that go through this training and 50 people complete it successfully, what’s the opportunity after that? Do all people have an opportunity to advance at the same pace?
What happens to those 50 people other than they just acquire the skills? I think you’re going back to what the initial premise was – if you don’t measure it, you have no idea. And I’m not aware of many organizations measuring this type of thing. It’s really important. And David, thank you for finding the paper and putting the link in. That’s exactly the paper. The Materiality of Human Capital Upon Corporate Financial Performance. It’s a very good meta-analysis. If you like reading academic papers, you’re going to love it.
Training is a big issue, probably number two after pay. There are lots of people who understand the strategic design around training and how to implement or how to create initiatives around training. I’m not a training person. I’m a data person. I will tell you the results of your training and I will help give you insights on where you should be spending money, where you should be budgeting for training based on the type of training and the benefits of that training.
But I’m not a training design person, and that’s a specialized skill that’s super valuable. And you should look into it, but look into it with the data.
That also raises another interesting question, because as we move toward a kind of a renaissance of training where it’s not one size fits all, is the training designed in an equitable way and does everyone have equal access to it. They can say, we offered it everybody but what about the employee working from home with a weak Internet connection or terrible broadband or no broadband or no device to access it.
If you want to get even deeper, we could talk about the inherent biases in the training. Absolutely. Like any AI has inherent biases because the programmers are white men. And so they inadvertently build in their own biases. It’s the same thing with training. We’re not going to get into the whole controversy about the SATs because they were written in a way to address the white population, and didn’t they take into consideration the cultural issues of any other ethnicity. So there is bias all over the place and we don’t know whether or not we have a bias unless we do the data analytics.
Yesterday I was listening to a broadcast and a webcast. One of the speakers said even the term microaggression, which is what everybody seems to be talking about infers racist comments are only a little bit of aggression. So even the term microaggression exhibits some bias in it or makes light of the bias in it.
We could spend a whole week talking about this kind of thing, but let’s move on. We’ve got a couple more of these areas that you can start measuring in terms of equity, mobility, and advancement for all ethnic and gender categories, providing the same opportunities for mobility and advancement. That’s really critical today. We must be able to answer that question in our organizations and say we are offering lateral promotions and job advancement to everyone.
Equitably across the organization to all ethnic, gender, and racial categories and against all job categories, all levels in the organization. And I think that that’s really important because we also know that mobility is really important to the majority of the workforce, which includes Millennials and Generation Z. They look for two things. Well, three things. They look for purpose which we can’t measure. That’s an experience. They look for training and development opportunities. They look for advancement opportunities.
So we should know whether or not we have these unconscious biases around the way we move people in the organization or promote them in the organization. And we won’t know until you look at the data.
Ira, I know you love this one velocity equity. It’s not just about whether or not you’re offering promotional opportunities or lateral opportunities or training opportunities. It’s whether or not you’re offering all races, all genders, all ethnic groups opportunities at the same rate. The same for promotion.
You might be promoting 10 percent of your black male population. And that’s great. And you might be promoting 10 percent of your white male population. Fantastic except when you learn that the white males get promoted faster than the black males do. You need to understand and know that. You need to understand the rate at which you are providing opportunities to the employee population because that’s their experience. And if you want it and engender this idea of fairness, you have to treat everybody fairly. You can’t just say, oh, we’re promoting men instead of promoting women.
That’s how you basically make a woman check out. I mean, how many commercials have you seen on TV where the woman gets passed over for a promotion, she goes out, she finds a new job. It’s this idea of velocity and Ira. I know you want to say something that.
Velocity equity is what triggered this whole idea. I’d be interested to hear what other people say, but to me is this is the ultimate goal, giving equal opportunity to everyone at the same rate. Does everything else fall underneath velocity? Is that the big umbrella? I think velocity is.
It might be. It might be the x-axis and everything else is the Y-axis, because even if we achieve pay equity, but people didn’t have the same training they didn’t advance at the same rate.
And maybe the cause of that happens to be training equity or a inequity or unequity within that. But if you have velocity equity, then does everything else get corrected to some degree? Do you have to have all these other things in place to have a loss of equity? Another research project. Solange!
I think it’s just another measure. I mean, I’ll tell you a story about a consumer products company that I worked with that was having a big problem. They had a couple of minutes to talk about this because I think it’s important. I was called in by the chief talent officer of the organization, and they had a group of people that they called the creatives, their marketing, and their creative people. They were the people who did marketing and branding and product design and packaging, the people that were really creating the products themselves. And they had about seven hundred of these people in the organization.
And the chief talent officer engaged me because she was having a hard time recruiting people to the organization. They were making job offers to entry-level level professionals and people were turning down the job offer. So she thought it was a comp issue. And so we went down the path of comp and we found out that, in fact, there are in the 90th percentile market pay. So it had nothing to do with pay, which made sense because she was trying to recruit millennials.
And millennials are not as sensitive to pay as the baby boomers. So we ruled out that pay was the issue and we started looking at other things. And one of the things that I looked at was the data associated with time-to-promotion, with the velocity of mobility in the organization. And she was making job offers to people and they were turning down these job offers because the organization had a bad brand for entry-level professionals to move, to learn.
They were paying a lot of money, but people don’t want to be in a job where they make a lot of money and they don’t get any place. They don’t get to advance their career. So I asked her, what is your time to motion for an entry-level person in this grade? So they’re hiring people at grade 13, their first exempt level, professional-grade. And she said I don’t know. And I said, what do you mean you don’t know?
I don’t know. So I asked for five years of data, which was a massive data set. And what I determined was because they didn’t track their employees in their HRIS system, they just had a payroll system. So what I found was on average, it was taking 21 months for entry-level people to get promoted. And that is too long. That’s far too long. That’s like a dead end. It’s like there was a TV show where the millennials were complaining when millennial was complaining that she’d been there for eight weeks and didn’t get a promotion at night.
So twenty-one months is like, duh. And what we did is we came up with the solution without disturbing the organization where we took that level 13 and we broke it into four bands and we move people every six months. So it didn’t disturb the rest of the integrity of the organization but it gave people the sense of movement of mobility. And we cut down that 21 months to about six months. And every six months people if we’re doing OK, and they didn’t have to be great, we moved them up a little notch and we give them a little bit more money and we’d say, you just got a grade promotion and it worked. It worked because the perception was, I have mobility. And so that velocity concept, instead of making somebody languish in a job for twenty-one months, they’re in the same job. They’re just doing something a little bit different. They get the sense that they’ve actually moved, they’ve advanced somehow and that that was so important for the organization.
I think another part of that, too, is that where there is a measurement and where there is people analytics, and you were able to prove it and it did require 21 months to advance, then what you were able to do is introduce a psychological benefit by breaking up the relatively long promotion cycle into segments. But even if the time span is fair at twenty-one months, it still might be perceived by the group as it’s too long because I have to be here almost two years before I get an opportunity. Which goes back to what you were talking about before, about the attributes you can have. You can have all the data in the world and justify your position. You can prove if we advanced people before they’re here for 18 or 21 months, they don’t work out. They fail. It was just too much to learn in too short a period of time or it took that long to know if they fit into the culture. And then people discard that whole program for the wrong reason.
So that there are some of these things has to do with more of a behavioral approach of not just relying on the data and again saying we’re doing everything right, because back to what diversity has become is that, well, we meet all the EEO guidelines.
Great, and again, it’s about perception, right? This is the perfect place to say perception is reality. It really is about that perception, because in that example, we didn’t change the structure of the organization.
There were twenty thousand people in that organization. We didn’t want to go and say, OK, we’ve got to redo all of our salary structures on our grading system. We found a solution that works within the existing system and we gave employees the option of advancement. We didn’t actually have to create new jobs. We said you’re a 13 D, then a 13 C, then a 13b, and a 13. So they knew that they were on a progression and once they got to 13a, then they can go to 14.
That goes back to the basics of where we’re headed with performance management, that you can’t wait till the end of the year to tell everybody how they’re doing. So if everybody knows upfront if the expectation is it could take you up to 24 months to get a promotion, but every six months we’re going to give you an update, milestones that you can reach, that you know you’re progressing. So it really becomes a performance management solution or methodology which goes back to you just can’t hold people in abeyance and expect employees to be OK with it.
I know you got a couple more equity attributes here. And I think the attrition equity is really interesting because I again, I’m not aware of anybody measuring that so well.
A lot of organizations are actually measuring attrition.
So they know attrition right now, but I’m not sure about the equity.
They’re not measuring who’s leaving the organization. So I always say that a lot of companies say to me, we really can’t understand our attrition because we don’t do exit interviews and we don’t trust what people are saying when they’re leaving, and that’s fine. But you can actually understand the nature of your attrition, the quality of that, the demographics of your attrition. And I always say, look at your attrition, not only through that lens of who’s leaving you but in terms of age, gender, nationality, race – look at where the attrition is coming from. Is it coming from one department? Is it coming from one manager? I have this at Benfield. We had a lot of attrition and it all came from one manager. And until somebody dug down into the data and we just said it was IT. All the HR people said it’s just It. We know that we have a lot of attrition and that’s just the nature of the game. And I said, No, that doesn’t make sense. Let’s look at who in IT, what part of IT, what group in IT, what manager in IT.
When I was at the hospital, we did something similar. We looked at the first shift and second shift. The first shift had lower turnover. So that’s good. The third shift actually was pretty good too because there are people that wanted to work that shift. We found most of the turnover occurred on the second shift.
Some blamed the second shift, but there were some second shift departments and units that didn’t have turnover. We eventually traced most of the turnover back to a single manager. But it wasn’t just the manager but the velocity of opportunity. Because there were people in the first shift that seemed to get more opportunities. This too fell back to the manager. It wasn’t necessarily bad management, but the manager didn’t offer promotions because he didn’t want to see the people leave. He did offer incremental and pats on the back, doing everything right from that standpoint. But his employees want to advance. He didn’t want to see them go so he never recommended anyone for promotion.
So I like you so much. I’m going to suffocate your career. It doesn’t make sense. And a lot of managers do that. They don’t want to lose good employees. So something to think about. The last equity attribute that we’ve got here is recruitment. And I know that there are a lot of ATS. I know that there’s a lot of attention being given now to creating balanced slates of candidates. And I think that’s great. And one of the things that we need to also think about when we put together a slate of candidate other than racial, gender, and ethnic diversity is also to reflect the composition of the available labor market.
A lot of people don’t think about this. My chief technology officer lives in Brainerd, Minnesota. And if we wanted to have perfect racial balance, then he would have to have Native Americans and Alaskans working in this company. But the population there isn’t representative to have every organization have a Native Alaskan or Native American working in their organization. So you need to have your recruitment strategy reflect your labor. Now, that brings up a really interesting question, which is, is our definition of available labor pool shifting because of COVID because we are working remotely now. We can hire people that are not in our geographic location to work. They can work from home or work remotely or work technology-enabled. And I think that that’s an interesting question that an organization can think about, which is how do I define my available labor pool? That’s something that you should be measuring.
And that’s going to change. Obviously, the geographic limitations have changed or dissolved. Maybe there aren’t any limitations. But the labor markets disproportionately impacted minorities. And especially black women, but a lot of minorities. So then you get back to we have this large labor pool and we want to be more diverse and more inclusive and do what’s right. But then how do we reach them? Because a lot of them don’t have the same access, the same transportation, the same abilities. Maybe they can’t work from home.
Without data, we’re just guessing we’re back to 1970.
How do you know? You do bring up a good point. We make these broad generalized statements, but every industry is different, every work category is different. So again, this is not prescriptive. This is just to get you guys thinking about how to look at your organization through a different type of lens.
I put up the slide, the data requirements. There is no magic to this. This is not a black box that I’m saying, come to my company and I can solve these problems for you. You can do this. You guys are all smart people. You need to think about how you’re collecting data, so as I mentioned at the top of this. Diversity is the EEO-1 categories 1.1, 1.2, or executives and first-level managers.
Then you see professionals. These are the nine categories. We’re not asking you to create new job categories, create new ways of analyzing data. This is what you should be doing every year. You should already have every job categorized into one of these categories. And it’s just a matter of pulling the data, mining the data. So we do this for diversity our way, Hispanic or Latino, male and female number of employees by all of these categories against the job levels.
You’ve already got a model. Now expand that, collect information on average, pay for each one of these boxes, collect information on how many moves, how many lateral moves, how many promotions were made, and each one of these categories. And I’m suggesting that you actually mine this data every month. And if you don’t want to do that, mine it every quarter. Put quarterly numbers in there, but give yourself a baseline to understand where you are performing well and where you’re not treating all employees equitably, fairly.
Termination. You can chart this out month by month for your terminations, both regrettable and involuntary. You can look at the people that are voluntarily leaving you and have a picture that way. And you can also look at whether or not you’re biased in the company and the people that you’re actively firing. You should understand that. Again, it’s just a matter of putting a number in the box that corresponds to each one of these levels and each one of these ethnic categories every month.
The number of applicants, if you’ve got an applicant tracking system, it will tell you that on most of the online systems. You just have to check the box, what race, what gender. Sometimes applicants decline to answer. That’s OK, too. You can’t force people to give you information, but if you have the information you should be looking at, you can look at how many candidates you’re interviewing. Your system should be able to just put out a report on the variables that you want to look at, how many job offers are made and how many offers are accepted using this lens – Hispanic, Latino, male, female, native, Hawaiian, African-American, white.
The EEOC gives us a pattern to do it. I said I wasn’t going to encourage you guys to call HC Moneyball, but I do want to show you that we could take all this data in. You give us the data and then we provide a platform for you to drag and drop to understand your performance. Here’s a picture, just by dragging and dropping average salaries. You can see the trends in average male mid-level management salary against average black female middle management salary.
You can understand over time what’s going on. And then what we did is we basically superimposed HCR, why the return on investment in human capital spend to show that there may be a relationship? So what we’re seeing is as you have more equity in the organization, your HC ROI is stabilizing. I just picked a couple of things. It might be different for you. It might be looking at training and training and development equity against attrition or against tenure.
Every organization is going to want to look at different things. What platform does is it allows you to drag and drop and understand these relationships really quickly once you have the data in the system.
There’s a question here for gender, For gender, would you track how employees identify or were born into? How do you have conversations on other genders like nonbinary? So I think now in most organizations you have male, female, and nonbinary. I mean, you can’t really ask people to disclose information about themselves that they don’t want to.
And all you can do is work with the data that you have. Again, we’re not trying to make people uncomfortable by the questions we ask them.
In the last couple of minutes. I just want to go through these last couple of slides. Once we understand our data and our performance over time against these attributes, then we can create a strategy to help either promote to the organization how great we’re doing or to create a strategy to right the wrong.
That’s what HR should be doing. We should be creating strategies to right the wrong. But you don’t know that there’s a wrong until you get the data and then.
This is the link to corporate financial performance. Circling back right to the first concept around perceived fairness, communications is critical. You want to boast about your performance. Bank of America just issued last November a report on their diversity and equity position. And they are fabulous. They’ve made this company initiative and they work to it and they let the world know that they’re doing a great job. You should be doing the same thing. If you’re doing a great job, let your employees know.
Let the world know. And if you’re not, that’s up to it. And take a commitment, make a commitment to do better. And people respond and respect when you fess up to what’s not working and make a commitment. And that’s basically all I have to share with you guys. And I know we have that just a minute or so left. So I want to thank you all for your questions. If I didn’t get to what I will actually write to you, because now I have to ask questions in the chat. So if I didn’t address now, I will send you an e-mail and respond to Ira.
I just put your email in the chat. I’ll send it to everybody so they can reach out to you. I think everybody has my emails because you’ve been getting them about this event so you can reach out. Some of these are certainly you Solange if anybody’s interested in how do you identify the right candidates. We work a lot with that on the recruitment side.
We have found in some of the analyses that we did that where there are higher dropout rates in the application or some of the applications are so cumbersome or were they asking certain questions that groups of people dropped out. So even before someone submits an application, let’s look at the applications. Let’s look at who we targeted. Who applied is only part of the story. How many people tried to apply? How many people viewed your job listing and were turned off? They were turned away because they didn’t think they had an opportunity. There’s a lot to unpack here. Data always tells the story and the data is out there. People just sometimes don’t track it.
I’m just going to show share my screen for a second here because I know there are some people that are interested in the term credits. Here’s the activity number should be displayed. Mark that down. You can submit this for one SHRM PDC. We certainly appreciate everybody being on the call today. Our time is currently 3:02 already, so we don’t want to hold up anybody. We do appreciate everybody being here. Solange will reach out to you if we didn’t answer your question. Or reach out to us and hopefully, we’ll do this again. This has been a great conversation so I suspect that there’ll be a ton of interest.
Thank you, everybody, for your patience. And if you have anything that was unresolved and again, you know, you don’t need to engage technologists to do this work. You have everything that you need at your fingertips to do the analytics. And if you want some help, we’ve got a great software solution that will help you do this quickly. Thanks, everybody.
Thank you. Stay safe.