Moving from Activity to Results: What the ‘C-Suite” Really Wants From Our Diversity Efforts

Numbers and the Bottom-line
Business is and always has been a numbers or a bottom-line results game. With the advancements in information processing technology, today’s executives have access to a range of data which is nearly infinite in its depth and breath. There is almost nothing that a computer can’t process at incomprehensible speeds producing the opportunity for “big-data” analytics on just about anything. Computers are churning numbers out on sales volume, accounts receivable and payable, production efficiency, market penetration, customer buying preferences, as well as making suggestions about what you should buy next and hundreds of other subjects including projections for the future. The numbers tell management how much something costs, how many units are being produced and sold, how long the lead time is for delivery of parts or products. They are not only descriptive, they are also predictive. In short, they drive the business.

 

Diversity and Inclusion executives as well as other diversity professionals face many challenging audiences when it comes to demonstrating diversity’s contribution and value; however some of the toughest audiences are in their own company’s or client’s C-suite. Most executives enter these meetings with at least two perspectives. First, they are wondering are you credible and confident enough to be here? In very short order these executive will form an impression of you and make assumptions about your department/organization’s performance based upon the results you have produced for the organization. Were these results tangible and performance based? Is there clear evidence that it was your Diversity initiative that generated these outcomes? What else could have contributed to this result?

Second, did the results you produced help the organization take advantage of an opportunity, meet a need, and/or solve a business-related problem? In other words, did your department’s Diversity initiatives produce outcomes that add measurable value in financial and other terms? Executives listen for impact and want to know there is urgency and opportunity around the topic you are presenting to them. To keep your meeting with them focused, you must consider how your measurement conversation states a clear takeaway upfront and tells them what your efforts have accomplished in ROI terms as well as delineate what you need from them.

Demonstrating a Diversity ROI (DROI®) Causal “Chain of Impact”
A successful meeting offers “direction”. Once they hear your message, executives will want to know how you can prove the results were delivered and what you plan to do next. The Diversity ROI (DROI®) methodology you use to produce the results must give them a step-by-step roadmap so they buy into the claims you make about the results. The Hubbard Diversity ROI (DROI®) methodology for example, provides seven levels of analysis using “evidence-based” outcome approaches that demonstrate a “causal chain of impact” to the results generated. These analysis levels include:

  • Level-0: Business Needs/Performance Analysis
  • Level-1: Reaction, Satisfaction, and Planned Actions Analysis
  • Level-2: Learning Analysis
  • Level-3: Application and Behavioral Transfer Analysis
  • Level-4: Business Impact Analysis
  • Level-5: Benefit-to-Cost; Diversity Return-on-Investment Analysis
  • Level-6: Intangibles Analysis

This allows C-suite and Board-level executives to follow the step-by-step actions taken that are linked to the results produced from the Business Needs/Performance Analysis phase through to their development, implementation and ROI impact. You will know the conversation was successful and had “impact” if it ends with the executives taking action in concert with your intended objectives and what is in the best interest of the organization.

It is much easier to achieve this success if your Diversity initiatives contain specific measures, Key Performance Indicators (KPIs) and other analytics that are measurable as well as linked and aligned with issues and challenges important to the business. These numbers can be validated by showing current and actual historical data that reflect the impact of the results and their reported value by others who apply and have success using the Diversity-based solutions you develop. They can also be compared to internal and external benchmarks that give a C-Suite executive comparative data to judge the outcome’s relative performance and contribution value. One of the Hubbard Metriclink® Diversity ROI Monitoring and Benchmarking Services for example, helps organizations track, monitor, and measure and assess the global impact of their Diversity progress in the following Global Benchmark Areas and much more:

  • Market Share ROI
  • Diversity Training, Education and ROI Impact
  • Vision, Goals, and Policies
  • Diversity Communications
  • Performance Improvement Training and Career Development
  • Community and Government Relations
  • Products, Services, and Supplier Relations
  • Marketing and Customer Services
  • Performance Improvement
  • Diverse Workforce Innovation and Creativity ROI
  • Leadership and Accountability
  • And at least 15 other areas

Using this approach, C-Suite executives can compare the results your Diversity interventions have achieved against local and global performance benchmarks. This will help set Diversity and Inclusion measurement standards for future performance and best practices in the organization’s competitive marketplace.

Why Now?
In the past decade, a variety of concurrent and other forces have driven additional focus on measuring the impact of Diversity and Inclusion programs and interventions including measuring the financial contribution and ROI. These forces continue to challenge old ways of defining an intervention’s or program’s success.

Diversity Intervention Failures
Almost every organization encounters unsuccessful Diversity interventions and programs – interventions and programs that go astray, costing far too much and failing to deliver on promises. Project disasters also occur in other parts of business organizations as well as in government and nonprofit organizations. Many critics of these projects suggest these failures could have been avoided if 1) the project is based upon a legitimate need stemming from a comprehensive business and performance needs analysis from the beginning, 2) adequate planning is in place at the outset, 3) data is collected throughout the project to confirm that the implementation is on track, and 4) an impact study is conducted to detail the project’s contribution. Unfortunately, these steps are unintentionally omitted, not fully understood, or purposely ignored; thus, greater emphasis is being placed on the process of accountability.

Shifting to Evidence-Based, “Science-based” and Outcome-based Diversity Management Approaches
It is critical for our profession (Diversity and Inclusion) to begin immediately moving to fact-based or evidence-based Diversity management and measurement. This means applying Diversity and Inclusion measurement sciences as a “performance improvement technology”, not merely a cobbling of diversity programs and interventions focused solely or primarily on talent management and pipeline challenges. Evidence-based Diversity management proceeds from the premise that using better, deeper logic, facts and prescriptive and predictive analytic methods to the extent organizations and their employees are able to drive business outcomes and objectives is a much more effective and efficient approach. This allows the organization to strategically utilize scarce resources. It is based on the belief that organizations must face the hard facts about what works and what does not work, and reject poorly designed and non-evidence based Diversity and Inclusion initiatives that often pass for sound advice and solutions. This will help organizations perform better in the long run. This move to fact and “Diversity ROI Sciences-based®” approaches supports the expansion to a comprehensive set of success analytics and measures, including financial ROI, and leads to better organizational decisions regarding methods to drive business performance outcomes.

Executive Appetite for Diversity ROI (DROI®) Value
Providing monetary contribution and Diversity ROI (DROI®) reporting is receiving increasing interest in the executive suite. Top managers who watch budgets continue to grow without specific accountability measures are frustrated, and they are responding to the situation by requiring functions to show their value and worth. They are beginning to demand ROI calculations and monetary contributions from departments and functions that previously were not required to produce them, especially given the current economy. As a consequence, in some subtle and not-so-subtle ways, Diversity departments that do not show their value are experiencing:

  • Budget cuts out-of-line with cuts made in other department
  • Whole positions or talent resources being eliminated or transferred to other departments
  • CDO reporting relationships changed to report into the Human Resources function instead of a direct line relationship to the CEO, President, Board or as a member of the C-Suite
  • Access to key influential people and resources diminished due to poor internal brand image and lack of credibility in the results delivered
  • Perceptions of Diversity and Inclusion as not really essential to core business drivers, operational processes and market needs

For years, these function and department heads had convinced executives that their processes could not be measured and their activities should be taken on faith. Well…the era of “faith-based” Diversity interventions is over and has been for some time. Executives no longer buy that argument; they are demanding the same accountability from these functions as they do from sales and production areas of the organization. These major forces are requiring organizations to shift their measurement process to include the financial impact and ROI. When Diversity and Inclusion organizations incorporate these Diversity ROI (DROI®) processes and strategies as a standard part of their practice and performance outcome delivery, they are viewed as truly credible strategic business partners. As a result, Diversity intervention outcomes are valued as core to the organization’s business and its success! Let me know what you think at edhub@aol.com.

* “DROI®” and “Diversity ROI Sciences-based®” are registered trademarks of Hubbard & Hubbard, Inc., All Rights Reserved.

Dr. Ed Hubbard is the President & CEO of Hubbard & Hubbard, Inc., and recognized as Personal Success Coach and Mentor as well as the Founder of the Diversity Measurement and Diversity ROI Analytics fields. Dr. Hubbard is an expert in Organizational Behavior, Organizational Analysis, Applied Performance Improvement and Measurement Strategies, Strategic Planning, Diversity Measurement, and Organizational and Individual Change Methodologies. He holds a Practitioner Certification and Master Practitioner Certification in Neurolinguistic Programming (NLP), a Neuro-science discipline. Dr. Hubbard earned Bachelors and Masters Degrees from Ohio State University and earned a Ph.D. with Honors in Business Administration.

For more information about the Hubbard Diversity ROI Institute, log onto http://www.hubbardnhubbardinc.com/certification-workshps.html

Diversity ROI Measurement Skills in Small Doses: Moving beyond Excuses

CEOs Want to Know the Impact of Diversity ROI on Initiatives but Aren’t Getting It!

A recent study of CEOs analyzing what CEOs want from their Diversity organizations concluded that CEOs want to see the impact and ROI of their Diversity investments but instead receive only activity and satisfaction data. So, why aren’t Diversity & Inclusion Executives, Managers, Practitioners, etc. measuring their impact and sharing with their CEOs? After all, this is not exactly a revelation. Some of the leading reasons are lack of resources, lack of support from the CEO, lack of funding, lack of skills, etc. My take: these are all just excuses since there are a huge number of resources, books, workshops, etc., available. This strongly suggests that many Diversity Practitioners need a serious skill update or should excuse themselves out of the job. If they remain without these skills, at some point, they may face elimination and/or extinction.

This is the 21st Century, with its emphasis on cutting edge as well as “State of the Practice” technological and analytical advances, yet Diversity Practitioners are using old-fashion measurement skills where the wheels immediately come off of their measurement system wagons. We haven’t been in the “Old West” of Diversity measurement for quite a few decades. State of the Art Diversity ROI processes have been here for quite some time.

Accountability Trends

Many enlightened business managers often take a professional business approach to Diversity, with ROI being part of the strategy. Top executives who watched their diversity budgets continue to grow without appropriate accountability measures have become frustrated with this approach. In an attempt to respond to the situation, they have turned to Diversity Return on Investment (DROI®). Top executives are now demanding DROI® calculations from Diversity departments where they were not required previously.
So, what factors prevent us from mastering Diversity ROI measurement? Here are a few excuses I hear that Diversity Practitioners say are consistently challenging and “Small Doses” to begin to address them:

Issue-1: Lack of Skills and Orientation
Many Diversity staff members neither understand ROI nor do they have the basic skills necessary to apply the process within their scope of responsibilities. Diversity ROI Measurement and evaluation is not usually part of the preparation for the Diversity job or taught as part of a university education focused on diversity. Also, the typical Diversity training program or intervention does not focus on results, but more on diversity awareness concepts, activities, or other issues. Staff members attempt to measure results by measuring learning only instead of the full range of Diversity performance intervention outcomes (at all 7 levels) that drive business. Consequently, this is a tremendous barrier to implementation that must be changed such that the overall orientation, attitude, and skills of the Diversity staff member are focused on business results, impact, and/or outcomes.

Small Dose-1: Build DROI® Skills and Measurement Orientation
Don’t wait until you are asked about the DROI® of your Diversity intervention to gain competency and business acumen in this area, start learning about DROI® today! Attend a Diversity ROI Webinar, Workshop, Read books on Diversity ROI, Use DROI® Tools, etc.

Issue-2: Faulty Needs Assessment
Many existing Diversity interventions are not based on an adequate needs assessment. Some diversity interventions have been implemented for the wrong reasons based on requests to chase a popular fad or trend in the industry. Even worse, they schedule training for everyone in the organization costing thousands or millions of dollars with NO measurable DROI®. If the intervention is not needed, the benefits from the program will be minimal or wasted. A DROI® calculation for an unnecessary program will likely yield a negative value. This barrier can be eliminated by training and certifying Diversity Executives and Practitioner in programs such as the Hubbard Diversity ROI technologies, training measurement workshops, etc.

Small Dose-2: Learn the Detailed Steps to Conduct a Comprehensive Needs Assessment
Needs analysis is the cornerstone of any Diversity performance analysis effort. It provides you with appropriate justification for either developing or not developing your Diversity intervention. You must conduct a needs analysis, no matter how abbreviated, before any Diversity intervention takes place.
The objectives of a needs analysis are to:
• Describe the exact nature of a performance discrepancy
• Determine the cause(s) of the discrepancy
• Recommend the appropriate solution(s)
• Describe the target population

Issue-3: FEAR
Some Diversity departments do not pursue DROI® measurement implementation due to fear of failure or fear of the unknown. Fear of failure appears in many ways. Designers, developers, facilitators, and program owners may be concerned about the consequences of a negative DROI®. They fear that the DROI® measurement process will be a performance evaluation tool instead of a process improvement tool. Also, the DROI® process will stir up the traditional fear of change. This fear is often based on unrealistic assumptions and a lack of knowledge of the process.

Small Dose-3: Overcome FEAR by Taking Action
The best way to overcome FEAR is by (a) taking action, (b) generating results, (c) evaluating the outcome, and (d) implementing improvements. FEAR is often based on a lack of knowledge so the antidote is to “learn” and “master” the DROI® skills and processes.

Issue-4: Discipline and Planning
A successful DROI® evaluation implementation requires much planning and a disciplined approach to keep the process on track. Implementation schedules, evaluation targets, DROI® analysis plans, measurement and evaluation policies, and follow-up schedules are required. The Diversity Change Management team may not have enough discipline and determination to stay on course. This becomes a barrier, particularly if there are no immediate pressures to measure the return. If the current senior management group is not requiring a DROI® evaluation, the Diversity Change Management team may not allocate time for planning and coordination. Also, other pressures and priorities often eat into the time necessary for an effective DROI® evaluation implementation. Only carefully planned implementation efforts succeed.

Small Dose-4: Build DROI® Discipline and Planning Focus
There is really no substitute for implementing a thorough approach to a DROI® evaluation process. It must be implemented using effective project planning and management skills as well as following the DROI® methodology according to each step in its design.

Issue-5: False Assumptions
Many Diversity staff members have false assumptions about the DROI® process that keep them from attempting DROI®. Typical assumptions include: (a) The impact of intervention cannot be accurately calculated, (b) Operating managers do not want to see the results of Diversity expressed in monetary values. They won’t believe it, (c) If the CEO does not ask for the DROI®, he or she is not expecting it, (d) CDO denial – “I have a professional, competent staff. Therefore, I do not have to justify the effectiveness of our programs”, (e) Learning or this type of intervention is a complex but necessary activity. Therefore, it should not be subjected to an accountability process, etc. These false assumptions form perceptible barriers that impede the progress of a DROI® evaluation implementation.

Small Dose-5: Eliminate Any False Assumptions
Let’s face it, the DROI® evaluation process and its associated analytics are here to stay. It’s only realistic that Diversity practitioners eliminate any false assumptions, wishful thinking and/or outdated measurement paradigms. In the future, there is likely to be even more demands for DROI® analysis feedback, demonstrated credibility and intervention performance value that tie to the organization’s bottom line.

Using these processes has the added benefit of improving the effectiveness of all Diversity interventions we conduct. Only those Diversity Practitioners who can operate as full strategic business partners will have what’s needed to survive for the long term. Do You Have What It Takes To “Survive”, “Thrive”, and “Drive” Real Business Performance using Diversity & Inclusion?

Why Diversity Professionals Need Predictive and Other Analytics

There’s a fair amount of buzz around diversity measurement and analytics. Advances in software, newly available data sources and how-to manuals have made it easier gain access to diversity measures.

Although interest in measuring the effects of diversity has been growing, the topic still challenges even the most sophisticated and progressive diversity departments. Many diversity professionals and practitioners know they must begin to show how diversity is linked to the bottom line or they will have difficulty maintaining funding, gaining support and assessing progress.

Over the past several years, diversity journals abound with volumes of information about the effect of a diverse workforce. The journal information is primarily from a talent representation point of view, focusing on organizational makeup of race, rank and gender (counting heads). Many of these diversity professionals are working with inconsistent, basic information and have yet to move from being reactive to proactive and predictive. In short, they have made little progress along the data-to-information-to-wisdom continuum needed to provide sophisticated diverse workforce insights that are critical to strategic decision-making.

How would you respond to the following questions:

  • Do you struggle with defining or measuring the success of diversity initiatives or other diversity interventions?
  • Are you constantly fighting the battle to show and justify the value that diversity initiatives or other diversity interventions are bringing to your organization?
  • Does your organization view diversity initiatives or other diversity interventions as an expense versus an investment with predicted returns?
  • Do you need to link diversity initiatives or interventions with the value it produces for your company?
  • Do you need a method of predicting (forecasting) the value of diversity initiatives or other diversity interventions to help decide whether to train and/or do something else?
  • Are your current diversity evaluation efforts always after the fact — do you need a way to measure success using leading indicators that drive continuous improvement?

If you answered yes to any of these questions, then predictive analytics for diversity is for you.

For the past eight years, I have been researching and developing a predictive analytics for diversity approach and framework that addresses all of the above questions and more. My goal is to create the next-level of diversity ROI-based tools that give diversity professionals a competitive edge and alignment to drive business performance and results.

What Are Analytics?
Analytics come in different types with a specific focus. They can be defined as follows:

  • Analytics: the science of analysis.
  • Descriptive analytics: tells what has happened in the past and usually the cause of the outcome.
  • Predictive analytics: focuses on the future, telling what is likely to happen given a stated approach.
  • Prescriptive analytics: tells the best course of action.

Descriptive diversity analyticscan help us understand human capital challenges and opportunities in utilizing a diverse workforce. On the other hand, predictive diversity analytics helps us to identify investment value and a means to improve future outcomes from diversity interventions and initiatives.

Companies struggle with evaluating whether their programs meet business needs and if they are worthwhile investments. Reasons given for not measuring diversity’s effect on business outcomes include statements such as, “It is too difficult to isolate diversity’s impact on results vs. the impact of other factors,” or “Evaluation is not standardized enough to compare well across functions.”

Sound business practices dictate that diversity professionals collect data to judge progress toward meeting the organization’s strategies and annual multi-year objectives. The Hubbard Predictive Analytics Framework, for example, is an approach that provides data to executives, including:

  • Predicting the success of diversity intervention in the three areas of intention, adoption and impact, and measuring to see if success has been achieved.
  • Leading indicators of future adoption (transfer of the intervention outcomes) and impact (business results).
  • Making recommendations for continuous improvement.
  • Isolating diversity and inclusion’s impact versus the impact of other factors.

The beauty of predictive analytics for diversity is that it uses leading measures (intention and adoption) as a signal of results (impact). If the leading indicators are below predicted success thresholds, actions can be implemented to make adjustments so the desired results are realized.

You can interweave outcomes and leading indicators into diversity interventions during the design and delivery phases to enhance their predictive validity and consistency in achieving sustained benefits. Predictive analytics practices help diversity and inclusion organizations move from an event-driven function to one that predicts success, measure performance against those predictions, and seen as returning significant shareholder value for the funds invested.

All told, the predictive numbers certainly support the world’s current fascination with analytics — and suggest that focus will continue to intensify in the years to come. Are you on board? If so, you will find an informative body of knowledge and insights waiting for your use to drive strategic performance improvement and success for your organization.

Using a Diversity ROI Analytics Business Case to Show Diversity & Inclusion’s Payoff in Big $$$

Organizations depend on their diverse employees to grow their bottom line and achieve the aggressive goals needed to win in today’s global, fast-paced economy. They know the marketplace is full of a diverse group of customers, yet they do not always effectively utilize their diverse workforce members to create innovative, paradigm-shifting solutions.

This guide is designed to help you build your Diversity ROI Business Case to demonstrate value-added by aligning with key business goals and objectives:

  1. Market Share Improvement
  2. Improving Global Leadership and Management Capability
  3. Lowering Costs and Increasing Productivity
  4. Developing New Revenue Sources

Why should you concern yourself with effective Diversity ROI Measurement and Management? In the past, many managers answered this question out of a sense of the “right thing to do” or because they were seeing more and more people who didn’t look like them in the workforce, or merely felt they had to meet the organization’s requirement for working with diverse groups. However, today’s managers know that without effective diversity management capability, organizational effectiveness is in jeopardy. Being effective at managing a diverse workforce for example, helps to lift morale, improve processes, bring access to new segments of the marketplace and enhance productivity of the organization. In essence, it is good for business.

In profit-making organizations, maximizing the difference between revenues and costs optimizes performance. This same goal exists in many non-profit organizations, except that the result is called surplus instead of profits. The question therefore is: “How are workforce Diversity and its management related to revenues, costs, or both?” To answer this question we can explore several concepts and strategies that illustrate the impact of diversity on business performance. These concepts and strategies include items such as marketing strategies, problem-solving strategies, creativity and innovation that can be viewed as important factors in revenue generation.

Marketing Strategies and Market Share Improvement

We live in an increasing global world that is diverse. Whether your business includes marketing financial services, computers, telecommunications products, social services, health care equipment, manufacturing processes, engineering expertise, and the like, expertise in addressing a diverse customer market (Business-Consumer Archetype) will be essential to your success. For example, an automobile manufacturer in Japan cannot afford to ignore the fact that nearly half of all new car buyers in the United States are women. This is true regardless of the gender make up of car buyers in Japan. Likewise, no reasonable person in the consumer-goods industry can afford to ignore the fact that roughly a quarter of the world’s population is Chinese and immigration to the United States from mostly Asian and Latin American countries is occurring at a rate of more than a million people per year.

We know that in the United States, Asians, African-Americans, and Hispanics combined now collectively represent over a $Trillion dollars annually in consumer spending. The Selig Center for Economic Growth (from the University of Georgia Terry School of Management) estimates and projections of buying power for minorities—African Americans, Asians, Native Americans, and Hispanics—definitely share in driving business success, and together wield formidable economic clout. As these groups increase in number and purchasing power, their growing shares of the U.S. consumer market draw avid attention from producers, retailers, and service providers alike.

The buying power data presented here and differences in spending by race and/or ethnicity suggest that one general advertisement, product, or service geared for all consumers increasingly miss many potentially profitable market opportunities. As the U.S. consumer market becomes more diverse, advertising, products, and media must be tailored to each market segment. With this in mind, new entrepreneurs, established businesses, marketing specialists, economic development organizations, and chambers of commerce now seek estimates of the buying power of the nation’s major racial and ethnic minority groups.

In a Business-Consumer Archetype (B to C), your diversity measurement strategies and analytics must be “Relationship/Brand Focused”. They must measure your organization’s ability to build customer intimacy knowledge and “use it” in measurable ways to generate outcome-based results that add revenue and other value to the bottom-line. Sample Diversity measurement strategies must focus on areas such as: Cultural Competence, Market Share, Brand, Relationship/Service-based outcomes, etc.

Sample metrics may include:

  • % Market Share
  • $ Share of Wallet by Demographic Group
  • #/% Diversity Competent Leaders/Managers by Demographic Group
  • #/% New Products generated by Demographic Group and for Demographic Groups
  • Improvement in Average Speed of Problem Resolution using Diverse Work Team Suggestions
  • % Favorable Response on Diverse Customer Satisfaction Surveys

In a Business-Business Archetype (B to B) on the other hand, your Diversity Measurement strategies and Diversity Analytics must be “Relationship/Product/Process Focused”. Sample Diversity measurement strategies must focus on areas such as: Innovation, Creativity, Process Improvement, Relationship/Service-based outcomes, etc.

Sample metrics may include:

  • Consultative Selling-Culture/Style Match
  • Customer Relations Effectiveness using Diverse Workforce Suggestions
  • Creativity (Competitive Edge Generation) – # Patents Generated by Demographic Group
  • Innovation (Diverse Work Team)
  • Cycle-time Reduction – Process speed to market
  • Solution Set Match-to-Problem (Improvements generated by diverse team)
  • Cost Reduction (strategic Diversity)

Research to prove the value of Diversity and Inclusion must clearly demonstrate a “causal chain of impact” working through seven levels of analysis as well as isolate Diversity and Inclusion’s contribution from other possible contributors. These processes and sciences are embedded in in the Hubbard Diversity ROI Methodology and the Diversity High Impact Mapping process.

Improving Global Leadership and Management Capability

If an organization plans to sell or deliver goods and services in a diverse marketplace, it must be fully capable of effectively utilizing its diverse workforce in key strategic ways. For instance, it is important from a public relations point of view to be viewed as a company that is known for managing and utilizing its diverse workforce assets well. There are a number of well-publicized ratings for “The Best Company for Working Women and Working Mothers”, “The Most Admired Company” and the “The Top 50 Companies for Women and Minorities”. This fuels a public relations climate where workforce talent and consumers make choices about the organizations they would work for and buy from. This line of thinking is also supported by a study of stock price responses to publicity that changed either positively or negatively on an organization’s ability to manage diversity. Many studies have found that announcements of awards for exemplary efforts resulted in significant positive changes in stock prices while announcements of discrimination suits resulted in significant negative changes in stock prices.

In addition, organizations can gain a lot from the insights of its diverse workforce to understand the cultural effects of buying decisions and mapping strategies to respond to them. Depending on the product or service delivered by the organization, many employees may also represent part of the firm’s customer base! A good reputation inside the organization can help product and service sales outside the organization. Another key marketing strategy includes tapping employee network or resource groups. They can be an excellent resource for focus groups, feedback and ideas for honing the organization’s reach into diverse marketplace opportunities.

Lowering Costs and Increasing Productivity

Revenue increases can also show up due to improvements in diverse work team problem solving and decision-making. Diverse work teams have a broader and richer base of experience to draw on in solving organizations problems and issues. The presence of minority views creates higher levels of critical analysis of assumptions and implications of decisions. In addition, it also generates an increase in the number of alternatives from which the group chooses. Problem solving benefits from diverse work groups do not happen by simply mixing people together who are culturally different. The improved outcomes heavily depend on a diversity-competent manager “utilizing” key diverse insights and experiences of the total group.

In one study, researchers found that properly managed and trained diverse work teams produced scores that were six times higher than homogeneous teams. Researchers also found that it is important how a diverse team uses its diversity. For example, those diverse teams that recognized and utilized their diversity had higher productivity. Even when the team was diverse, if that diversity is not used effectively, it can cause process problems that result in lower team productivity. The essential variable is a Leader’s or Manager’s ability to “effectively manage and utilize the team’s diversity”.

Developing New Revenue Sources

Creativity and innovation can be vital to an organization’s ability to perform. New product introductions, advertising, process re-engineering, quality improvements and the like are examples where these skills are required. Diverse work teams have also been found to promote improved creativity and innovation that generates revenue. In her book “The Change Masters”, Rosabeth Moss Kanter notes that highly innovative companies have done a better job of eradicating racism, sexism, and classism; tend to have workforces that are more race and gender diverse, and take deliberate steps to create heterogeneous work teams with the objective of bringing that diversity to bear on organizational problems and issues. Many organizations such as Pepsico for example, with the introduction of Guacamole Chips, and other innovations, created a plethora of new product SKUs generated by utilizing their diverse Employee Resource and Business Resource Groups.

As the buying power of diverse consumer segments including women, Hispanics, African Americans, and the lesbian, gay, bisexual and transgender community continues to grow, these segments represent a marketplace opportunity too big for retailers and consumer product manufacturers to ignore, according to “The Changing Consumer and the Workforce Imperative” Report. “This report focuses on how the retail and consumer products industry can unleash our multicultural workforces to achieve results that benefit our employees, our communities and our companies,” said Network Chair Michelle Gloeckler, senior vice president for merchandising execution at Walmart Stores. “Research for this project began at last year’s NEW Multicultural Workforce Conference and the results were previewed at this year’s conference in March. The Network believes that diversity and inclusion is critical to the future of our business.”

The report, based in part on one-on-one interviews with more than two-dozen leading U.S. consumer goods and retail executives, explores the correlation between workforce diversity and the ability of the consumer goods and retail industries to engage the changing U.S. consumer.

“Cultural connections are critical to understanding what drives purchasing decisions and brand loyalty across different market segments,” said Alison Paul, immediate past president of the Network of Executive Women, and vice chairman and U.S. retail sector leader, Deloitte LLP. “Making these connections rely on retailers’ and manufacturers’ ability to not only become more culturally aware-which are increasingly table stakes–but harness and value diverse perspectives as a source of innovation.”

Consumer insights most often come from those who share a consumer’s cultural experience, the report concludes. As such, recruiting, retaining and advancing a diverse workforce are integral to creating a brand/consumer connection, as consumers feel most comfortable doing business with companies whose employees mirror their communities.

According to the report, consumer product manufacturers and retailers may be able to achieve an inclusive culture by first understanding the bottom-line business opportunity, then making a commitment to diversity that touches all company departments. Top management should view workforce diversity not as a stand-alone program, but as an essential element for business survival. Achieving cultural competency involves leadership commitment and communication, employee accountability, strong talent recruiting and retention programs, progressive succession planning, diverse supplier relationships, and effective ROI measurement and analysis processes that capture impacts and results.

Appealing to a carefully segmented, diverse market is no longer only a niche opportunity for adventurous store managers and edgy entrepreneurs: Multiculturalism is fast becoming a retail and consumer goods industry opportunity too big to ignore. The same is true for “B to B” organizations as well. A diverse workforce serving a broadened customer base is a critical success factor because, as market research further demonstrates, a diverse workforce improves service outcomes and enhances financial performance regardless of the specific archetype.

Embracing Diversity as a way of thinking is the most effective response for business leaders and an important driver of an organization’s innovative engine. This means Diversity and Inclusion, and the archetypes that drive its constant performance, need to be brought to the forefront of your value proposition and ingrained in the organization’s cultural DNA. It must become a branded component of how you do business. When an authentic, inclusive culture is at work, a diverse workforce becomes capable of producing a broad range of original and engaging ideas that is simply not possible among homogenous employee populations. At the top of the organization, this can translate into more apt and financially rewarding decision-making.

The Diversity ROI Business Case highlighting the link between “Diversity and Inclusion Utilization” and Business Performance, not merely acquiring “Representation” alone, can be made by utilizing Diversity ROI processes and practices. From a Diversity ROI standpoint, Diversity measures and analytics must capture the outcomes and impact of these Diversity and business strategies in a way that demonstrates compelling evidence of Diversity’s contribution to the organization’s business objectives and results. By using tools such as the Diversity ROI 7-Level Chain-of-Impact, the Hubbard Diversity ROI Methodology, the Diversity High Impact Map, a ROI-based Diversity Scorecard, etc., a strong business Diversity ROI Business Case can be made in dollars and “sense” that clearly shows Diversity and Inclusion as “great for business”!

Dr. Hubbard is an expert in Organizational Behavior, Organizational Analysis, Applied Performance Improvement and Measurement Strategies, Strategic Planning, Diversity Measurement, and Organizational Change Methodologies. He holds a Practitioner Certification and Master Practitioner Certification in Neurolinguistic Programming (NLP), a Neuro-science discipline. Dr. Hubbard earned Bachelors and Masters Degrees from Ohio State University and earned a Ph.D. with Honors in Business Administration. Dr. Hubbard is available for Keynote Presentations, Executive Briefings, Workshops, etc. He can be reached at http://www.hubbardnhubbardinc.com/contact-us.html