Building Inclusive Workplaces: Accountability and Metrics Principles

Building Inclusive Workplaces: Accountability and Metrics Principles

Accountability is a critical change mechanism A series of academic studies have found that accountability is a critical element necessary to improve diversity (e.g. Kalev et al., 2006; Gorman, 2005)

Our company s experience thus far suggests that a committed chief executive and C-suite are essential to telegraph the importance of the effort. When senior leaders engage with something, others are encouraged to make individual commitments, establish shared goals, and accept collective accountability. ~ Beth Axelrod, SVP, ebay and Michelle Angier, Global Leader Women s Initiative, ebay in the McKinsey Quarterly

Example of accountability structure CEO Accountable to Board of Directors through CEO annual goals Executive / Functional Leaders Accountable to: Deliver results in their organizations Take executive actions (e.g., sponsorship) Demonstrate inclusive leadership Hold others accountable D&I Initiative / D&I Leaders (Committee, Council, etc.) Accountable to: Identify root causes Recommend & implement strategies Collaborate on corporate-wide actions Managers D&I Change Teams & Communities

Accountability Case Example: ebay Global Women s Initiative Goals for: CEO Senior vice presidents (about 20 of the most senior leaders) Vice presidents (about 170 leaders) Goals: All open leadership positions should have a diverse slate of candidates and interviewers. Top-talent women, at every level, should have careerdevelopment plans and discuss them with their managers. Leaders should monitor the diversity of their promotion pipelines to ensure fairness. Each senior vice president and vice president should help to develop top-talent women by mentoring or sponsoring five of them. The company would continue to measure progress on our demographics regularly. Source: Michelle Angier and Beth Axelrod, Realizing the Power of Talented Women, McKinsey Quarterly.

How do metrics help? MEASURE ACCOUNTABILITY Align leaders. Measure progress. Celebrate small wins. FOCUS ON HIGH IMPACT ACTIONS Target root cause issues to accelerate progress. MOTIVATE CHANGE Motivate action by benchmarking to other organizations. LEARN AND IMPROVE Continuously refine practices to increase effectiveness.

Principle #1: Measure both Diversity and Inclusivity to fully capture the ability to produce innovation Change Metrics Diverse Mix Enables innovation Inclusive Culture Produces innovation Representation - Recruitment - Retention - Advancement Succeeding Equalizing Inclusive Culture Mattering Interacting Belonging

Principle #2: Assess the full pipeline to identify critical gaps and target improvements Overall company-wide representation percentages can obscure pipeline dynamics and hide issues Overall representation: 22 30 25 20 15 10 5 0 28 Entry 6 pt drop (21) 22 Mid 10 pt drop (46) 4 pt drop 12 (33) Dir/Sr Dir 8 VP/SVP 8 pt drop (100) 0 0 Exec

Principle #3: Benchmark your organization General guideline: representation equal to labor market availability should be within reach for each area of the business. Representation Organization Area Women Benchmark Org Area Asian Benchmark Org Area Black Benchmark Org Area Hispanic Benchmark Org Area Product Mngt Marketing Finance Human Resources Technology Legend: = Above Benchmark Range = Within Benchmark Range = Below Benchmark Range

Principle #4: Drill down to actionable insights Diverse Mix Representation Recruitment (hiring metrics) Retention (turnover metrics) Advancement (promotion metrics)

Example: Heat map Demographic Group XXX: Year Over Year Change Entry Mid Dir/Sr Dir VP / SVP Exec Recruitment Retention Advancement No activity = Increase Year over year = No change Year over year = Decline Year over year

Example: Finding the root cause may require additional one-time analysis Diverse Mix Representation Recruitment (hiring metrics) Retention (turnover metrics) Advancement (promotion metrics) Sourcing Screening Interviewing & making offers Gaining offer acceptance Examples of Data Reviews to Drill Down to Root Cause Engagement survey Exit interviews Compensation analysis Focus groups Performance Assignments Networks Career advancing relationships Interviews

Principle #5: Overweight leadership gains Greater underrepresentation at the top intensifies diversity dynamics, making gains more difficult Increasing diversity representation at the top produces a cascading effect over time, increasing diversity at all levels.

8 of 14 metrics are for leadership levels, creating more weight on these roles Demographic Group XXX: Year-Over-Year Change Entry Mid Dir/Sr Dir VP / SVP Exec Recruitment Retention Advancement n/a = Increase Year over year = No change Year over year = Decline Year over year

Principle #6: Create a journey of sustainable change Stop erosion and start to gain Step 1 Stem losses: secure level of hires, promotions, and retention at current representation Achieve industry average Step 2 Achieve benchmark: be as good as your average competitor Lead the industry Step 3 Lead: Aspire to greater gains and achieve competitive differentiation

Principle #7: Develop both leading and lagging indicators LEADING INDICATORS LAGGING INDICATORS Short-term: Successful delivery of actions Long-term: Key metrics for Diversity & Inclusivity improvement

Example: Leading and lagging indicators Short term: Medium term: Long term: Initiate Action (Action Scorecard) Measure Action Completion: - Executives sponsor diverse managers to a director position Intermediate impacts (One-time Survey) Measure Increase in: - Leader advocacy - Visibility to senior leaders and network connectivity - Access to stretch assignments Metrics change (Metrics Scorecard) Measure change in top level metrics: - Higher representation - Increased advancement - Improved retention

Example: Action scorecard Action 1 Action 2 Action 3 Action 4 Action Scorecard ( Leading Indicators) Target Actual Tip: Use a format that is similar to how business initiative progress is typically reported in your company. An example is shown. Formats vary widely by company. Legend: Action delivered Action delayed

Principle #8: Leverage employee surveys to gauge inclusive culture Equalizing Exponential Talent s Inclusive Culture model can be used to create an Inclusion sub-index from an employee survey. Succeeding Inclusive Culture Mattering Interacting Belonging

Gauge inclusiveness through a fairness review Audit people process outcomes to check for fairness. Succeeding Interacting Equalizing Inclusive Culture Belonging Mattering Most companies can review: Performance ratings Compensation Promotion Some companies can review for some areas of the business: Critical assignments Note: Exponential Talent LLC cannot provide legal advice regarding fairness audits. It is recommended to consult with legal counsel on specific legal protocols for your organization. We can provide analytical tools and services.

Example: Dashboard Action Status ( Leading Indicators) Metrics ( Lagging Indicators) Action 1 Action 2 Action 3 Action 4 Legend: Action delivered Legend: YOY = Year Over Year Target Actual Action delayed Diversity Overall Representation Women Asian Black Inclusivity Inclusion index (employee survey- all) Improvement by YOY Improvement vs. Benchmark Prior Current 3 of 5 levels red Below Below 3 of 5 levels green 3 of 5 levels green Prior Current 6.9 7.5 = Increase YOY = No change YOY = Decline YOY At Below Change 0.6 pts Above Hispanic 3 of 5 levels red At Below Women Asian Black Hispanic At Change 9 5.5 5.8 0.3 pts 5 5.6 5.5-0.1 pts -2 4.9 5.4 0.5 pts 10 5.3 5.0-0.3 pts -6

Summary of design principles MEASURE ACCOUNTABILITY Align leaders. Measure progress. Celebrate small wins. FOCUS ON HIGH IMPACT ACTIONS Target root cause issues to accelerate progress. MOTIVATE CHANGE Motivate action by benchmarking to other organizations. LEARN AND IMPROVE Continuously refine practices to increase effectiveness. Measure both diversity & inclusivity. Assess each level of the pipeline. Overweight leadership gains. Drill down to actionable insights. Leverage employee surveys to gauge inclusive culture. Benchmark your organization. Create a journey of sustainable change. Create leading as well as lagging indicators. Assess effectiveness of changes to identify what works and what does not.

Tips Tailor to your business Align metrics design and purpose Avoid paralysis through analysis Don t let perfection be the enemy of the good Keep the focus on how best to drive change

FOR MORE INFORMATION: Exponential Talent LLC Website: www.exponentialtalent.com Molly Anderson Founder & President, Co-Author, The Corporate Lattice Email: molly.anderson@exponentialtalent.com Caroline Simard Co-Leader Email: caroline.simard@exponentialtalent.com