Most Companies Don't Measure the Bottom-Line Impact of Diversity Programs

i4cp Study: While most agree it is an important issue, companies struggle to define diversity and what "success" is.

SEATTLE, WA (November 5, 2009) - While most companies agree that diversity issues in the workplace deserve attention, not many have a clear and consistent definition of just what "it" is, according to a recent study by the Institute for Corporate Productivity (i4cp).

The study found overall, only about 1 in 5 (21%) study respondents have a broad and inclusive definition of diversity, while 17% admit they have no definition at all. Higher market-performing organizations are more likely to define diversity broadly, with 28% reporting they include all diversity groups in their definition, compared to only 15% of lower-performing companies that include them all. Roughly one in four (23%) lower-performer companies do not even have a diversity definition, and 12% of higher performers don't either. Also, few organizations measure the bottom-line impact of diversity initiatives. In higher-performing organizations, 76% said they do not calculate a return on their diversity investments, while 80% of lower performers don't measure ROI.

Diversity strategy, however, is a widely recognized topic, particularly among larger companies. A full 78% of organizations with 10,000 or more employees report having a diversity strategy, compared to 44% of companies with 100 to 999 employees and 31% in companies with fewer than 100 workers.

The perceived importance of diversity is not lost on companies, either. Seventy-two percent of higher-performing organizations say that diversity issues are "important" or "very important" today, and 80% believe the issue will be important/very important in 10 years. That compares to 76% of lower performers who feel diversity is important or very important today, and 83% of them believe it will be so in 10 years.

"Defining 'diversity and inclusion' is a primary challenge for organizations to 'move the needle.' If you cannot agree on what diversity is, how do you create a strategy?" asks i4cp's Mary Ann Downey. "How do you know when you have succeeded? Another challenge is measurement. If you define diversity narrowly to attributes that are measurable, such as race/ethnicity, gender, etc., are you addressing the business challenge?"

Regarding budget considerations for diversity programs, larger and higher-performing companies are more likely to set a specific budget. Fifty-nine percent of companies with more than 10,000 workers have specific budgets for diversity issues, compared to 19% of companies with 100-999 employees, and 11% of companies with fewer than 100 workers. Higher performers (48%) are also more apt to specifically fund such initiatives than are lower-performing firms, at 27%.

When it comes to measuring the success of their programs, organizations at all performance levels agree that retention and engagement top the list. Improvement in employee retention was cited by 69% of higher performers as the top diversity success measurement, followed by better employee engagement results at 54%. More than half (56%) of lower performers cited retention as the top measurement, and 54% (the same as higher performers) pointed to improved employee engagement. When reviewing diversity metrics, companies at all levels tend to rely on the previous year's results for comparison purposes.

To support diversity strategies, the most common infrastructure in place is diversity training, favored by 53% of higher performers and 54% of lower-performing companies. Diversity recruiting is favored by 49% of higher performers, compared to 36% of lower performers.

The Diversity Practices Survey was conducted by i4cp in September of 2009. The full results of the survey are available exclusively for all i4cp corporate members.

Additionally, i4cp will be hosting a webinar titled, "Global Diversity and Inclusion: A Johnson & Johnson Success Story," today, November 5, 2009 at 1pm EST. The webinar will be presented by Arisa Cunningham, Vice President of Global Diversity at Johnson & Johnson. Register for the event at

About i4cp, inc.

The Institute for Corporate Productivity (i4cp) is the world's largest vendor-free network of corporations focused on building and sustaining a highly productive, high-performance organization. Our vendor-free community facilitates innovation by giving our members - among the largest and most respected organizations in the world - access to:

  1. Peers to spark new ideas and prevent "reinventing the wheel,"
  2. Research to enable members to understand current practices and next practices,
  3. Tools to put ideas and research into action,
  4. Technology to enable members to easily access tailored information and execute workforce strategies.

With more than 40 years of experience and the industry's largest team of human capital analysts, i4cp is the definitive destination for organizations seeking innovative ways to improve workforce productivity. For more information, visit

Erik Samdahl
Erik is the head of marketing at i4cp, and has nearly 20 years in the market research and human capital research industry.